Social Studies January 2006

Why Republicans Can't Cut Spending

Why are Republicans having such a hard time cutting federal spending? The answer has to do with a critical shift in the GOP's governing strategy, dating back to the late 1990s.
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In September, shortly before an indictment cost him his job as House majority leader, Rep. Tom DeLay, R-Texas, outraged conservative Republicans by saying that (as The Washington Times paraphrased him) there was "no fat left to cut in the federal budget." Within hours, conservatives erupted, and on Capitol Hill they vowed to prove DeLay wrong.

With the fiscal 2006 budget completed except for the last formality (the House is expected to make the budget official as soon as it returns from recess), conservatives have declared victory. In a press release last month, Rep. Mike Pence, R-Ind., announced, "With the passage of this Deficit Reduction Act, including an across-the-board cut in federal spending, the 'Republican Revolution' is back."

And, indeed, this first post-DeLay budget proves DeLay wrong. Spending is not completely uncuttable. It is, rather, 99.5 percent uncuttable.

The Deficit Reduction Act of 2005 is, strictly speaking, a deficit-reduction act only in the Washington sense of the term—meaning, it is part of a plan to increase the deficit. It consists of about $40 billion of reductions in spending on entitlement programs, spread over five years (fiscal 2006 through 2010). Based on Congressional Budget Office forecasts, the Deficit Reduction Act will reduce entitlement outlays by about 0.5 percent over that period and cut cumulated deficits by about 2.5 percent. Wow.

Meanwhile, another budget bill is slated to cut taxes by $70 billion over the same five-year period. The net effect of the two bills (known as reconciliation bills) would be to increase the deficit by $30 billion. "The fact that the overall effect of reconciliation taken together was to enlarge rather than reduce the deficit undermines the credibility of anyone claiming that this was a deficit-reduction package," says Maya MacGuineas, the president of the Committee for a Federal Responsible Budget, a nonpartisan fiscal-watchdog group.

Judged in purely fiscal terms, then, the reconciliation action resembles the old joke about a man who fell out of a plane without a parachute. Fortunately, there was a haystack below him. Unfortunately, there was a pitchfork in the haystack. Fortunately, he missed the pitchfork. Unfortunately, he missed the haystack.

The reconciliation bill focuses on entitlement programs such as Medicare, Medicaid, and student loans. Not to be overlooked are the discretionary accounts. Here, the Republicans' budget is indeed tight. The White House boasts that, thanks in part to a 1 percent across-the-board reduction, total discretionary spending (that is, defense and homeland security, plus domestic discretionary programs) will grow by only 1.1 percent in fiscal 2006, which is below the likely rate of inflation. G. William Hoagland, the director of budget and appropriations for Senate Majority Leader Bill Frist, R-Tenn., notes that domestic discretionary spending (which excludes defense and homeland security) is budgeted to decline a little, a feat not seen in Washington for years.

But, again, the Republicans missed the haystack. Domestic discretionary spending accounts for only a sixth of the budget, and the other five-sixths are growing. According to the Committee for a Responsible Federal Budget, Congress reduced nondefense discretionary spending by $106 billion over five years, but it more than offset those cuts with $237 billion in added spending on defense, Iraq, and emergencies like Katrina and bird flu.

All of that is before counting billions more in likely supplemental appropriations, notably for the Iraq war, which is being conducted off the books. "Appropriations represented some success this year, in that the line was held on nondefense discretionary spending," says Brian Riedl, a senior budget analyst at the Heritage Foundation. "At the same time, Congress continues to put $100 billion to $150 billion a year into emergency supplemental bills, and those never get counted in the final number."

If your paramount concern is reducing the federal deficit, then the best that can be said for the 2006 budget is that it may do less fiscal damage than the budgets of 2005, 2004, 2003, 2002, and 2001. But, as has become pretty obvious, deficit reduction is not the paramount concern of today's conservative Republicans. Their concern, rather, is to scrape away at the calcified mass of programs that constitute Big Government. On that measure, how did they do?

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Jonathan Rauch is a contributing editor of The Atlantic and National Journal and a senior fellow at the Brookings Institution.

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