During the administration of George W. Bush, the Federal government is likely to borrow approximately $642 billion (net, counting the surplus in 2001). That’s $2,287 for every man, woman, and child in the nation, or almost $6,000 per average household–money that we and our children will have to repay with interest. Meanwhile, the latest Washington Post/ABC News poll shows the president on course for reelection. He has a nice strategy: borrow the equivalent of about $6,000 per household, spend the money on tax cuts, domestic programs, and a quick war against a tinpot dictator. Buy 8 percent GDP growth and a military victory in the year before you’re up for reelection, and coast to another four years. Worry about the debt later.
There are conservatives who believe that deficits are good, because they prevent the government from expanding social programs. They should be careful what they wish for. First of all, my simple analysis of current government spending shows that almost 75% of it goes to currently “untouchable” programs: Social Security, Medicare, the military, veterans benefits, mandatory retirement benefits for other federal employees, and interest. Social Security and interest payments are guaranteed to rise. When the fiscal crunch comes, it’s unlikely that presidents will respond by deeply cutting the remaining portion of the federal budget, the domestic discretionary programs that conservatives detest. A lot of this spending is popular, since it includes education, scientific research, aid to states, and law enforcement. Instead of cutting, future administrations will have to increase taxes or borrow still more money.
Second, if Bush wins reelection with this strategy, it’s hard to imagine the next Democratic president doing what Bill Clinton did, and painfully paying down the deficit he inherits. Instead, I suspect that fiscal discipline will be forgotten for a long time to come. Presidents of both parties will remember Bush’s successful use of a borrow-and-spend reelection strategy: great for incumbents and potentially disatrous for the country.