You know spending discipline has collapsed on Capitol Hill when one of the lone voices for fiscal restraint is House Minority Leader Nancy Pelosi. As Republicans rush to deluge the Gulf Coast with tens of billions of tax dollars to display their "compassion," Ms. Pelosi has cleverly seized the mantle of fiscal responsibility.
Last Wednesday Ms. Pelosi offered to return to the federal government $70 million for highway bill projects targeted for her district in San Francisco -- "to help the victims of Katrina." But when House Republican leaders were asked if they would give up their slabs of highway pork, there was not a single taker. Majority Leader Tom DeLay of Texas went so far as to declare that, "The bill creates hundreds of thousands of jobs. It's an economic engine." By that logic we could end joblessness in America by building even more bike paths and bridges to nowhere.
With a lifetime Citizens Against Government Waste rating of "Hostile to the Taxpayer," Ms. Pelosi hardly qualifies as a fiscal conservative. But at least she understands what the out-of-touch Beltway Republicans don't: The latest polling shows that voter support for the GOP is slipping, especially among normally loyal Republicans, and their spending spree is one big reason. This is an important moment for Republican governance that threatens their control of Congress.
Our primary concern with the Katrina spend-fest is that it puts the economy at risk by putting pro-growth tax cuts in harm's way. If the 2003 capital gains, dividend and income tax rate cuts are cancelled, as virtually the entirety of the Democratic Party is clamoring for, we get the most destructive of all fiscal storms: a continued federal spending buildup -- expenditures are already up 34% under President Bush in five years -- slower economic growth, and a smaller future tax base to finance federal spending promises.
The new Federal Reserve Board household wealth survey reveals that $4 trillion of new American household wealth has been created since the capital gains and dividend tax cuts were enacted. Repealing those tax cuts is the surest way to trigger a true housing bust and reverse the stock market gains of the last two years.
Congress could do more to control itself, but it's obvious the GOP leadership won't do this without prodding. That means Mr. Bush is going to have to lead. For five years the White House has let Congress spend at will, declining to veto even a single bill, though many have arrived at his desk with billions of dollars more than he requested. This year's $286 billion highway bill was $30 billion over his alleged 2004 line in the sand.
Remarkably, Mr. Bush has also never even tried to use another budget weapon in his arsenal: the power to rescind funds authorized by Congress. The House Rules Committee defines this "rescission" power as "a law that repeals previously enacted budget authority in whole or in part. Under the Impoundment Control Act of 1974, the President can impound such funds by sending a message to Congress requesting one or more rescissions and the reasons for doing so."
[Trimming the Fat]
In other words, the President sends Congress a list of projects that he does not wish to spend money on, either for policy reasons or because conditions have changed (a hurricane). Congress then votes up or down on whether to accept this package of cuts. Past Presidents, notably Ronald Reagan, have saved billions of dollars over their terms with the rescission power (see chart). And Reagan didn't have a Republican Congress.
Mr. Bush could get Congress's attention by immediately sending up two emergency rescission packages. The first would include $6 billion of savings from spending on transportation pork -- the parking garages, bike paths and nature trails that Ms. Pelosi says she's willing to give up. Next, Mr. Bush could request an across-the-board hurricane relief rescission of 2% of federal agency spending, which would save about $75 billion over the next four years. With non-military spending going up by 7.2% this year, federal bureaus ought to be able to save two cents on the dollar.
Whether Capitol Hill mandarins would accept these rescissions is anyone's guess. But it seems clear that Main Street America will rally around these calls for changing spending priorities in order to meet a genuine emergency. Even if Congress rejects his rescissions, the President still wins. Mr. Bush will have taken a step toward restoring his badly tarnished credentials as a budget steward. Most important, a high-profile vote on pork-for-Katrina will help identify the genuine fiscal conservatives from the great pretenders.
I love it, now congress is looking to try to reduce federal employees pensions and benefits to save money for Katrina.
I guess Alaska needs a bridge for the 50 residents and the landscaping for Reagan highway are all necessary.
But at least she understands what the out-of-touch Beltway Republicans don't: The latest polling shows that voter support for the GOP is slipping, especially among normally loyal Republicans, and their spending spree is one big reason.
In trying times like these, I fall back on: WWJED?