The Daschle Deficits
Who to blame.

Stephen Moore is president of the Club for Growth.
January 4, 2002 8:20 a.m.

he national Democratic party wants to start a national debate over the issue of who lost the budget surplus. The latest projections from the Office of Management and Budget foresee a deficit in each of the next 3 years. Democratic pollster Mark Penn told the Washington Post that the budget deficit is "Bush's mess and he's going to have to fix it."

But if there's any single culprit for the return to deficit spending it is Mark Penn's boss, Senate Majority Leader Tom Daschle. Daschle's pro-spending and anti-tax-cut crusade over the past year has contributed mightily to the twin deficits that now befuddle Washington: the budget deficit and the economic-growth deficit.

Daschle-nomics is a version of the European welfare state creed of economic growth through government growth. At Daschle's pit-bull insistence, this past fiscal year we have seen the most gigantic inflation-adjusted increase in government spending since the days when Jimmy Carter was president. President Bush requested a pro-taxpayer budget at the start of the year. The White House suggested a 4 percent increase in discretionary-spending increases to roughly $660 billion. Instead the final tally is closer to $706 billion. It was Daschle and his Democratic-committee chairmen who took the lead role in larding the appropriation bills with fat slabs of bacon (though Republicans could hardly be heard howling in protest). Yes, it's certainly true that the Republican-controlled House of Representatives also participated in the spending spree. But in almost every instance it was Daschle and the Senate that shoveled on billions of dollars of extraneous spending.

Thanks primarily to Daschle, this year's discretionary spending will not rise by the 4 percent that Bush sought, but 8 percent, according to the latest analysis by Congressional Quarterly. (I have excluded the 3 percent spending hike that was a result of 9/11 emergency spending.) This additional federal spending cost taxpayers about $25 billion in 2001 and will cost another $30 billion in 2002.

Even that avalanche of funding was insufficient for the South Dakota majority leader. The Daschle economic-stimulus proposal would have forced taxpayers to play Santa Claus to every conceivable interest group in Washington. There was $9 billion for Amtrak, millions for Indian reservations, and hundreds of millions for Montana Bison ranchers, California cranberry growers, and other aggrieved farmers. The Senate Democratic bill would have added another $40 to $50 billion on to the bloated appropriations bills the Senate had already passed. Wisely, Bush squashed the deal with Daschle, or else the budget deficit in 2001 and 2002 would have been tens of billions of dollars larger.

Daschle's most insidious impact has not so much been to accelerate government growth as to derail economic growth policies that could get Americans back to work, return companies to profitability, and raise federal revenues to return to balanced budgets. Daschle lead the Democratic opposition to the Bush tax-relief plan back in May and though he didn't succeed in preventing a tax-cut plan from passing, he did help neuter the bill by delaying most of the rate cuts into 2005 and beyond. Now he wants that tax plan repealed even before any of the growth-stimulus measures have been permitted to take hold. He savagely attacked a plan by GOP Senators Wayne Allard and Judd Gregg to cut the capital-gains tax. He opposed the death-tax-repeal plan and was instrumental in making sure that the inheritance tax will be reinstated in 2011. He slams business tax relief as "corporate give-aways" in one breath and in the next, he sanctimoniously decries savage corporate layoffs. One moment Mr. Daschle is on the Senate floor pleading for the most expensive farm bill in U.S. history, the next he screams that George W. Bush is squandering the budget surplus. He is endowed with a Clintonesque talent for refusing to allow the observable truth ruin a good story.

It gets worse. There was no economic-stimulus bill in the last days of 2001 because Daschle rejected any tax-reduction measure that would have actually created jobs and wealth. There was no energy plan to allow the U.S. to drill in Alaska and to become more energy self-sufficient because Daschle refused to bring the president's plan up for a vote. Of course, the biggest beneficiaries of Daschle's gridlocking maneuvers are the oil ministers of the Middle East. We might as well be writing checks directly to the agents of terrorism.

Mr. Daschle either doesn't understand or doesn't much care that it is precisely the curse of slow economic growth that is the single largest factor behind the disappearing surplus. At least $100 billion of the squandered surplus from 2001 was a result of the economy downshifting from 3.5 percent growth to 1 percent growth. Without a return to the high growth path of the late 1990s, there will be no return to surpluses — at least not anytime in our lifetimes.

Daschle always speaks soothingly in TV interviews of the need for bipartisanship in Washington. But his actions belie a ferociously partisan agenda that is single-mindedly meant to destroy George W. Bush. If the cost of bringing down the president is to torpedo the U.S. economy and to keep workers unemployed, that is a price the nation's leading Democrat is evidently willing to pay.

There is, alas, some truth in the Democratic charge that Republican policies have caused the surplus to vanish into thin air. But tax cuts are not the explanation for budget deterioration. Congressional Republicans have been converted into minor league big spenders over the past several years, with each passing year since the Gingrich revolution began bringing about more obese domestic-spending budgets and more failing fiscal grades on the National Taxpayer Union budget report card.

But Washington's unrivaled big-league spender these days is Mr. Daschle. George W. Bush's guardian of the federal Treasury, Mitch Daniels has announced that "we are unlikely to return to a balanced budget before fiscal 2005." The truth is that we are unlikely to rebalance the budget until the day Tom Daschle leaves the Senate and Washington for good.