Weekly Standard

September 10, 2001/Vol 6, Number 48 The New Stupid Party The Gephardt Democrats' slow, Social Security-induced suicide. By David Brooks

Long ago, the Republican party was nicknamed the Stupid Party, and at times Republicans have done their best to live up to the label. But after the past week, it is perhaps time to acknowledge that when it comes to brainless, self-destructive behavior, the Democratic party has achieved a level of excellence that will be unsurpassed in our lifetime.

Last week the Congressional Budget Office came out with a budget forecast. The report immediately got submerged in a chatterstorm about whether Congress or the White House would dip into something called the Social Security trust fund, but the essential facts are these: The CBO economists estimated that the federal government will run a surplus of about $150 billion in 2001. That's a lower surplus than the CBO estimated a few months ago, before the economic slowdown, the Bush tax cut, and the recent congressional spending splurge. But even in these adverse circumstances, the surplus is still projected to grow to about $200 billion a year in 2004 and close to $300 billion a year by 2006.

The Democratic party proceeded to work itself up into a collective aneurysm. Dick Gephardt—who, when given the chance to play the demagogue, never goes halfway—said that the United States now faces "an alarming fiscal crisis." Democratic national chairman Terry McAuliffe said on Face the Nation that it had taken Bill Clinton eight years to build up the surplus, but Bush was able to "blow it in eight months." Other Democrats rose up en masse to declare that the Bush administration was going to bankrupt Social Security/the federal government/western civilization because the administration was going to have to "raid the Social Security trust fund."

Now the press, which loves a crisis, no matter how bogus, played along. The graphic artists at USA Today ran a front page chart purporting to show that the federal surplus is now gone. It was left to a few more sophisticated writers, like former Clinton Office of Management and Budget staffer Matthew Miller, to remind everyone that the trust fund is an accounting fiction. When the government takes in surplus money, it doesn't matter whether you call it a Social Security surplus or a Medicare surplus or a beer bash trust fund, it all gets used the same way: to pay down outstanding debt. What matters, as far as the economy or the federal government's long-term solvency is concerned, is the government's total indebtedness. By that perspective, especially compared with the budgets of the past 20 years, America's fiscal house is in pretty decent shape.

One could have a rational argument about all of this. Bush critics could point out that in the years before the first baby boomer retirements, you want to see the government retiring as much debt as possible. Bush defenders could then respond that in shaky economic times, you want to stimulate the economy with a tax cut, even if it means lower surpluses in the short term, because a revived economy will eventually produce more revenue. The critics could then come back by pointing out that the Bush tax cut is poorly designed for that sort of stimulus.

But that would be a reasonable debate.

Suffering from Post-Florida Stress Disorder, the leaders of the Democratic party are in no condition for that sort of dialogue. They apparently feel some need to prove that Bush is evil and that his tax cut is the worst crime perpetrated this side of Jack the Ripper. So the Democrats launched a war of bar charts, all designed to show that the Bush administration had blown the deficit in a flurry of greed.

If you closed your eyes last week and listened to the hysterical charges coming from Democratic mouths, and to the sound of the shuffling press conference props, you might have thought that Ross Perot had taken over the Democratic party. But even if he was a little wacky, Perot at least hyperventilated about deficits when the U.S. government was actually running them. Dick Gephardt et al. are hyperventilating about fiscal rectitude in a time of surpluses.

And in working themselves up into a Perotvian lather, the Democrats have emerged as rabid budget hawks. Surpluses are sacred. The higher the better. Anything that reduces the size of the surplus is an immoral money grab. The ranking Democrat on the House Budget committee, John Spratt, actually held a press conference in which he said that the purpose of the budget process is to keep the fiscal balances of the country healthy. The party that once believed that the purpose of government is to help people now believes that the purpose of the people is to help the government hoard cash. The party that once believed in Keynesian pump-priming has now signed on to an agenda that includes building up massive surpluses during a possible recession.

But the transformation goes deeper. This is a party that once believed in activist government. Now, in full Perot mode, it has transmogrified into a party that believes in green eyeshade accounting. Far from protecting the Social Security trust fund and the Medicare trust fund, the Democrats should, if they were rational, see these entitlement programs as mortal threats to everything they once held dear. Again, a little simple math. In 1970, when liberal programs were growing under both Democratic and Republican administrations, the cost of Social Security and Medicare together was equal to 3.7 percent of GDP. By 2010, the cost of these two programs is expected to be somewhere around 9 percent of GDP. By 2030, these entitlements will, if unreformed, consume about 13 percent of GDP.

In other words, these entitlement programs are growing so fast, they are consuming larger and larger shares of the federal budget. Everything liberals hold dear—education spending, anti-poverty spending, subsidies for offensive art—is being subjected to a steady squeeze by these rapacious entitlements. When entitlement spending rises, discretionary spending, as a percentage of the total budget and the total economy, shrinks. Again, beyond the bogus tempest about dipping into the Social Security trust fund, the CBO report contained the essential data: Non-defense discretionary spending as a percentage of GDP is now at the same level it was in the early '60s. By the end of the decade, the CBO economists project it will constitute the same share of the economy as it did before World War II. And this comes after a few years of relatively generous spending, when discretionary programs grew much faster than the inflation rate.

Thus we confront the liberal nightmare. Over the next 40 years, as the baby boomers retire, entitlement spending surges. There is scarce money left over for any new government programs. Discretionary spending shrinks and shrinks in significance. The government becomes nothing more than a big check-writing machine, which is so boring that pundits will have to sit around hoping Gary Condit's grandchild runs for Congress so they will have something to talk about.

Republicans of a libertarian bent can feel relatively sanguine about this scenario. Milton Friedman predicted it several decades ago. A government that does nothing but send out entitlement checks is relatively benign. But Democrats should be horrified by the prospect. This is a world in which liberalism ceases to be a progressive force. Unable to launch new initiatives, Democrats will sit around in their musty studies with portraits of Harry Hopkins on the wall and blunderbusses on their knees, in case anybody ever mentions Social Security reform.

A few smart liberals have shot off warning flares. Robert Kuttner wondered in the Washington Post why the spirit of Calvin Coolidge seems to have taken over the Democratic party. In the Los Angeles Times, Robert Reich wrote a piece called "Democrats are Falling Into the Austerity Trap." But these liberal voices did not move the party elites. And this revealed a striking intellectual hollowness at the core of the Gephardt/McAuliffe Democratic party. It no longer cares much about using government to foster economic equality, the way FDR's or LBJ's Democratic party did. Instead, in hedgehog-like fashion, it gets its juices going for only one purpose: protecting Social Security and Medicare from the perfidious Republicans.

The Democrats are good at protecting these programs. They are good at scaring grannies about the imminent threat to that monthly check. They've got big cannons that don't move, but they are powerful. If a Republican talks about reforming Social Security, and thus ventures into the cannons' line of fire, the Democrats let him have it. If a Republican even walks down the street that leads to the driveway that goes up to the house that contains the Social Security lockbox, the Democrats fire the guns. It's the only weapon they have, they feel, so they fire it every chance they get.

But if they succeed in protecting these entitlements as currently constituted, they will end up creating a government with little money for discretionary spending and thus, with little discretion. It will be a big government but an immobilized one, unable to respond to any problem that requires spending. The just and the unjust programs will both be squeezed—defense as well as mohair subsidies.

The American people are cynical about and detached from the federal government. They may want a government with no discretion, and hence, no politics. Let's just hope nothing happens over the next four decades or so that requires a swift and active national response.

-- Anonymous, September 04, 2001