Just Put It on His Tab
Congress goes on a spending spree as the deficit grows
Homeland security isn't Washington's only bloated budget. After the president warned that he'd nix any highway bill with a price tag over $284 billion, a bipartisan Senate last week did him $11 billion better. Conservatives gasped at what the Club for Growth called a "fiscal monstrosity" --even the more modest House version includes 4,000 pet projects, like $4 million for footbridges across a Louisiana canal--and insisted that Bush finally brandish his carving knife. "If Bush can't hold the line on the transportation bill," asks Stuart Butler of the Heritage Foundation, "how can he look at people and say we need to massively change Medicare?"
Indeed, whether Bush stands firm on road spending is largely a symbolic matter. But fiscal hawks point to the highway bill as another sign of Washington's return to the bad old days of free spending and win-win deal making, warning that such behavior will most likely take a huge toll as a swelling deficit and mounting national debt threaten to scare off foreign investors, goose interest rates, and send the economy into a tailspin. With the Republican Congress making only minor changes last month to Bush's $2.6 trillion budget--which assumes an extension of recent tax cuts and makes only a small dent in Medicaid growth--economists say deficits will keep growing. "Bush says he'll cut the deficit in half," says the Committee for Economic Development's Charles Kolb. "But the numbers don't add up."
Republicans defend pricey measures like 2003's Medicare drug benefit. "Economists don't have to stand for reelection," says Jim Nussle, chairman of the House Budget Committee. "Or respond to constituents who are cutting their pills in half." Nussle insists that the budget puts the country on track to halve its deficit--to around $210 billion--in five years.
Hidden costs. But the budget omits big-ticket expenses, like reforming the alternative minimum tax and supplemental spending on Iraq past 2006. "The deficit balloons if you look beyond five years," says the Concord Coalition's Robert Bixby, who worries that a tide of retiring baby boomers will overload Medicare and Social Security beginning in 2008. What's needed, Bixby and other deficit hawks say, is a complete overhaul of entitlement programs.
Until the public feels the deficit burn--maybe through rising interest rates--economists doubt it will attract much attention. "It's like the doctor who warns you to stop smoking," says Bixby. "Until you have a heart attack, you're going to keep doing what you're doing." For now, Republicans are loath to roll back tax cuts, while Democrats criticize even modest entitlement cuts. "There's widespread consensus that the path we're on is unsustainable," says former Congressional Budget Office Director Robert Reischauer. "But it's hard to do the right thing when that involves inflicting pain on people you depend on during elections."
This story appears in the May 30, 2005 print edition of U.S. News & World Report.
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