Guns, butter, and hubris
By Mortimer B. Zuckerman Editor in Chief
U.S. News & World Report: Feb. 2, 2004

  How do you stop a runaway elephant? If words could do it, particularly words from the Republican camp, there might just be a sliver of hope of reining in what the Wall Street Journal describes as "the most profligate administration since the 1960s."
  Reaching back to his Navy days for a more colorful metaphor, Sen. John McCain says, "I've never known a sailor, drunk or sober, with the imagination this Congress has." The omnibus appropriations bill just approved, covering seven of the 13 spending bills Congress was supposed to complete months ago, is well and truly dubbed "a pork‑laden monstrosity" (by Club for Growth, a political action committee). "Grotesquely stuffed with pork," echoes the Washington Post. The federal budget, declares the investment firm Goldman Sachs, is, quite simply, "out of control." And the beat goes on.
  What we have here is nothing short of fiscal disaster. America has gone from a $280 billion surplus when George W. Bush was inaugurated to $500 billion annual deficits as far as the eye can see. And those deficits would be $100 billion higher if the government wasn't raiding the Social Security surpluses now treated not as a lockbox but a candy jar. These numbers understate the scale of the spending binge because historically lower interest rates have sharply cut interest costs on the $3.9 trillion federal debt.
  Disarmament. Most critically, the $5.6 trillion surplus once estimated for the first decade of this century is now projected to be a $5 trillion deficit. So what? Vice President Cheney is reported (by former Treasury Secretary Paul O'Neill) as saying that President Reagan proved "deficits don't matter." They do. And they will do just what they did back then, which is to crowd out private investment, raise interest rates, and slow economic growth to the point where our legacy to our kids will be lower living standards.
  President Bush, who has not vetoed a spending bill in three years, has fractured the fragile bipartisan consensus of the late 1990s to dedicate the surplus to reducing debt. Now there is no pretense of fiscal discipline. We do not choose between guns and butter; we have guns and butter and tax cuts. This is the first war where the president and Congress seem totally unwilling to sacrifice. It is the equivalent of fiscal disarmament, and it will compromise our ability to respond to problems at home and abroad.
  The Bush team defends the excesses by pointing to higher productivity (hardly the result of the Bush years) and increased profitability, as well as the higher stock market, all of which will increase federal revenues. But their claim stands economics on its head. Why? Because larger long‑term deficits can lead only to reduced private capital spending, higher interest rates, and increased indebtedness and interest costs to foreign creditors.
  In happier times, the GOP was the party of hard money, balanced budgets, and a shrinking public debt. Back then, it was Democrats itching to prime the pump with deficits while blithely ignoring the size of the debt. Now the roles are reversed. And the public has noticed. In a Wall Street Journal/NBC News poll last year, 64 percent disapproved and only 29 percent approved of tax cuts as the best way to improve the economy. In a CNN/Gallup/USA Today poll last September, 74 percent said a candidate's position on the deficit would be taken into account this year. By a whopping 60 to 21 percent, Americans said they would reduce the deficit by canceling some tax cuts, rather than spending less on health and education. And now, in a Pew Research Center poll this month, 51 percent call the deficit a top priority for Bush and Congress. All of which would seem to give Democrats a major issue, especially as Bush proposes to make the tax cuts permanent, at a cost of $1.7 trillion added to the deficit over the next decade.