ED032196b: Clinton's New Budget: And The Winner is ... Big Government

COMMENTARY Budget and Spending

ED032196b: Clinton's New Budget: And The Winner is ... Big Government

Mar 21, 1996 3 min read

President, America Action Forum

The new budget President Clinton released this week was supposed to attack big government. Big government won.

Over seven years, President Clinton's fiscal year 1997 budget proposes $358 billion in higher spending and $232 billion in higher federal tax revenues than the balanced budget submitted to him by Congress last fall, which he vetoed. That amounts to $3,580 in higher spending and $2,320 in higher tax revenue for every household in America. So much for "the end of big government."

And what about the deficit candidate Clinton vowed to slay within five years if elected? Compared to the 1995 Balanced Budget Act, the president's new budget adds $125 billion in new red ink through the year 2002. That amounts to increasing the debt burden on every household by $1,250.

But give the president credit -- for some exceptionally brazen budget gimmickry. On paper, his fiscal year 1997 budget balances by 2002, but only by leaving the real work of deficit reduction to a future president and Congress. Consider: The White House budget purports to save nearly $600 billion over seven years, but only 40 percent of those savings would come during Clinton's second term in office, if he wins.

Simply put, it's a lot easier to balance the budget when some other president will bear the brunt of responsibility for deficit reduction. Under the 1997 Clinton budget, the first president and Congress of the next century would have to find 63 percent of the savings -- not just from political lemons like foreign aid, but from favored programs like Medicare and Medicaid.

Not only does the president leave the spending mess for someone else to clean up, he hogs popular tax cuts for himself. Under his budget, middle-class families would get a tax credit for each child, increasing in value from $300 in 1997 to $500 by 1999. But in 2002, the deadline for a balanced budget, Clinton's child tax credit vanishes. The result in that year: an $18 billion tax increase on families with children. But this doesn't worry the White House either, since some future president will have to deliver the bad news.

What's more, the president's budget offsets these tax cuts with big tax increases. All told, the White House budget contains $99.7 billion in tax cuts and $62.4 billion in tax increases. New taxes exceed the president's proposed seven-year Medicaid savings ($59 billion) and surpass by half his proposed welfare cuts ($40 billion). In the end, the net tax cut is $37 billion, or just 3 cents of every $1,000 taxpayers will send to Washington over the next seven years.

And let's not forget: This is the same president who said he would work with Congress to craft some kind of capital-gains tax cut. But not only does his budget propose no such tax cut, it calls for $4 billion in higher capital-gains taxes over the next seven years.

Meanwhile, the president's budget treats entitlement programs such as Medicaid and Medicare -- the real engines behind uncontrolled spending growth -- with kid gloves. In fact, spending on entitlements steams ahead by $370 billion, or 50 percent, over seven years. For all "mandatory" programs, spending would grow from 49 cents of every federal dollar today to 59 cents of every federal dollar in 2002.

This threatens not only the country's solvency, but the future of entitlement programs themselves. In less than 15 years, spending on entitlements and debt interest will consume nearly every dollar in the federal budget, according to the Bipartisan Commission on Entitlement Reform headed by Sen. Robert Kerry, D-Neb., and retired Sen. John Danforth, R-Mo.

The president's response? His budget proposes to slow the growth of Medicare spending by $124 billion over seven years -- not nearly enough to save the program from collapse. For Medicaid, the situation is just as bad. If nothing is done to reform the program, runaway costs could force states to raise taxes or cut spending by $146 billion. And the president's proposed "reform" -- placing a cap on how much the federal government will spend per Medicaid beneficiary -- could slap $47 billion in new costs on already cash-strapped states.

There is one area of the budget, however, where the White House does propose real change: spending on presidential "pork" gets a big boost. Clinton's budget outlines a sweeping agenda of new spending initiatives on priorities important to politically influential special-interest groups: education (teachers' unions), high technology (corporations) and the environment ("green" activists). Compared to Congress' balanced budget, the president would shovel an extra $106 billion over seven years to programs supported by such groups.

Let's face it. The president's budget -- while claiming, technically, to eliminate the deficit by 2002 -- is just more obfuscation, smoke and mirrors. It is not the end of big government, it is the embodiment of it.

Note: Scott Hodge is former Grover M. Hermann fellow in federal budgetary affairs at The Heritage Foundation, a Washington-based public policy research institute.