The Blog

It's Still the Economy, Stupid

From entitlements to energy to trade, Clinton has left a lot of unfinished business

11:00 PM, Jan 21, 2001 • By IRWIN M. STELZER
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THE FULL PLATE for which Bill Clinton is famous usually consists of a jumbo order of McDonald's fries. The full plate that he has left for George W. Bush may prove less easily digestible.


The new president's first order of business will be "the economy, stupid," probably bringing the first smile to the face of James Carville since he found that the Constitution does indeed include a role for the Supreme Court. Bush surely knows that if he can't head off a serious recession, the Republicans will pay the price in 2002 and 2004, just as his father did in 1992. Contending that he inherited the mess from Clinton won't wash: Voters will remember only that times were sweet under Clinton-Gore and turned sour under Bush-Cheney.


Which brings us to the main plank in the Bush platform -- a large tax cut. Never mind the precise amount, or how the benefits will be distributed. Those are details that will be hammered out in negotiations with the Democrats, who would rather spend the money than give it back to those who earned it, and with the Republicans in Congress, who would rather dole out "targeted benefits" to married couples, or to inheritors of substantial wealth, than go for a large, across-the-board cut. Al Gore should permit himself a wry smile when he hears House speaker Dennis Hastert urging caution and "targeting" on the new president, and attempting to take credit for the increased spending on education reflected in the new budget.


Bush's tax cut plan had its roots in the sensible notion that taxpayers deserve some relief from a burden that has risen steadily as a share of national income, and that unless that relief is granted, the bipartisan coalition to spend and spend would get its grubby mitts on the surplus, and scatter it across congressional districts and various constituencies.


Alas, the spenders beat Bush to the trough. Congressional Republicans united with Bill Clinton and congressional Democrats to approve a massive budget that includes record spending for education and social services, and about $ 1 billion in "economic development initiatives," better known in the trade as "pork" (or whatever meat from reindeer is called; Alaska's Reindeer Herders Association got $ 176,000). The final total exceeded Congress's own spending ceilings by $ 37 billion and President Clinton's original spending proposal by some $ 15 billion. Washington spendthrifts have thus already disposed of perhaps 40 percent of the projected surplus.


Still, the Bushies say there should be a large enough surplus -- almost $ 5 trillion over the next decade, according to Clinton -- to give room for tax relief. Really? Put aside the accuracy of budget forecasts notorious for their past inaccuracy. The economic slowdown will probably lead to as many and as large downward revisions in the estimates of the surplus as we have seen upward revisions during the economic expansion. Bush's own spending plans, including substantial increases for the starved military, $ 50 billion for universal preschool education, some form of prescription drug benefit, and a program to encourage fatherhood (cheap, at $ 2.9 billion), will sop up more. Then there are the ongoing spending commitments signed off on by Clinton. These will extend beyond this year's budget, as far ahead as the budgeteer's eye can see, and include such difficult-to-repeal items as the new lifetime health care program for military retirees and their families. Probable cost of this one item: $ 60 billion over the next ten years.


And then, sitting in the counting room, are the two 800-pound elephants everyone is pretending not to notice -- the pending deficits in the Social Security and health care programs. If the government used any sensible accounting scheme that gave weight to future liabilities, it would have to have huge reserves in these pay-as-you go accounts to provide for the retirement of the baby boomers and the mounting costs of their medical care. Or it would be planning to fund these obligations with large tax increases when the bills come due. It is doing neither. It is acting rather like the householder who feels really rich for three weeks because he refuses to recognize that a mortgage payment is coming due at the end of the month.