Elected officials in mood to spend Surplus money, deficit reduction fuel urge to fund projects

January 11, 1998|By Paul West | Paul West,SUN NATIONAL STAFF

WASHINGTON -- Gov. Pete Wilson wants to spend millions to get smoke-belching cars off California freeways. Gov. George Pataki is pushing guaranteed health insurance for every child in New York. President Clinton is proposing the largest Medicare expansion in 25 years.

Maybe the era of big government isn't over after all.

A strong economy and a hot stock market are putting more tax money into the hands of America's politicians, just in time for this year's elections. As a result, the penny-pinching politics of the '80s and early '90s is being replaced by what some are calling the new politics of plenty.

"It's a whole new climate," says Scott Hodge, top budget analyst at the conservative Heritage Foundation. "There's a whole new psychology at work."

"The specter of the deficit held a lot of that new spending in check. Now, the robustness of the economy, combined with the fact that the deficit has disappeared, has unleashed all this pent-up demand for new spending."

Clinton got a jump on Congress last week, floating proposals for expanding Medicare and a subsidized day-care plan he termed "the largest single investment in child care in the nation's history."

Some congressional Republicans want to use any budget surplus to pay down the national debt. Others would return money to the taxpayers by cutting the "marriage penalty" on two-income families. A third group, emphasizing spending, is promoting a $200 billion highway construction package.

"I'm reminded of a family that was in bankruptcy for 20 years and they finally looked like they were coming out of it. And then they went out and bought a Rolls Royce to celebrate," says former Republican Sen. Warren B. Rudman of New Hampshire, urging fiscal caution.

If they find themselves spending a revenue windfall, Washington's policy-makers would be following a trend set by governors and legislators back home.

The 50 states are now in their healthiest financial shape since the 1970s, according to the National Conference of State Legislatures. Hal Hovey, a former Illinois budget chief who edits a newsletter on state finances, predicts a total budget surplus this year of more than $30 billion, which would be a record.

About one-third of that money will likely be returned to taxpayers, a sign that the conservative tax-cutting fervor of the Reagan years endures. In 1998, at least half the states are expected to provide some form of tax relief or refund.

Most of the surplus money, however, -- roughly two out of every three dollars -- is going into new spending.

The top priority: education, to help local school systems keep up with enrollment growth from the "baby boomlet" generation. Other popular spending targets include programs connected to welfare reform, crime prevention and an array of one-time projects, from school construction, prisons and highways, to refurbishing state capitols, covering unfunded pension liabilities, beefing up rainy-day reserves and upgrading government computer systems.

"The lack of money to spend over the last 10 years taught us a lesson," says veteran state Rep. Irv Anderson of Minnesota, which must dispose of a $1.7 billion budget surplus.

"But the lessons we have learned will be short-lived, if the economy keeps growing for another three our four years," predicts the Democratic-Farmer-Labor party member. "We'll go back to spending again."

Already, there are signs the fiscal restraint of the early '90s is vanishing.

Last week, the governors of the nation's two largest states -- both Republicans with national ambitions -- unveiled ambitious social welfare proposals.

California's Wilson, who leaves office next year, is proposing a sharp increase in aid for poor children, including a doubling of his state's child care program. His latest budget request, up by $4 billion from last year, includes $64 million to help low-income drivers fix smoke-belching cars or sell them to the state for demolition.

New York's Pataki is calling for a health insurance plan to provide comprehensive coverage for every child in his state through the age of 18. Pataki, up for re-election this year, also proposed a $1.2 billion tax cut.

"I think Republicans and Democrats are looking at the same poll results and the same focus groups," says political scientist John J. Pitney Jr. of California's Claremont McKenna College, who believes the spending binge does not signal a return to big government. "They're not really extending government into new

areas so much as doing a better job of what government already does."

What politicians often do best is provide treats for voters at election time. With governors or lawmakers being elected this year in 46 states, including Maryland, the spending pressure is ,, intense.

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