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CRISIS? WHAT CRISIS? GEORGE BUSH'S NEVER-ENDING DOMESTIC BUDGET BUILD-UP

Government Miscellaneous
Source: The Cato Institute
Published: Policy Analysis No. 173 -- June 19, 1992 Author: Stephen Moore
Posted on 01/26/2000 13:56:33 PST by Willie Green

For education and discussion only. Not for commercial use.

Stephen Moore is director of fiscal policy studies at the Cato Institute.

Executive Summary

Unfortunately, if there is one thing the Bush adminis-tration does not need to be prodded to do, it is to spend and borrow money. Bush has been increasing real federal domestic expenditures by 8.7 percent per year, a faster rate of growth than under any previous president since John F. Kennedy.(2) Since 1989 Bush has also run up bigger deficits, both in dollars and as a percentage of GDP, than any other post-World War II president. If massive growth of government and multi-billion-dollar deficits were the solution to America's eco-nomic problems, the nation would be basking in unprecedented prosperity, and Bush would be widely acclaimed as an economic miracle worker.

In February 1991 a Cato Institute Policy Analysis first called attention to the rapid build-up of domestic spending during Bush's first two years in office.(3) This study re-veals evidence that there had been virtually no slowdown in Bush's domestic spending spree. In fiscal year 1992 federal outlays will rise to $1.5 trillion, 8 percent above infla-tion. Federal spending will consume a post-World War II record 25.2 percent of gross domestic product this year. In other words, the 1990 budget agreement and the $200 billion tax increase have done nothing to slow the Bush spending binge. If anything, they have accelerated it. Ten damning details of Bush's fiscal policy mismanagement follow.

1. From the time of Bush's inauguration through the end of this year the domestic portion of U.S. government spending, after accounting for inflation, will have risen by $175 billion. That is a 28 percent real ex-pansion in just three years. Excluding the cost of the savings-and-loan bailout, domestic programs are still up roughly 24 percent in real terms.

2. No president in the last quarter century has in-creased spending by so much so rapidly. The 8.7 per-cent rate of annual increase in the real domestic bud-get under Bush earns him the distinction of being the biggest spender to occupy the Oval Office since John Kennedy. This administration is spending at twice the rate Jimmy Carter's did. (Ironically, vice presiden-tial candidate Bush helped skewer Carter as a liberal big spender in 1980.)

3. Costs of domestic programs are rising almost across the board. Since 1989 appropriations have risen 48 percent for the Departments of Commerce and State, 22.5 percent for the Department of Energy, 36 percent for the Department of Housing and Urban Development, and 32 percent for the Department of Transportation. Appro-priations for the Departments of Labor and Health and Human Services have increased by an astronomical 63 percent.

4. The big lie in Washington in the 1990s is that the federal government is underinvesting in infrastructure, education, children's programs, and other war-on-pover-ty-programs. Since 1989 real spending has risen 8 percent for education, 11 percent for highways, 58 percent for Head Start, 46 percent for food stamps, and 18 percent for child nutrition. In short, Bush has been a generous benefactor of the Great Society.

5. The Bush administration and the 102nd Congress have even increased the budgets for programs that have the lowest priority. The budgets of 30 major programs that the Reagan administration had proposed terminating in the early 1980s--including the Small Business Adminis-tration, the Export-Import Bank, the Job Corps, and the Corporation for Public Broadcasting--will have risen by an average of 44 percent through 1993. Bush has re-quested many of those increases.

6. It is not true that Bush is an innocent victim of a Democratic-controlled Congress. Without question, this is a free-spending Congress; however, Bush has been requesting big budget increases. His latest budget (for FY 1993) requests spending increases of more than 10 percent for the Departments of Education, Housing and Urban Development, Justice, State, and the Trea-sury. The Bush budget would increase spending for virtually every domestic purpose above the inflation rate; only defense spending would fall.

7. In three years Bush has not vetoed a single spending bill sent to him by the Democratic Congress because it cost too much. Clearly, the spending epidemic in Wash-ington begins in the White House.

8. Federal borrowing continues to skyrocket under Bush, reversing the progress that had been made in deficit reduction from 1986 to 1989. When Bush became presi-dent, the Gramm-Rudman-Hollings path was supposed to bring the federal deficit down to $64 billion in 1991, $28 billion in 1992, and $0 in 1993. Instead, the deficit was $280 billion in 1991, and it will be $400 billion in 1992 and $350 billion in 1993.

9. By veering off the Gramm-Rudman-Hollings track and then abandoning that spending control mechanism alto-gether in 1990, Bush has increased the federal debt by $1 trillion over what it should have been. As a re-sult, the federal debt will reach $4 trillion this year.

10. The Democrats' standard line--that large deficits are a result of the Reagan defense build-up and tax cuts--no longer has even a glimmer of truth to substan-tiate it. Defense spending as a share of GDP is now lower than it was before Reagan became president, and tax revenues as a share of GDP are exactly at their 1979 level of 19 percent. The increase in the deficit in the 1990s has been due to Bush's raising domestic outlays from 13 to 16.5 percent of GDP in three years.

Clearly, the key to restoring U.S. prosperity is not some scheme to spend more federal money and drive the na-tional debt up further into the stratosphere. Bush has tried that strategy, and it has produced woeful results. The road to prosperity is to aggressively, and rapidly, cut government spending and substantially reduce the tax burden on American businesses and workers. In short, economic revival depends foremost on shifting "Bushonomics" into reverse.

Budget Growth under George Bush

Under Bush, domestic spending, adjusted for inflation, rose by nearly 10 percent through 1991. Even excluding the cost of the savings-and-loan bailout, the real rate of in-crease in domestic spending under Bush was more than 6 per-cent. That was a far cry from the 3 percent "flexible freeze" budget strategy he promised in his 1988 campaign.

When first confronted with evidence of profligate spending, the White House offered reassurance that progress on the budget was right around the corner.(4) The administra-tion's optimism was based on two factors. First, the $150 billion savings-and-loan bailout would end in 1992, and when the Resolution Trust Corporation began to sell off the ac-quired properties and other assets of the failed thrifts thereafter, the government's balance sheet would further improve. Second, Office of Management and Budget director Richard Darman insisted that the 1990 budget deal's tight spending caps would usher in a new era of budget austerity in Washington.

We can now conclude with relative certainty that fiscal progress is not right around the corner. Federal spending continued to accelerate far ahead of predictions in 1991, and it will continue to surge in 1992 and 1993. Table 1 shows that this year total real federal outlays will in-crease by more than $100 billion, or 8.2 percent above in-flation. Spending as a share of GDP will rise to 25.2 per-cent--a peacetime record. Figure 1 shows that it took Rea-gan eight years to reduce federal spending from 24 to 22

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1 Posted on 01/26/2000 13:56:33 PST by Willie Green (Go Pat Go!!!)
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This is a 1992 article. What's the point?

2 Posted on 01/26/2000 14:03:38 PST by Okiereddust
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Most of the domestic spending skyrocketed thanks to the Dumbasscrats in Congress.

Bush Sr. vetoed many of these pork-laden bills, only to be ridiculed as "an extremist" and "uncaring" (insert your favorite liberal slogan here________)

Sorry, Willie Green, I despise the Bushes as much as you do, but he's not to blame here. Congress controls the nation's wallet, it is they who come up with pork-barrel bills and programs.

Even Reagan had to compromise with the Dumbasscrats so he could spend money on rebuilding the nation's military.

FReecerely Yours,

3 Posted on 01/26/2000 14:06:07 PST by ServesURight
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Willie. You're trying the "sins-of-the-father" angle, aren't you? Surely you can go back and find articles about Richard Nixon's socialist wage-and-price controls and budget-busting liberal domestic policies.

Oh, I forgot. Buchanan worked for Nixon, didn't he?

Never mind.

4 Posted on 01/26/2000 14:11:30 PST by sinkspur
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This is a 1992 article. What's the point?

Like father, like son. I don't think we should forget the budget deficits and bank failures.

Year	President	National Debt (billion $)	Budget Deficit (billion $)	Trade Deficit (billion $)	Bank Failures	Inflation (CPI)	Unemployment
1980	Carter	909	-74	-20	22	12.5	7.1
1981	Reagan	995	-80	-22	40	8.9	7.6
1982	Reagan	1,137	-128	-28	119	3.8	9.7
1983	Reagan	1,372	-208	-52	99	3.8	9.6
1984	Reagan	1,565	-185	-107	106	3.9	7.5
1985	Reagan	1,818	-212	-118	180	3.8	7.2
1986	Reagan	2,121	-221	-138	204	1.1	7.0
1987	Reagan	2,346	-150	-152	262	4.4	6.2
1988	Reagan	2,601	-155	-119	470	4.4	5.5
1989	Bush	2,868	-152	-109	534	4.6	5.3
1990	Bush	3,207	-221	-102	382	6.1	5.6
1991	Bush	3,598	-269	-67	271	3.1	6.8
1992	Bush	4,002	-290	-85	181	2.9	7.5
1993	Klinton	4,351	-255	-116	50	2.7	6.9
1994	Klinton	4,644	-203	-151	15	2.7	6.1
1995	Klinton	4,921	-164	-159	8	2.5	5.6
1996	Klinton	5,182	-107	-170	6	3.3	5.4
1997	Klinton	5,370	-22	-181	1	1.7	4.9
1998	Klinton	5,479	69	-230	3	1.6	4.5
1999	Klinton	estimated 5,615	estimated 79	estimated -303	8	2.7	4.3

5 Posted on 01/26/2000 14:13:29 PST by Willie Green (Go Pat Go!!!)
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Willie. You're trying the "sins-of-the-father" angle, aren't you?

I've had the urge ever since Dubya shook hands with Keating 5 sleazeball McCain and promised no "negative" campaigning. My bet is that was a "people who live in glass houses..." type of deal.

6 Posted on 01/26/2000 14:20:09 PST by Willie Green (Go Pat Go!!!)
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Got to love these on-budget / off-budget games. Our national debt goes from $5,479 billion up to $5,615 billion and yet we have a surplus of $79 billion? Who said numbers don't lie.

7 Posted on 01/26/2000 14:22:46 PST by Jeff F
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Most of the domestic spending skyrocketed thanks to the Dumbasscrats in Congress.

Bush Sr. vetoed many of these pork-laden bills, only to be ridiculed as "an extremist" and "uncaring"

Not according to #6 and #7 in the article above.

8 Posted on 01/26/2000 14:35:36 PST by Willie Green (Go Pat Go!!!)
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"Like father, like son."

Well, we ceratainly know a lot about two of the people in your family......shallow gene pool?

9 Posted on 01/26/2000 14:41:49 PST by dons (Smartaleck)
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"Who said numbers don't lie."

It's a matter of people knowing the difference between a deficit and a debt. Apparently you don't.

10 Posted on 01/26/2000 14:46:01 PST by dons (Smartaleck)
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It's a matter of people knowing the difference between a deficit and a debt. Apparently you don't.

Kind of snippy of you particularly in light of the fact that you are totally missing the point, and don't seem to have a command of the facts.

Please re-read my post. You will notice that I direct the reader's attention to on-budget verses off-budget computations of the deficit. It is the essentially dishonest formulation of the latter that is the basis of my ironic last sentence. If you don't understand the difference between the two, I will be happy to explain it to you.

11 Posted on 01/26/2000 15:20:21 PST by Jeff F
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"Kind of snippy of you particularly in light of the fact that you are totally missing the point"

Not hardly. You can "catagoize" the numbers anyway you want but the math's the same. There's a surplus or a deficit in a given time period or there isn't.....the deficit refers to one year when refering to gov't budget.

12 Posted on 01/26/2000 16:48:10 PST by dons
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Oh I agree. "Compassionate conservatism" hasn't changed much from Sr. to Jr. It's a cerebrally empty concept, to people who hate any sort of serious conservative pro-American thought.

All it realy amounts to in a long run is using conservative policies to finance liberal compassion, and let liberals take credit for the benefits while avoiding the responsibilities.

13 Posted on 01/27/2000 00:02:43 PST by Okiereddust
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