SHORTLY AFTER THE 1996 ELECTION, a triumphant President Clinton met behind closed doors with congressional Democrats, who were, if not surprised, at least disappointed by their failure to retake the House of Representatives. According to news reports, the president told his fellow Democrats that unless they got serious about balancing the budget, they would never recapture the House. American voters would continue to see them as fiscally irresponsible.
Nine months later, with a surging economy serving as midwife, White House and congressional negotiators gave birth to an agreement that would balance the budget by 2002 — much sooner if the economy doesn’t sour in the interim. To each of the parents, the child is not wholly lovely, possessing too many features from the other side of the family: a cigarette tax, a new entitlement for children’s health care, locked-in levels of domestic spending — all things Republicans hate and Democrats love. From the right side come a lower capital-gains tax rate, expanded IRAs, reduced inheritance taxes, and more choices for Medicare. Everyone is beaming about the child tax credit — although Republicans had to get over their initial view of the credit at the low end of the income spectrum as a welfare payment, and Democrats had to give up on ludicrous calculations of income that mystically transformed millions of middle-class American families into “the rich” overnight. So it is that under the tutelage of Bill Clinton, a majority of Democrats in both the House and Senate voted to balance the budget at last.
Okay, so, the budget will balance, Wall Street is skyrocketing, families will have more money in their pockets: Now what?
What has become increasingly clear is that Bill Clinton thinks he has a pretty good answer to that question. It has also become abundantly clear that Republicans have barely a clue as to where to go from here. Conservatives have tended to think of Bill Clinton as merely a liberal in disguise, someone who steals conservative rhetoric and the occasional conservative idea but who remains as fundamentally committed to the advancement of a leftward agenda as ever. The balanced-budget deal ought, once and for all, to disabuse them of this notion. It grossly underestimates Bill Clinton. Clinton is an entirely new political animal — the first of the balanced-budget liberals.
Years of conservative and Republican frustration over the budget had made the effort to balance it a quest — one that seemed at times as likely to succeed as the quest for the Holy Grail. So what happens when you find the Holy Grail? It is doubtful that those who actually sought the Grail gave much thought to what their purpose would be after the quest was successfully completed. What do Republicans do after the budget is balanced? Go to Disneyland? Sign a sneaker-endorsement contract? This was their Holy Grail, after all. What could be important after that?
Balancing the budget was never Bill Clinton’s Holy Grail. In fact, he came upon the quest for it late in the day (June 1995 to be exact) and only once the Grail was actually in sight. And while the longtime questers remained transfixed by the image of the Grail before them at last, Bill Clinton was able to see beyond it.
Clinton realized that a balanced budget could actually mean increased spending. This was something the Republicans could never have foreseen, and it works like this: If the budget is balanced, then the moral imperative to restrain or even to cut spending is gone. Instead, the argument between the parties turns into an argument over what to do with the money that flows in to the federal government after the budget is balanced. And this is the real opportunity for Clinton and his fellow balanced-budget liberals: So long as expenditures do not exceed revenues, the proprietors of the budget can’t be charged with fiscal irresponsibility, indifference to the future, or moral laxity. If the Democrats can keep themselves from (as they like to say) ” blowing a hole in the deficit,” government no longer need be a dirty word.
Republicans are just beginning to understand the threat posed by balanced- budget liberalism. It’s obvious what they would like to do with the surplus cash rolling in — rebate it in its entirety as tax cuts. Or maybe use some of it to finance the transition to a privatized Social Security system. But as a practical matter, the GOP wish for tax cuts will compete with the desire of the White House to fund the expansion of government to meet a million new as-yet-undiscovered needs. We should do more, and we can afford to do more, the president will say. In fact, we can’t afford not to do more. It’s not clear how a Republican Congress wins that argument and forces a Democratic president to send all the money back to the people.
How to stop the expansion of government in the balanced-budget era? What a novel political problem. Conservatives are now embroiled in a contretemps over a proposal by Rep. Mark Neumann of Wisconsin, who is the first to try to come to grips with balancedbudget liberalism. Neumann wants the GOP to divide “excess” revenues into three piles: one for tax cuts, one to pay off the national debt, and one to pay off the “debt” in the highway and other trust funds (in other words, to finance pork-barrel spending on infrastructure).
Supply-siders immediately stepped up to denounce the Neumann plan. It would be morally wrong and politically stupid — a typically Republican green- eyeshade blunder, said the Wall Street Journal editorial page — to overtax Americans in the name of the joyless and economically stupid task of paying off the debt.
Well, sure. Except that the salient political question is why Bill Clinton (or a possible Democratic successor) would go along with even the Neumann plan, let alone the big tax cuts and fundamental tax reform the Journal and every other conservative would prefer. Paying off the debt and cutting taxes are simply not the top priorities of balanced-budget liberalism.
The case for cutting taxes is the most potent GOP political tool. The case for more spending is the most potent Democratic political tool. Unfortunately for Republicans, and unfortunately for the philosophical promotion of limited government, the case for more spending just got a whole lot better.