Deficit hawk Snow faces a tough job of explaining

April 21, 2004|By JAY HANCOCK

TREASURY Secretary John W. Snow must be frantic. The stingy, self-described "deficit hawk" has been made to look ridiculous by his extravagant president, so he's seeking respect from the only people who'll give it: a bunch of fifth-graders.

It's National Teach Children to Save Day. Tomorrow, Snow decamps to a New York City grade school to - I quote the Treasury - "lead a lesson on the importance of saving for the future and how budgeting can help individuals achieve their goals."

Think of it as a cry for help.

Snow is the man who once ran a campaign at the Business Roundtable to cut the federal deficit. In 1995, he called the deficit "a huge Damocles sword that hangs over us." That year the deficit was $164 billion. Now, under President Bush, his boss, the deficit approaches $500 billion.

What does Snow think of that? He can't say, or he'll get fired like his Treasury predecessor, Paul O'Neill. But when you can't communicate directly, you deliver your message secondhand. Rostand's Cyrano speaks through a friend. Shakespeare's Hamlet stages a play. Colin Powell talks anonymously to Bob Woodward. Snow poses as schoolmarm and delivers a "duh" message about financial responsibility that would prompt an uproar if he said it to a grown-up politician.

"Abby Hayes is sick of using her sister's battered old rollerblades," reads the promo for a book sold by the American Bankers Association, the sponsor of Teach Children to Save Day. "She is determined to buy herself a brand new pair, with purple wheels. But no matter how much money she earns doing odd jobs, she always seems to spend her profits on other things. Will Abby ever stick to a plan to save her money?"

Will George ever get his budget under control? Can Washington avoid inflating the dollar into smithereens? Will the Snow show catch the conscience of the president?

Nah. Bush seems so oblivious to fiscal facts that even Wall Street and conservative economists are horrified. "This administration has lost its claim to being conservative," says Veronique de Rugy, a scholar at the conservative American Enterprise Institute and the libertarian Cato Institute. Bush's claim of fiscal responsibility, she says, "is total nonsense."

By de Rugy's analysis, he is the most profligate president in more than three decades, a bigger spender on discretionary items than even Democrats Bill Clinton and Jimmy Carter. Since 1964, only Lyndon B. Johnson, who presided over the inauguration of the Great Society social programs and the buildup of the Vietnam War, increased optional spending more.

The Bush White House proffers several excuses, the first of which is that old entitlement programs such as Medicare, over which it has no control, caused the deficits.

But de Rugy shows that Bush's increases for farms, energy, transportation, education, security and all other nonentitlement items exceeded 8 percent in each of the last three years - higher (adjusted for inflation) than at any time since 1967, which marked Johnson's most lavish budget.

Well, it's the war, the administration says. Terrorism caused the deficits.

Not so, de Rugy counters. Nondefense, nonentitlement spending will have increased by an inflation-adjusted 25 percent by the end of Bush's first term - again, higher than in the first term of any president since Johnson. And much of the increased outlays for homeland security are Congress-inspired porkfests that have nothing to do with defense, she says.

Well, it must be the economy, the administration says, not spending. Poor business conditions depressed tax collections, and that's why there's a deficit.

Nope. Last month, the nonpartisan Congressional Budget Office estimated that economic weakness caused only 6 percent of the deficit.

The real reasons for the budget shortfall, of course, were the large spending boosts combined with huge tax cuts. Each might have been defensible alone. Combined they are a disaster.

Our government owes $4 trillion to Treasury bondholders. The Congressional Budget Office expects that to exceed $6.5 trillion in the next decade. Having no national savings, we desperately depend on foreign lenders. And retiring baby boomers are about to present this country with perhaps the biggest fiscal challenge in history.

After Snow teaches the New York kids tomorrow, he'll head downtown to the Waldorf-Astoria to address the Bond Market Association. Those guys will be a tougher sell.

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