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Ray Haynes

A Budget Primer

The federal government just came out with its budget calling for an explosion of spending, and blowing the top off of the debt limit. Small government, pro-freedom conservatives are justifiably outraged.

Newt Gingrich tells the story of one of his conversations with Ronald Reagan at the end of Reagan’s presidency. Gingrich told then President Reagan that, while he had done some amazing things as President, he had failed to bring the budget under control. Reagan responded by saying, “I conquered international communism, I leave the budget deficit to you.” Since that time, Republicans have done a poor job of controlling federal government spending. Gingrich had a balanced budget for several years while he was Speaker of the House, but when he resigned, and Speaker Hastert took over, budget deficits returned. Bush couldn’t control spending, Republican majorities during Obama’s years didn’t, and total Republican control of all the levers of government during the first two years of President Trump’s time didn’t control it either.

We had the same problem here in California. While Pete Wilson was Governor, and revenues were lean, he did a decent job of controlling spending (though he foolishly raised taxes in his first year there, he cut them in his last year, leaving tax rates lower when he left office than when he started). However, when revenues recovered, Wilson couldn’t stop the growth of government. Schwarzenegger proposed one budget where spending was restrained (only $200 million increase out of the $80 billion spent, that turned out to be only budget I voted for in 14 years in the Legislature). He then abandoned his promise to restrain spending, and proposed the largest spending increases in California history in his last 5 years as Governor.

Why does this happen? Why do those who campaign to reduce spending completely fail to do so? Wilson, Schwarzenegger, Bush and Trump all promised us they would restrain spending, but none of them did. What is it? Republican controlled Congresses promised the same thing, and none of them kept that promise. In some cases, the Republican controlled Congress is a bigger spender than the Democrats. How does this happen?

First is the reality of the process. Quite frankly, most of the information on which the budget process is based is controlled by the permanent bureaucracy, and that bureaucracy obtains its power and its wealth from higher spending. The political leadership, which is supposed to control the bureaucracy, is transitory. Appointed Secretaries, Assistant Secretaries, Deputy Secretaries, Directors, and the like are only in office for a short time. Bureaucrats are forever. Even if one political appointee tries to take control of the budget process and cut spending, the bureaucracy either butchers him or her in the media, or simply waits them out. The next appointee is just as likely to capitulate to the bureaucracy as try to control it. On balance, the bureaucracy wins because they are always there. Politicians come and go.

Second, the negotiations on the budget always follow the same pattern. Republicans want more roads and a stronger public safety presence (whether it be the military at the federal level or police and fire in the states), and push for more spending on these items. Democrats want higher spending on education or more transfer or public subsidy payments (no matter how it is couched, as food stamps, TANF, social security, Medicaid or Medicare) for those the Dems say “need the help.” The compromise? Spend more on everything. The political types cater to their supporters, that is, the “military-industrial” complex or government employee unions, and the taxpayers pick up the bill.

We are selling our children’s future. It can be controlled. My last article on this showed how the state has increased spending over the last 10 years. The next will be on how to change the process to bring the government under control. It is the challenge of my generation, that is, to put the structure in place to control an out of control government. It will hurt, but the alternative, that is, allowing the government and bureaucracy to remain out of control, will hurt a lot worse.