Red is back in fashion in Washington

July 23, 2002|By Steve Chapman

CHICAGO -- In 1989, a real estate developer named Seymour Durst unveiled the National Debt Clock in New York City to record the steady and staggering increase of the national debt. Two years ago, the clock was turned off because, with the government running surpluses, the debt was shrinking. But last week, the clock started up again -- and it will be running for some time.

The federal budget deficit is back. After a brief, glorious era of surpluses, the government expects to go $165 billion into the red this year. Next year may be even worse. Although the administration predicts the deficit will fall to $109 billion in 2003, congressional estimates on both sides of the aisle run upward of $190 billion.

Congress and the administration have a duty to do something about this alarming development. And they are doing something about it: They're taking steps to make it bigger.

Last summer, the budget sky was blue. In the fiscal year that ended Sept. 30, Washington took in $127 billion more than it spent. That was the fourth straight year that we, as a society, lived comfortably within our means. And there was good reason to think that custom would become the norm in the years ahead. Fiscal experts predicted surpluses as far as the eye could see.

What happened? Well, a recession and a stock market decline happened, and that meant a sudden drop in federal revenues. On top of that, Sept. 11 occurred, opening a war against terrorism that costs a lot of money. Put all these together, and it's not surprising that we're spending more than we're taking in.

But that doesn't mean it wasn't avoidable. Even before these events, Congress and the president had already abandoned the modest fiscal restraint that had helped produce the surpluses. They no longer had to worry that new spending programs or tax cuts would enlarge the deficit. There was no deficit to enlarge.

In the days of fiscal austerity, anyone advocating measures that would cut revenues or boost spending was greeted with a simple question: How can we do this when we don't have the money? Once the surpluses became routine, it was the advocates who were asking their own question: How can we not do this when we have such a big pile of cash?

As a result, spending has shot up. In 1999, President Clinton's budget estimated that in 2003, the government would spend $595 billion on discretionary programs, which include pretty much everything except entitlements (such as Social Security and Medicare) and interest payments. But in the 2003 budget proposed by President Bush, discretionary spending would amount to $789 billion. Those outlays will be 33 percent higher than we expected only three years ago.

Chris Edwards, director of fiscal policy at the Cato Institute in Washington, says that if Congress had merely held spending over the next five years to the level that was planned then, it would have nearly $1 trillion in money available between now and 2007. Instead, Congress and President Bush agreed to raise spending and cut taxes, leaving nothing in reserve in case things went wrong -- which, as it happens, they did.

There is no convincing evidence that the trend will be reversed. Just the opposite. In May, the president signed a farm bill that will boost spending by at least $83 billion over the next decade. Congress is now wrangling over adding prescription drug coverage to Medicare -- which, according to estimates, would cost anywhere from $350 billion for the House Republican version to $800 billion for the measure favored by House Democrats. It would be no great surprise if all these estimates turned out to be low.

So the National Debt Clock is going to be running at a fast pace until further notice. At last check, the debt stood at $6,132,592,680,423.69. But not for long.

Steve Chapman is a columnist for the Chicago Tribune, a Tribune Publishing newspaper. His column appears Tuesdays in The Sun.

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