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 uddenly
every Democrat is a defense hawk, at least when it comes to decrying
how the tax cut has supposedly starved defense spending.
New Republic
editor Peter Beinart joins the chorus in an online piece knocking
a Weekly Standard editorial that criticized the Bush defense
shortfall but neglected to blame his tax cut for the unacceptable
parsimony.
For Beinart,
this is a major act of intellectual dishonesty. But he's not being
entirely fair to the Standard — the magazine has run two
or three pieces recently that ape the McCain line and blame the
Bush tax cut for the smaller-than-expected (and smaller-than-needed)
increases in defense spending.
But this is
neither here nor there: Did the tax cut starve defense or not? Politically,
pushing the tax cut first did make getting the necessary huge increases
in defense spending harder. But, politically, there was a little
choice. Critics like Beinart knock Bush for breaking his campaign
promise to rebuild the military, but cutting taxes was an even more
central, high-profile campaign promise. It had to go first.
The deeper
question is why a tax cut made defense spending more difficult,
and the answer is: the Democrats. Specifically, the rules governing
the surplus that will be rigidly enforced by the Democrats and have
been foolishly acquiesced to by the Republicans. These rules bear
no relation to reality, and make budgetary politics in Washington
an insane exercise.
Beinart writes
that the Bush administration is "stiffing defense because they
don't have any money." This is an extraordinary claim
in a country with a surplus that will run over $100 billion this
year. Let's back up and look at the numbers.
Initially,
the CBO estimated a roughly $280 billion surplus this year. The
tax cut — which, remember, the Democrats as well as conservatives
pushed to have front-loaded into this year — took about a $40 billion
bite out of that. Anther $30 billion bite comes from budgetary chicanery
involving shifting corporate tax revenues from this year to next.
Probably about another $60 billion or so will disappear because
of declining revenues from the slowing economy.
So, on the
Democrats' terms, the slowdown (which began under Bill Clinton)
has as much to do with supposedly starving defense as the tax cut.
But we shouldn't accept the Democrats' terms, because even after
all of this subtracting, the surplus this year is going to be about
$150 billion. $150 billion! How then is there "no money"
left over for defense? How can Beinart — amazingly — write that
the only way to increase defense spending further is to run up "a
big budget deficit"?
Well, that
has to do with crazy budget rules. Democrats and Republicans have
conspired to define most of the surplus away, with the so-called
Social Security and Medicare lock boxes.
Now, as has
been well documented, lock-boxes are meaningless. Paul Krugman of
the New York Times, the foremost lock-boxer this side of
Al Gore, gave the game away in a column yesterday when he admitted:
"It's true that when the Social Security system starts cashing
in its i.o.u.'s the federal government will have to have higher
taxes and/or lower spending than it would if it could simply renege
on its promises."
So, the lock-boxes
do nothing to "save" Social Security and Medicare, because
the surplus funds in them mainly go to paying down the debt — which
shouldn't be a high-priority goal in light of the fact that the
Federal Reserve is worried about too much of the debt being
paid down. In short, the lock-boxes are just gimmicks.
Beinart in
his piece refers us to a New Republic article by Jonathan
Chait that supposedly proves his point about the tax cut. But here's
Chait on lock-boxes: "Politicians need some artificial device
to counteract their natural tendency to shovel out surpluses through
vote-buying tax cuts and spending programs." Spending programs
like defense. There you have it: In Beinart's terms, liberals are
putting an "artificial device" over America's ability
to restore its armed forces.
So, the charge
against the tax cut just doesn't add up. Liberals are focusing on
one factor among many that has left defense spending wanting, including
the economic slowdown, the lock-boxes, and, above all, the bizarre
fetish of maintaining the surplus. Under no economic theory does
it make sense to run a federal surplus during a slowdown, or possibly
even a recession. And by no reasonable standard is Washington running
short of money. As Robert Samuelson has recently written of the
surplus revisions: "The amount left for debt repayment between
2002 and 2011 would still exceed $2 trillion. That would extinguish
about two-thirds of publicly held federal debt."
If Bush is
to be faulted, it isn't for pushing his tax cut, but for not standing
up to the budgetary insanity in Washington. Liberals, though, are
never going to back off that insanity because it's key to their
strategy in 2002, which depends on attacking a supposed "raid"
on Medicare. Defense spending is the least of their concerns.
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