Liberal Defense Hawks
Suddenly every Democrat is a defense hawk.

July 26, 2001 2:30 p.m.

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.