TRB: The Illusionist

by Jonathan Chait | June 11, 2008

If you accuse John McCain of agreeing with George W. Bush on economics, he'll come back at you with the one big issue where he and Bush disagree: spending. McCain may (now) approve of the Bush tax cuts, but he lacerates the president for his spendthrift ways. This, McCain says, is a "fundamental" difference between him and Bush.

But you know who else disagrees with George W. Bush on spending? George W. Bush. The president has been lamenting excessive spending for years now. Bush's line is the same as McCain's: The tax cuts are swell, but "[t]hat's just one part of the equation. We've got to cut out wasteful spending."

Actually, McCain is following the pattern of not just Bush but every Republican president since Ronald Reagan. Phase One is to enact tax cuts and promise that they'll cause revenues to rise, or will cause revenues to fall (leading to spending cuts), or somehow both at once, so, either way, there's no possibility that it will lead to deficits. Phase Two is deficits. Phase Three is to blame the deficits on big-spending congressional fat cats and to issue increasingly strident threats to cut expenditures, without going so far as to identify actual programs to cut.

One of the tropes of this phase is railing against the evils of pork-barrel spending. President Bush's position is that earmarks are really bad. ("The time has come to end this practice [of congressional earmarking]," he urges. "So let us work together to reform the budget process, expose every earmark to the light of day and to a vote in Congress.") McCain's position is that earmarks are really, really bad. He likes to hold up for ridicule a federal program to study bear DNA, and he has taken to using the same language to taunt congressional appropriators ("I'm their worst nightmare") that he otherwise reserves for Hamas.

Another trope is the embrace of the line-item veto as panacea. Reagan crusaded for the line-item veto, as did George H.W. Bush. Today McCain vows, "I will seek a constitutionally valid line-item veto to end the practice [of earmarking] once and for all." When then–Vice President Bush was making the line-item veto a big issue in the 1988 campaign, economist Doug Holtz-Eakin studied state budgets over the previous 28 years. He concluded that "over time, in the hands of Republicans and Democrats alike, the line-item veto fails to cut spending." Apparently Holtz-Eakin has failed to share these findings with McCain, whom he serves as chief economics adviser.

McCain's crusade against domestic spending is a wild misdiagnosis of the problem. Most conservatives believe their main error has been to deviate from the true small-government faith, and McCain has embraced the narrative. "We were elected to reduce the size of government and enlarge the sphere of free and private initiative," he told the Republican group GOPAC. "Then we lavished money, in a time of war, on thousands of projects of dubious, if any, public value."

The audience is meant to take this to mean that the size of government has expanded under Bush largely because of pork-barrel spending or other domestic outlays. In fact, the growth of government under Bush is mostly due to higher spending on defense and homeland security, which have grown from 3.6 percent of the economy to 5.6 percent. Domestic discretionary spending (that is, programs other than entitlements) has fallen as a share of GDP, from 3.1 percent to 2.8 percent. (These numbers come from Richard Kogan of the Center on Budget and Policy Priorities.)

McCain is promising to cut taxes by $300 billion per year on top of the Bush tax cuts, which he would make permanent. In addition to this, he promises to balance the budget in his first term. When asked how he could possibly pull this off, McCain has asserted that he could eliminate all earmark spending, saving $100 billion per year.

I don't find this explanation persuasive. The first point I'd make is that $100 billion is, in fact, less than $300 billion. The second point I'd make is that McCain won't even cut $100 billion, or anywhere close. By conventional measures, earmarks only account for $18 billion per year. McCain gets his number by employing an unusually broad definition of what constitutes an earmark. McCain's definition includes things like aid to Israel and housing for members of the military that are not "pork" as the term is understood. When asked if he would eliminate those programs, he replied, "Of course not."

So we're left with a pot of money closer to $18 billion. And McCain surely won't eliminate even that. He has frequently found himself campaigning at places funded by federal earmarks and beloved by the local citizenry, and he keeps inadvertently showing how impossible it is to fulfill his promises. Last month, McCain visited a hospital in Pennsylvania and met an ovarian cancer patient who's being treated with a clinical trial program funded by an earmark. Asked if he would eliminate that program, he replied, "It's the process I object to. ... When you earmark in the middle of the night, you have no budgetary constraints."

Likewise, when pressed by NPR's Robert Siegel, McCain insisted he supports programs so long as "there's a need" and only wants "to do it through an open, honest, transparent process that is proceeded by hearings and authorization." A perfectly sound position. But, if you're merely shifting spending from earmarks to the regular budget process, then you're not saving any money.

Indeed, The Washington Post recently did a long reported story on the bear DNA project that McCain has made the butt of so many jokes. ("Three million to study the DNA of bears in Montana. Unbelievable," scoffs one McCain ad.) The Post found that the project is a tool for measuring the bear population in Glacier National Park and has a sound scientific basis. When contacted by the story's author, McCain's campaign gave a familiar reply: "Senator McCain does not question the merits of these projects; it's the process that he has a problem with." If McCain won't even commit to zeroing out his single favorite example of government waste, it's not clear that he'll save any money at all.

During the GOP primary, McCain presented his economic program as a more ideologically pure version of Bushism. Now he puts the same thing forward as a new synthesis. "It will not be enough," he says, "to simply dust off the economic policies of four, eight or twenty-eight years ago." Right; those other presidents had huge tax cuts for the rich combined with unspecified spending cuts. McCain's plan has those things and a joke about bear DNA. How heterodox!

Source URL: http://www.newrepublic.com//article/trb-the-illusionist