MORE LIES FROM THE LUMMOX:
Budget Whoppers
By James K. Glassman
Tuesday, February 3, 1998; Page A17
Is President Clinton lying about sex with Monica Lewinsky? We don't
know yet, but on other matters -- where the stakes are higher and the
effects broader -- his lies don't require a special prosecutor to ferret out.
They're big, brazen and undeniable.
These policy lies have been on full display over the past week in the State
of the Union and the budget message. There are two whoppers -- the
foundation for all the rest. The first is that "we have the smallest
government in 35 years." We don't. In fact, we don't even have the
smallest government in five years.
I'll get back to this lie -- or, if you'd rather be more dainty, untruth -- a little
later, but let's move quickly to the second.
"Tonight," Clinton told Congress last Tuesday, "I propose that we reserve
100 percent of the surplus -- that's every penny of any surplus -- until we
have taken all the necessary measures to strengthen the Social Security
system for the 21st century."
This is a reasonable idea. Hold spending steady, which could mean
surpluses in the hundreds of billions of dollars in a few years. Don't touch
that money now, but use it to fund reform of Social Security.
"We should not spend a surplus that we don't yet have," Clinton said
Sunday. But then he offered a budget that does just that. He wants to hire
100,000 new teachers, boost education and job training spending by
one-third, add $21 billion in child care initiatives, etc, etc.
Some of the money for these programs will come from the tobacco
settlement -- the largest transfer of assets from the private to the public
sector in history. But if that deal happens, why shouldn't those dollars also
boost the surplus? Or supplant taxes on families?
Clinton also wants to extend Medicare, a system that will soon be
bankrupt, to people under 65 -- at no extra cost, he says, to the taxpayers.
This may not be an outright lie, but it's outrageously disingenuous. He
knows very well that taxpayer money will eventually be used to help pay
the premiums for these not-quite-oldsters.
The reason Clinton has to lie about new spending is obvious. While it helps
him with his hard-core constituency in Congress, it's poison to most
Americans. In a recent Louis Harris poll, for example, 45 percent want to
use the surplus to reduce the debt; 41 percent want to "reduce taxes by the
amount of the surplus"; and just 13 percent would "increase spending on a
valuable government program."
Still, Clinton can get away with proposing new programs because of his
claim that government is smaller. In other words, we've paid our dues by
scrimping, so now we can spend. This analysis, too, is flat-out wrong.
In 1992, when he took office, federal spending -- which is, after all, the
best way to measure the size of government -- was $1.4 trillion, or roughly
$14,000 for every American household. This year, spending will be $1.7
trillion. The precise increase is 21 percent in a period when inflation,
according to the consumer price index, rose less than 14 percent.
Try another measure. In 1965, federal spending represented 17.6 percent
of GDP, according to the president's own budget office. In 1997, it was
20.1 percent of GDP.
Clinton claims that the deficit was brought down from $390 billion in 1992
to a negligible $22 billion in 1997 because of the "truly historic bipartisan
balanced budget agreement." This, too, is a lie (or, more charitably, a
misstatement of fact).
The deficit came down for two reasons: first, the reduction in defense
spending, which began under -- guess who? -- Ronald Reagan. Defense
outlays peaked in 1986 at 6.5 percent of GDP. It was one of the great
investments of all time. As a result of the defeat of communism, defense
spending in 1998 will be just 3.2 percent of GDP -- the lowest figure since
1940. That peace dividend is saving us about $250 billion, or $2,500 per
family, per year.
The second reason the deficit fell was that businesses -- and the individual
men and women who create, guide and work for them -- became leaner,
smarter and more imaginative. The changes in the private sector that began
in the early 1980s were encouraged by Reagan's tax-rate reductions and
Alan Greenspan's monetary stewardship, but I would give even more
credit to animal spirits and American know-how and the boom in
technology.
This private-sector renaissance has led to a flood of new tax revenues --
rising an average of 7.6 percent a year since 1992, or roughly three times
the rate of inflation. In 1992 Washington collected $1.1 trillion in taxes; this
year, it will collect $1.7 trillion.
As for last year's budget agreement: We would be far better off if it hadn't
happened. Instead, Congress and the president agreed to boost spending
by $70 billion, or 4.4 percent, in a year in which inflation is rising 1.7
percent. Smaller government?
Besides defense, the only true reductions in spending during the
Clinton-Gingrich era have been cuts in farm subsidies and welfare spending
-- a total, calculates Robert Reischauer, former director of the CBO, of
$14.7 billion by 2002, or 0.8 percent of total spending.
In fact, Republicans and Democrats should think about adopting a policy
that could be called, "Leave Well Enough Alone." Freeze taxes and
spending in place. Let surpluses pile up and, at the same time, debate
bigger issues, such as reforming the way we collect revenues, finance
health care and fund retirements.
But we can't do any of these things if the president doesn't stop telling lies,
lies, lies -- not about "that woman," but about more important things.
The writer is a fellow at the American Enterprise Institute.
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