President Bush may be repeating the sins of his father. Although elected on a Reaganesque, tax‐cutting platform, the White House has veered to the left.
President Bush has signed a bill to regulate political speech, issued protectionist taxes on imported steel and lumber, backed big‐spending education and farm bills, and endorsed massive new entitlements for mental health care and prescription drugs. When the numbers are added up, in fact, it looks like President Bush is less conservative than President Clinton.
It makes little sense to discourage one’s core supporters prior to a mid‐term election. Yet that is the result when a Republican president expands government, which Bush is doing. Also, academic research on voting patterns shows that a president is most likely to get re‐elected if voters are enjoying an increase in disposable income. Yet making government bigger is not a recipe for economic growth. After all, there is a reason why Hong Kong grows so fast and France is an economic basket case. But you can’t tell that to the Bush administration.
Administration officials privately admit that much of the legislation moving through Congress represents bad public policy. Yet they argue either that everything must take a back seat to the war on terror (much as the first Bush administration treated the war against Iraq) or that compromises are necessary to neutralize issues such as education. But motives and rationalizations do not repeal the laws of economics.
In less than two years, President Bush has presided over more government expansion than took place during eight years of Bill Clinton. For instance:
— The education bill expands federal involvement in education. The administration originally argued that the new spending was a necessary price to get vouchers and other reforms. Yet the final bill boosted spending and was stripped of almost all reform initiatives. And there is every reason to believe that this new spending will be counter‐productive, like most other federal money spent on education in the past 40 years. Children and taxpayers are the big losers.
— The farm bill is best characterized as a bipartisan orgy of special interest politics. Making a mockery of the Freedom to Farm Act, the new legislation boosts farm spending to record levels. Old subsidies have been increased and new subsidies created. Perhaps worst of all, the administration no longer has the moral credibility to pressure the European Union to reform its socialized agricultural policies. Taxpayers and consumers are the big losers.
— The protectionist decisions on steel and lumber imports make free traders wish Bill Clinton were still president. These restrictions on world commerce have undermined the productivity of U.S. manufacturers by boosting input prices and creating massive ill will in the international community. American products already have been targeted for reciprocal treatment. Consumers and manufacturers are the big losers.
— The campaign finance law is an effort to protect the interests of incumbent politicians by limiting free speech rights during elections. The administration openly acknowledged that the legislation is unconstitutional, yet was unwilling to make a principled argument for the Bill of Rights and fair elections. Voters and the Constitution are the big losers.
— New health care entitlements are akin to throwing gasoline on a fire. Medicare and Medicaid already are consuming enormous resources, and the burden of these programs will become even larger when the baby boom generation retires. Adding a new prescription drug benefit will probably boost spending by $1 trillion over 10 years. A mandate for mental health coverage will drive up medical costs, making insurance too expensive for many more families.
Those policy decisions make government bigger and more expensive. They also slow the economy and hurt financial markets — read the headlines lately? For all his flaws, President Clinton’s major policy mistake was the 1993 tax increase. Other changes, such as the welfare reform bill, NAFTA, GATT, farm deregulation, telecommunications deregulation and financial services deregulation, moved policy in a market‐oriented direction.
Perhaps most importantly, there was a substantial reduction in federal spending as a share of gross domestic product during the Clinton years. Using the growth of domestic spending as a benchmark, Clinton was the second most conservative president of the post‐World War II era, trailing only Ronald Reagan.
To be sure, much of the credit for Clinton’s good policy probably belongs to the Republican Congress, but that is not an excuse for bad policy today. And on one positive note, President Bush has “promised” to fight for partial privatization of Social Security. Yet, so far, President Bush has not vetoed a single piece of legislation. Needless to say, this means it will be rather difficult to blame “big‐spending” Democrats if the economy continues to sputter.