Opinion - The Republican spending binge

By Raymond J. Keating

chief economist

Small Business Survival Committee

Washington, D.C.

I used to think that Republicans were interested in restraining - indeed, even reducing - the size of government. How naïve could I be?

Remember when President Bill Clinton, a Democrat, was in the White House, and Democrats controlled both houses of Congress? Those Democrats controlled the budget for fiscal years 1994 and 1995, and in each of those years total outlays increased by 3.7 percent. Meanwhile, inflation (as measured by the GDP price deflator) averaged 2.2 percent for 1994 and 1995. Not exactly a great spending record, what with the rise in spending far outstripping the inflation rate.

Republicans took control of Congress in the 1994 elections. So along with Clinton in the White House, from 1996 to 2001, outlays increased at an average annual rate 3.5 percent, while inflation averaged 1.8 percent. That record was not all that different from the couple of years under complete Democrat control.

The 2000 election brought Republican George W. Bush into the White House, the House remained in Republican hands, but in 2001, with one senator switching allegiances, the Democrats narrowly held the Senate. Spending for 2002 leapt by 7.9 percent, while inflation was running at 1.1 percent, and for 2003, outlays again are projected to jump by 7.9 percent, with inflation expected around 2 percent. Yikes!

Now, of course, there have been some extenuating circumstances at work in recent years, i.e., the terrorist attacks of September 11, 2001, and the following wars in Afghanistan and Iraq. But what if we factor out defense spending? Non-defense spending saw sizable leaps under the Democrats in 1993 and 1994 - at an annual average rate of 5.5 percent. Under a Democrat White House and Republican Congress from 1996 to 2001, non-defense spending slowed to an average rate of 3.8 percent, though still well ahead of inflation. However, in 2002 and 2003, the increase in non-defense outlays will have jumped by an average annual rate of at least 6.4 percent.

Even with Republicans now in control of the Congress and the White House, President Bush proposed a 2004 budget that would see total outlays increase by 4.2 percent, including a rise of 4.2 percent in non-defense spending - that's roughly double the inflation rate. But the news gets worse, after a Republican Congress got its hands on the budget, the Congressional Budget Office now projects that outlays in 2004 will rise by 6.2 percent - that's about triple the inflation rate.

President Bush and his fellow Republicans have done some very good work on the tax side of the federal budget. In particular, reductions in personal income, capital gains and dividend tax rates are providing a much-needed boost to the economy.

However, when it comes to spending, the Republican-controlled White House and Congress have failed miserably. In fact, judging by their record so far, the current Republicans in power are turning out to be bigger spenders than the Democrats. So, who exactly are taxpayers supposed to rely upon to keep the size and scope of government under control?