What's spending got to do with it?

When the Republican Party lost the majority in Congress in 2006, Senator Lindsey Graham was reported to have said that Republicans lost because, “We had been spending like drunken sailors.” The problem is actually much deeper. The Republican Congress had failed to do what they said they would do which was reduce the size of government and be more efficient with the taxpayers’ funds. Republicans had lost the mantle of “the conservative party,” and it seemed that the phrase was even more an oxymoron than originally thought.

A friend of mine, Josh Gross, who is a political consultant, and I were recently discussing the relative merits of politicians we know. Josh commented that one politician in particular was “strong on defense, but weak on spending.” I retorted that spending is a national security issue. As our nation borrows increasing amounts from foreign governments that are not necessarily friendly to our interests (i.e. China and Saudi Arabia), we endanger our ability to exert influence in the world. As I told Josh, “No one picks a fight with their bankers.”

Both mainline political parties are to blame for the current economic conundrum. Neither party has been willing to ask for sacrifice and restraint on spending. Instead, Congressional earmarks continue to proliferate. Recently, Senator Jim Demint authored a budget amendment that would have instituted a one-year moratorium on Congressional earmarks and the amendment was defeated with 71 “nay” votes in the Senate. Remarkably, all three Presidential contenders (Senators McCain, Clinton and Obama) voted in favor of the moratorium. It seems that their collective support indicates that no one running for national office would want to be seen as a spendthrift even as appropriators in Congress see it as the path to reelection. The defeat of such an amendment also shows the lack of willpower in the Congress to go home and tell voters that pork barrel projects will have to wait given that we are trying to fund a war. (Of note; in South Carolina we aren’t funding any wars but our General Assembly is no more inclined to spend the people’s money wisely.)

Given the comment I have attributed to Todd Long in my entry on May 21 that “a politician thinks about the next election while a statesman thinks about the next generation,” it is clear that the rationale for votes against the earmark reform measures constitutes the politician’s mindset and not the statesman’s. In 2003, the Federal Budget exceeded $20,000 per household for the first time. Most would suspect that the growth in budget expenditures was related to the post 9/11 efforts in war and homeland security spending. In fact, as these programs grew, there were no offsetting cuts in discretionary domestic spending. According to the Heritage Foundation, "non-defense discretionary spending has grown 55 percent under President Bush." Earmark items grew in the same period. Sadly, these increases are in spite of the fact that our nation is in a war that has budget implications of its own.

As if the size in spending per household weren’t enough of a bitter pill, in 2003, the U.S. Treasury collected less than $17,000 per household. This deficit has continued in the following years as well. In fact, we’re all receiving “stimulus checks” from the Treasury to encourage us to spend money when we’re already in the hole fiscally. So, where do we get the difference? Since 2001, borrowing from foreign lenders to fund the deficit has also grown at annually increasing proportions. As the “boomer” generation moves into collection mode on welfare programs, these deficits are likely to increase. Will we see any offsetting cuts in federal spending to fund these programs even though we haven’t sacrificed domestic spending to date for the current war?

While we borrow from foreign lenders to fund our legislative consumerism, confidence in our future economic viability erodes, our currency’s value declines, and energy resources denominated in dollars increase in price.

As we examine the world stage and our national security, our nation and its leaders must understand that prudent fiscal policy is strong foreign policy.