The End of Fiscal Discipline

You can almost hear the screeching, 180-degree turn in political strategies in Washington.

With Vermont Sen. James Jeffords' abrupt exit from the Republican Party, the White House is preparing for an all-out wooing of Majority Leader Tom Daschle. Republican senators are starting a "have you hugged a moderate today?" campaign.

The most dramatic shift, though, will be in the changing of the Democratic game from defense to offense.

Counter to conventional wisdom, this is not an enviable position. Furthermore, it may well be the straw that breaks the back of the short-lived era of fiscal discipline.

For five months, the Republicans governed under pretty much ideal budget circumstances. They had the gift of trillions of surplus dollars to play with and even while pushing for a preposterously large tax cut, they could argue that they were leaving enough money (just barely) to reduce the debt to the lowest possible level.

Now that it is the Democrats' turn, they too may become complicit in the raiding of the surpluses. None of the items on their agenda -- from a prescription-drug plan to long-term health care to more cash for education, agriculture and the environment -- come cheap. And now that the tax cut has been passed, there is even less money to pay for them.

For the Dems to take any meaningful action on any of their priorities, there will be only two approaches to pay for these programs: Roll back the tax cut or dip further into whatever may or may not be left of the surpluses.

The first option is, of course, the more responsible. The current $5.6 trillion national debt is estimated to reach $6.7 trillion in 10 years, and that is without either a tax cut or any new federal programs. To increase the debt further will do substantial harm to the economy, and leave younger generations with a truly outrageous bill to pay.

A fiscally responsible politician would have pointed out long ago that there is actually little room for tax cuts or spending increases in a country that continues to rack up hundreds of billions of dollars of debt. At the very least, one would hope Democrats would forge some type of compromise by scaling back the tax cut and using the savings partially for new spending and primarily for debt reduction.

The trade-offs between tax cuts and new spending would require tough decisions, but in forcing those choices it would create a better link in taxpayers minds between the costs and the services the government provides.

For instance, would we rather repeal the estate tax or create a prescription-drug program? Double the child credit or increase funding for education? Reduce the highest tax rates or implement new energy and environmental programs?

These are not necessarily easy decisions, but ones that should be made in a responsible budget.

Unfortunately, political realities are what they are, and opposing tax cuts before they are passed -- a battle Democrats already lost -- is a lot easier than supporting their repeal.

Therefore, the far more likely scenario is that Democrats will take a page from the Republican tax-cut playbook, obfuscating the true costs of their spending proposals, phasing them in over time and using budget gimmickry to reduce their apparent costs.

And you can bet that the same Democrats who wanted to "trigger" tax cuts as a way to scale them back if they grew too large, will oppose any such mechanisms for their own potentially budget-busting spending initiatives.

Republicans, not relishing the idea of being on record as opposing education or prescription drugs, particularly with the contentious 2002 elections just around the corner, will grudgingly go along. Once the programs have passed, they will continue on, whether or not the surpluses to pay for them ever materialize.

And this may well be the end of the tale of the short-lived surpluses.

In what could turn out to be a new low for honest budgeting and responsible policies, each party will have taken its turn at spending away the surpluses (possibly more than once), while the other, for fear of voter retribution, looked away.

Once the true costs of the marriage of huge tax cuts and new government spending emerge with an eerily Reaganesque ring, the country will be left with large budget deficits once again -- certainly not the path Jeffords hoped for when he divorced his party.