This nation is going to rebuild a major city — New Orleans — and that won't come cheap. Some say the federal government's contribution alone could end up being $200 billion, and some also say there's just one way to come up with the money: Raise taxes.
That's wrong, even though worries about the federal deficit are right. The shortfall this fiscal year is put at $314 billion, and analysts have estimated the amount could go up by another $200 billion in several years when you throw in the costs of resurrecting the Gulf Coast from Katrina's devastation. The borrowing to finance such a deficit can increase interest rates to ill economic effect, but taxes are not the answer.
Why not? Because taxes take money out of the private economy just as surely as borrowing does, and the private economy is what produces the wealth that provides decent housing for Americans, decent education, decent health care. The answer is to cut government spending, which does not mean what the liberals will tell you it means. As analyses by scholars at the Cato Institute and the Heritage Foundation show, it does not mean you have to ditch programs crucial for helping those most in need.
You can start, in fact, with corporate welfare, a favorite target of the liberals as well as of many principled conservatives. The point is not to raise taxes on businesses generally, which would be counterproductive, but to end the most blatantly unwarranted subsidies of the kind found in the recent energy bill. We're talking billions here, folks. Billions and billions.
You can then move to pork, which used to be a specialty of Democrats until Republicans took over both houses in Congress. Now the Republicans are champs, scouting their districts and states for any possible project that could win them support at the expense of the national treasury. Drop these projects that either are not needed or should be paid for by other sources, and you save a bundle, and then you can turn to some other projects that are in fact the province of the federal government and are needed but not that badly. How about at least postponing some of them, too, so that we can serve the Katrina victims without wrecking the economy?
Some say President Bush will have to give up his hopes of Social Security reform now that he has this new priority, but in fact it is now more imperative than ever to reform Social Security and, at the same time, Medicare. Absent a fundamental restructuring, these programs are going to suck money from every other existing program as baby boomers retire. Bush may have to pass on individual retirement accounts that would kick in anytime soon, but not on another idea of giving the largest increases in Social Security benefits to those with the least resources.
Much of what the government does is waste, not just waste in the sense of failing to make every dollar count, but waste in the sense of utter futility. A Heritage Foundation paper notes that the government itself agrees that "40 percent of federal programs" have no "positive impact on their intended beneficiaries." Get rid of them, and then move on to pare down those programs that are more worthy but still flabby. A leaner federal government could well be a more effective federal government, and one far less restrictive of precious liberties.
None of this will be politically easy, of course, and I have doubts that Bush is up to the task unless pushed hard by his fellow Republicans and at least some by Democrats. Despite the charges of some left-wing pundits blinded to the facts by ideological obsessiveness, he has not been trying to defund the federal government. Through his farm bill, Medicare drug benefits and in virtually every direction you might choose to look, he has been increasing spending at rates unmatched by any predecessor since Lyndon Baines Johnson. He talks about cutting spending in tones that suggest he means it, but his record gives the lie to his rhetoric. He has been a spendthrift in conservative clothing.
It's difficult to imagine congressional Republicans answering the call, either, but they have acted in the interests of austerity before, and they should keep in mind that what's at stake here is the national welfare.
Jay Ambrose, formerly Washington director of editorial policy for Scripps Howard newspapers and the editor of dailies in El Paso, Texas, and Denver, is a columnist living in Colorado. He can be reached at SpeaktoJay@aol.com.