All Commentary
Friday, May 1, 1998

Deficits Are Good

Red Ink Helps to Check Politicians' Free-Spending Tendencies

Doug Bandow, a nationally syndicated columnist, is a senior fellow at the Cato Institute and the author and editor of several books, including Tripwire: Korea and U.S. Foreign Policy in a Changed World.

President Bill Clinton’s big-spending, high-taxing budget proves what many of us have long known: deficits are good. Years of unending red ink helped check the free-spending tendencies of politicians from left to right. Unfortunately, the mirage of future surpluses has now opened wide the budget floodgates.

For instance, President Clinton wants to create new childcare subsidies, launch a big research program on the supposed threat of global warming, spend more on computers for the abusive IRS, toss additional foreign aid into Africa’s chaotic money pit, create new federal housing initiatives to supplement failed old ones, throw more cash at artistic elites through the National Endowment for the Arts, and spend billions of dollars to reduce class size in local schools. Uncle Sam is to be simultaneously Santa Claus and national nanny, wending his way across the nation spreading cash and regulations far and wide.

At the same time the President tells us there is no money for tax cuts for those who earn the money he plans on spending. Instead, we should husband any surplus to “save” Social Security, he explains—while developing a new program for every interest group with a letterhead and at least two members. Those paying the bills can just shut up and pay more.

The subterfuge of claiming to maintain fiscal discipline even while proposing a $150 billion flood of spending increases and tax hikes wouldn’t matter so much if there was real opposition in the capital. True, House Majority Leader Dick Armey opines that “We can’t go back to the days of skyrocketing government spending” which “the President has proposed.” However, most Republicans as well as Democrats give only lip service to the notion of limited government.

In his response to the President’s State of the Union speech, Senate Majority Leader Trent Lott decried the high tax burden borne by Americans and denounced government waste, such as the existence of “more than 750 education programs, in 39 different bureaucracies.” However, the GOP has controlled Congress for three years. Why are there still “more than 750 education programs, in 39 different bureaucracies”?

The same disconnect between rhetoric and reality was evident when House Speaker Newt Gingrich denounced the President’s plan for “higher taxes, more spending, and a larger, less accountable government.” What would the Speaker do differently? He recently gave a major speech in which he decried government bureaucracy, even after his party last year made the tax law more complicated. He cited problems in funding medical research, even though Congress has done little to curb the Food and Drug Administration’s deadly overregulation. He demanded that “we,” whoever that is, replace local administrators in urban schools that don’t work, rather than suggest that government butt out and let parents choose where to send their kids to school. Social Security is a decade away from insolvency, but Speaker Gingrich said there was “no crisis” and called for . . . creation of a commission to study the issue. He ended with a rousing call to reduce the burden of government, without suggesting elimination of a single program.

Indeed, GOP leaders privately debated dropping the budget caps imposed only last summer. They backed away only under pressure from a caucus with a few members who are still capable of outrage. But the budget process is not yet over and the advocates of more spending in both parties continue to lobby hard.

The problem is that most everything in Washington is based on partisanship, not principle. The President’s proposals are wrong not because he likes wasteful bureaucracy—after all, his administration has been busy attempting to “reinvent” government. His initiatives are wrong because they aren’t appropriate for government.

Consider child care. More efficient government-provided day care is not better day care. It is merely less wasteful bad day care. The President wants Uncle Sam to throw cash at families in which the parents work outside of the home. So far the GOP response has been to propose a tax credit that would help stay-at-home moms as well.

Obviously government should not discriminate against families in which one parent stays home. But why not keep the government out of child care entirely?

Someone in Washington needs to offer a truly radical alternative: that parents be responsible for their own children’s care. Having kids is obviously a burden, but it is freely undertaken. People who choose to have children should also be willing to pay the cost. When difficulties arise, help should come first from family and second from private charity.

Combined with that should be real, across-the-board tax relief that would reduce the pressure on both parents to work. Then families could choose among career options without government interference. Big government that relies on tax incentives to push people to act as it wishes is barely less intrusive than big government that relies on regulations to force people to act as it wishes.

Similar is the question of education. The GOP should thank the President for his concern over class size and suggest that he run for the D.C. school board. There is no obviously correct class size; there certainly is no reason for the national government to decide the matter. There are, in fact, few issues that are more appropriately a private, family concern.

Indeed, the real problem with education is that parents have little influence in a political process dominated by administrators and unions. Instead of letting the Department of Education hand cash to local bureaucracies, Congress should leave the money with parents so they can take their kids out of failing schools. That is the only effective way to hold schools accountable.

Then there’s the question of “saving” Social Security. Refusing to give tax cuts to people who are losing a larger share of their income to Uncle Sam than at anytime since World War II is a curious way to preserve a system that has been steadily increasing its tax take for years. Even if the administration really wanted to “save” the extra money, instead of spending it on a host of new government programs, as actually proposed by the President, pouring it down the Social Security rathole would merely postpone the system’s day of reckoning.

But creating yet another commission is no less stupid an idea. The problem with Social Security is obvious to all: it is a pay-as-you-go system that can survive only if it is transformed into a private insurance system. If money is “saved” towards this end, it should be immediately returned to taxpayers so they can independently prepare for their own retirement or spend it on whatever else they would like.

Despite the supposed Republican Revolution, nothing has really changed in Washington. There were two parties of government before the 1994 election, and there are still two parties of government. That’s become particularly evident as the federal budget seems to be moving to surplus. But there’s still hope. It’s true that no one is willing to stand up for principle. That almost certainly guarantees the return of federal deficits. And deficits may be the only discipline that works in Washington.

  • Doug Bandow is a senior fellow at the Cato Institute and the author of a number of books on economics and politics. He writes regularly on military non-interventionism.