Mysterious Disappearance of the Republican Deficit Hawks

David M. Fine | May 19, 2003

President Clinton, a Democrat, pursued an 8-year policy of deficit reduction. Now, with big deficits forecast for this year and next, President George W. Bush has thrown that policy out of the window. What happened to Republican balanced budget orthodoxy? Or were Republicans merely brandishing their deficit-cutting swords during the Clinton years as a political weapon?

Let's take a look at the last series of Republican administrations. During the Reagan administration, with the help of Congress, the U.S. debt increased by $1.2 trillion. Then, under the first Bush presidency, it grew by another $900 billion. From 1980 until 1993 the ratio of the nation's debt to the nation's Gross Domestic Product had grown from 26.7 percent to 50 percent.

Just in time for Bill Clinton to ascend to office with quixotic ideas about domestic policy investments that would help average Americans get jobs, buy houses, and make ends meet.

Suddenly, Republicans found deficit-cutting religion. They incessantly fulminated about how the deficit had to be eliminated, how we were burdening future generations with too much government debt. In the opposition, Republicans became purist fiscal conservatives and committed deficit hawks. Clinton bought the "we need to cut the deficit" ploy hook, line, and sinker. A quote from a February 8, 1994 Boston Globe story is instructive.

"Clinton put mass transit, public housing and low-income heating assistance programs on his list of proposed trims. The moves angered liberals…yet failed to elicit much praise from conservatives who groused that $176 billion in new debt was still too much to add to the existing $4.6 trillion national debt."

Today the national debt stands at $6.46 Trillion and yet most Republicans are mute about the coming 2003 deficit of $347 billion and the $385 billion projected for 2004 (numbers from the Center on Budget and Policy Priorities). Where are the deficit hawks now?

The truth is, they hardly exist. The deficit-cutting pressure heaped on Clinton is looking more like a Trojan horse for nixing liberal government programs than genuine concern for fiscal responsibility. Now that Republicans control all branches of government, deficits be damned.

There are a few pols truly concerned about containing deficit spending, like Senator Olympia Snowe (R -Maine), and she got pummeled by her own party with television issue-ads criticizing her opposition to the Bush tax cut.

The Bush Jr. presidency appears to be a sequel to the Reagan years. Gone is the evil empire; here, likely to stay, is the evil Al-Qaeda. Back are skyrocketing expenditures on defense, the budget providing $400.5 billion for 2004. Back are the tax cuts for the rich, as well as some for the middle class too. And back are the deficits. It's as if front-bench Republicans have found a cool new platinum credit card with an elephant on it.

The next act of this play will feature the Republican epiphany that the deficit has somehow mysteriously ballooned behind their backs, and they will quickly jump back on the balance-the-budget bandwagon.

With the War on Terror and the remaining axis of evil inductees an ever-constant threat, and politicians afraid of appearing weak on defense, the bloated military budget will not be on the chopping block. Instead, Republicans will insist we have to take bites out of Social Security, Medicare, Medicaid, and slash many other programs that are good for America. As in 1995, it will become their excuse for cutting just about anything they don't like.

Contrary to the demagoguery, there's nothing inherently bad about deficits. The U.S. Government has been borrowing more and more for the past thirty years and the economy has performed quite well, on average. Even long-term interest rates, which conservatives often claim get pushed up by government borrowing, haven't been this low since the 1960s. Enough of the national debt is held domestically - about 70 percent - that when the government pays on it, the money gets circulated back into the American economy. America is wealthy enough and its economy solid enough that it can afford to borrow.

Some Democrats have adopted the "cut the deficit" strategy today, playing the same game the Republicans began. It is ironic, for Democrats have long ascribed to the Keynesian notion that running deficits during a recession to help stimulate a recovery is wise policy. Given the rising unemployment and stalled economy, it's not the Bush deficits the Dems should be attacking - but how they're being spent.

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