George Bush says he's learned his lesson. No more new taxes, and this time he really means it. In fact, he "seriously regrets ... being forced" by big-spending Democrats to raise taxes the last time. Of course "no new taxes" was always, as The Wall Street Journal put it, "the Big Lie of the great budget debate." Bush's choices were a fiscal calamity, a tax increase or spending cuts too unpopular to propose. Through months of demagoguery, he never did propose spending cuts anywhere near equal to the tax increase he supposedly wanted to avoid.
But what about No New Taxes II? Can he, without uncharacteristic fortitude, hold to this one?
The mildly irritating answer: probably yes. The recent five-year budget agreement calls for no further cuts in entitlements (Medicare, Social Security and so on). It allows other domestic spending to increase at the rate of inflation. It projects cuts in defense along the lines recommended by Sen. Sam Nunn -- and whose views on such matters are more exquisitely modulated? At the end of that time (says Robert Reischauer, director of the Congressional Budget Office) under reasonable assumptions about the economy the deficit will be down to less than $100 billion and one percent of GNP -- the lowest in 20 years.
In short, the budget crisis may actually be over. The peace dividend and the deal he now sneers at will have bailed Bush out. Of course many wise people think we should be running a government surplus, to feed our anemic savings pool. But that's merely a matter of dribbling away our prosperity in the long term. Hardly urgent.
This assumes no big surprises like a deeper-than-expected recession or a war that foreigners don't care to pay for. It assumes the growing misuse of Social Security payroll taxes to finance the rest of the government: $120 billion worth in 1995. Above all, it assumes that the government won't want to do anything new.
In this light, let us now turn to the debate said to be going on in the White House about Bush's long-sought "domestic agenda." The issue: Should he use January's State of the Union address to adopt a series of proposals tarred by their own advocates with the label, "the New Paradigm"? These include such things as tax breaks for capital gains (natch), tax breaks for "enterprise zones," tax breaks for the working poor, tax breaks for poetry that rhymes, tax breaks for a good bowl of chili and so on. Since the one area of social policy already dominated by tax breaks -- public housing -- is a disaster (hmmm ... ), for housing the Paradigmers urge fixing up apartments and selling them cheap to their tenants.
God knows George Bush is not alone in needing new ideas on social policy. Some of the "New Paradigm" ideas are interesting. And some of them might not cost much extra money: public school "choice" -- everyone's favorite -- for example. But most of them would cost a lot of money. Under the budget deal, there is no money.
There is nothing inherently conservative about these massive and costly new government programs. I would call them neo-liberalish. The self-described "conservative ideologues" -- led by Housing Secretary Jack Kemp -- who are pushing them surely lose all right to the ideological label if they won't point to other government spending they are willing to eliminate, dollar-for-dollar.
Budget director Richard Darman, Kemp's rival in this drama, is playing against type as a man of integrity. In a Nov. 16 speech Darmanesque to the point of self-parody -- with references to "Hubble-ism," "cultural now-now-ism," "no-no-ism," "yes-yes-ism," "neo-pop-media-ism," etc. -- it may have taken gall for Darman to mock the term "New Paradigm." But he did. And in the Q&A, he went further. He attacked government benefits for "the politically well-represented and numerous middle class" and said some of this money should be redirected toward the poor. For honesty, courage and radicalism, that puts Kemp's babble to shame.
Our budget dilemma is not ideological. You could lock two genuine ideologues of the left and right in a room, and without much trouble they could come up with a recipe for raising and spending government money that was both more progressive and better for economic growth than what we have now. The main problem is that neither side will take on the large chunk of the budget (approaching half) that simply amounts to writing checks to the middle class.
A Heritage Foundation broadside lists some of the less-than-vital spending that survived the supposedly arduous budget negotiations: $50,000 for seedless grape research, $15 million for a children's museum and so on. No doubt there is a lot of silly stuff still going on, though it's worth asking why the richest nation on Earth must have an utterly no-frills government budget and can't afford a children's museum if it wants one. In any event, you can't squeeze serious savings out of seedless grapes and the like. But now this bluff need not be called. Like President Bush, the Heritage Foundation can thank the hated budget deal. It's made the world safe for another few years of conservative hypocrisy.