Articulo Jeffrey H. Birnbaum. Fortune. 16.09.02
Jeffrey H. Birnbaum
In wartime, as everyone knows, federal spending must go up. The aftermath of Sept. 11 is no different. The U.S. needed to rout al Qaeda from Afghanistan, tighten airport and border security, and heighten its defenses against terrorism. That took gobs of money, so no one begrudges the recent surge in outlays. It's all for a good cause.
Except it isn't. Spending is skyrocketing, but shockingly little of it is related to the Sept. 11 attacks. Budget experts say that only about a third of the additional spending this year can be attributed to the war on terror. The rest is testament to a fact that predates Sept. 11: The era of big government has returned.
Of the programs that Congress and the President control directly, spending is up a whopping 13.9% this fiscal year. And that's not a new phenomenon. Soon after Bill Clinton declared, "The era of big government is over" in 1996, expenditures started to zoom. Such spending is rising so briskly that, for the first time since the late 1960s, annually appropriated programs have been growing faster than formula-driven entitlement programs like Social Security and Medicare.
Sept. 11 is merely a blip in that trajectory. Despite all the hoopla, only about $30 billion has been spent on homeland security and national defense programs directly related to the antiterror campaign. About $10 billion of that went to the fight in Afghanistan and $20 billion to rebuild New York City, prevent bioterrorism, improve transportation security, and the like. Overall, however, Uncle Sam has spewed out an extra $91 billion in appropriated funds this fiscal year for matters that range from highway construction to medical research.
In other words, the war on terror is being used as a ruse to justify all sorts of spending. President Bush lifted the veil on this deception by withholding $5.1 billion in extraneous expenditures that were buried in a homeland defense bill. But analysts worry that the pattern will become a fixture. Says Bob Bixby of the Concord Coalition, a fiscal watchdog group: "Packaging all manner of spending under the banner of homeland security will become a permanent addition."
Then again, lawmakers don't need much prodding to spend more. Nondefense spending has been increasing so rapidly lately that 2000-03 would still represent the largest four-year spending spree in a generation even if military expenditures hadn't gone up a penny. During that period farm subsidies doubled; unemployment compensation and health programs (other than Medicare and Medicaid) jumped 50%; education outlays rose by a third.
A lot has changed since 1998, when economic boom times created the first federal annual budget surplus since 1969. For four fat years lawmakers got used to spending what they pleased. A mere year ago, in fact, Bush confidently predicted $5.6 trillion in budget surpluses over the next decade and settled for a $1.35 trillion tax cut. But the economic slowdown changed all that. Today Bush will struggle to keep the tax relief he won. Fiscal 2002 will probably post a deficit near $165 billion.
A few shekels of deficit spending isn't necessarily a bad thing. Indeed, the sagging GDP could use some Keynesian stimulation. But so much? In February, Bush asked Congress to hold non-homeland security, non-Pentagon spending to 2% growth next fiscal year. But by May he had signed the most expensive farm subsidy bill in history--$190 billion over ten years. And that after proposing a 4% reduction in agriculture subsidies last year!
Ever since Ronald Reagan's war against government in the 1980s, every President has talked big about making government small. Bush is no exception. In August he told reporters, "It is important for this country to be fiscally disciplined as our economy begins to recover." But federal spending has risen every year since 1965--including under Reagan--and no sane person is predicting that trend will end.
The new emphasis on homeland security will make sure of that. Bush contends that the Department of Homeland Security won't make government larger. But almost no one believes him. He will combine 22 agencies and 170,000 workers to create the most massive new bureaucracy since the Defense Department was created in 1947.
Corporations are rushing to cash in. Since the office of Homeland Security started fielding business propositions last October, more than 1,000 companies have pitched ideas, some of them very strange. One firm wanted to fit every commercial airline seat with metal straps that could ensnare potential hijackers. Another proposed to teach our enemies transcendental meditation in order to calm them down. They didn't make the cut.
But others will, and businesses are gearing up to sell into this multibillion-dollar market. Deloitte Consulting estimates that homeland security programs at the federal level could exceed $30 billion a year.
Will the President allow things to get that far out of hand? Bush has wielded his veto authority less than any President since Franklin Roosevelt; in fact, he hasn't used it at all. White House aides promise that he will--and soon--to force Congress to pare its profligacy. But few think he'll make a dent in the big-government boom.