Throughout its history, the Republican Party has been known as the party of fiscal conservatism. From Goldwater to Reagan to Gingrich, the Republican political elite espoused the benefits of limited government and balanced budgets. Yet that party has vanished. As Sen. John McCain (R-Ariz.) said last spring, today's Republicans, at a time of national crisis, "have thrown caution to the wind and continue to spend, and spend, and spend -- all the while cutting taxes."
Since 2001, a Republican president and Congress have presided over the largest fiscal meltdown in the history of our republic -- turning record surpluses into record deficits. While Republicans have argued that our burgeoning deficits are the result of policies designed to move our country out of recession and to finance the cost of the war on terrorism, the reality is quite different.
The Republican-led Congress is passing pork projects at a rate three times as great as the last time Democrats controlled both houses of Congress, and it is spending at levels not seen since World War II, on a per household basis, measured in constant dollars. Add billions of dollars in debt financed tax cuts to that mix, and you've got a recipe for fiscal disaster. Clearly, this is not your father's GOP.
While Republicans have turned their backs on fiscal conservatism, Democrats have been unable to assert leadership on fiscal responsibility. During the 1990s, the Clinton administration made eliminating the deficit one of its primary policy goals. Through a combination of spending cuts, budget reforms, and targeted tax increases, as well as a boost from a growing economy, the Clinton administration put the federal government in the black for the first time in years, and voters rewarded the president with two terms of office. Yet since then, Democrats have missed the opportunity to become the party of fiscal responsibility by failing to offer a real alternative to President Bush's reckless budget policies.
There is much to be gained from becoming the party of fiscal responsibility. First, Democrats can begin to close the trust gap on values that has become an obstacle to their candidates at the national level. By making the federal government live within its means,
Democrats can show they understand the values of working families that live from paycheck to paycheck. To become the champions of fiscal responsibility, Democrats will also have to take on the special interests that defend an ever-growing litany of spending programs and tax loopholes. That fight would allow Democrats to grab the mantle of reform.
Second, Democrats can use the deficit issue to split moderate Republicans from the Republican right. Some Republican fiscal conservatives are growing increasingly uncomfortable with the fiscal recklessness of the Bush administration and the Republican congressional leadership. Democrats should force votes at every opportunity that would encourage these antsy Republicans to buck their leadership. Democrats can push the Bush administration and its congressional allies to the right, while capturing the progressive center.
Third, as long as our government remains awash in red ink, the prospects for real progressive change are minimal. In fact, even if the government's books weren't so horribly out of balance, the prospects for progressive reform would be dim, because the Democrats have a tax-and-spend image problem. They must take the lead in putting the government's fiscal house in order before the country will trust them to undertake any big new initiatives on such things as universal health care, college access, or preschool. Otherwise, Republicans will simply oppose those measures as big government spending programs that will worsen an already disastrous fiscal situation.
But for Democrats to reap the rewards of fiscal responsibility, they must first do the following:
Get tough on government spending. Throughout the presidential campaign,
Sen. John Kerry railed against the Bush deficits. Yet, the senator chose to emphasize rolling back the Bush tax cuts for the wealthy rather than offering a plan of specific spending cuts to reduce the deficit. Combined with his litany of new spending proposals for health care, education, and defense, Kerry was never able to convince voters or the media that he would be more fiscally prudent than Bush. On an issue that the president clearly should have lost, Kerry could achieve no more than a draw.
The lesson for Democrats is that they must be willing to make not only the right choices on taxes, but also the tough choices on spending. This means, at a minimum, offering a deficit reduction plan that is composed in equal parts of spending cuts (including entitlement reforms) and tax increases for those who can most afford them.
Offer bold budget reforms. Democrats are right to propose restoring the budget reforms of the 1990s. Budget caps and pay-as-you-go ("PAYG O") rules were vital steps in restraining spending and eliminating the deficit. But Democrats must go further. In addition to budget caps and a real PAYGO rule that requires offsets for new entitlements as well as tax cuts, Democrats should propose an agenda that would include new reforms, such as: a supermajority vote requirement for emergency spending and tax breaks for special interests; a constitutionally valid line-item veto; an end to baseline budgeting, under which all proposals are scored against projected spending increases; establishment of a "rainy day fund" to hedge against economic downturns; and a congressional budget resolution that has the force of law, to keep appropriators in line.
In addition, to further the reform agenda, Democrats should also push for a base-closing-style commission to close corporate welfare provisions on both the spending and tax sides of the ledger.
Finally, Democrats should support legislation that denies bonuses and pay increases to members of Congress and political appointees in the executive branch in years when the budget is in deficit. There is probably no greater deterrent to Washington's excessive spending than pulling money out of the pockets of its politicians.
"If we can't pay for it, we're not going to do it." One idea John Kerry proposed during his presidential campaign that Democrats should embrace is to hold the line on spending we can't afford. Democrats need to make it clear to the American people that they are tough enough to set priorities, and that includes no new spending or tax incentives until we begin to fix the budget mess we are in.
Surprise People. As Al From and Bruce Reed have noted elsewhere, Americans will only believe the Democrats are serious about the deficit (and changing our country) when they take a position that truly surprises people. This means no longer running away from the issue of entitlements and demonstrating a willingness to eliminate agencies or programs that no longer serve useful purposes. To do so will come with a price, but the rewards will be far greater for the party, and, more importantly, the country.
