President Bush presents his first budget to Congress today. It contains many cuts in spending, along with a few increases, such as for education. It can safely be predicted that Democrats will say that these spending cuts are only for the purpose of financing tax cuts for the rich. They will say that without the revenue loss from lowering the top tax rate and abolishing the estate tax, it would be possible to preserve spending and still maintain the surplus.
Democrats will also play the old Washington game of calling reductions in the rate of growth of spending for any program a "cut." In their universe, even when the government spends as much or more for a program than it did the previous year, it still counts as a cut if spending does not rise as much as the so-called current services baseline. This last assumes that any time program spending does not rise by at least the inflation rate, it necessarily indicates a reduction in the services that program provides.
Thus the current services baseline ignores improvements in productivity or changes in targeting that might allow more services to be provided at lower cost. And of course, it discourages agencies from seeking efficiencies in their operations because they generally get an increase in their budget each year automatically. They only have to justify increases in excess of inflation.
It is doubtful that many corporate CEOs just automatically increase the budget of each of their divisions for inflation each year. They demand justification for all increases, based on performance, future plans and how each division stacks up against others. Inflation may be one justification for a larger budget, but there is no presumption that one is always entitled to more money solely on this basis. Indeed, there is no presumption that a corporate division is even entitled to the same money it got the previous year, let alone an automatic increase.
Yet in Washington, annual increases in spending for every program are so ingrained that it has been codified in the current-services baseline. This allows those who always favor higher spending to get away with calling budget increases "cuts" if they are not large enough.
Even if Bush were truly cutting spending significantly, it still wouldn't follow that it was for the purpose of giving tax cuts to the wealthy. Because there is a large budget surplus and because the federal government does not operate on a balanced budget rule, there is no necessary connection between revenues and spending. In other words, cutting tax rates doesn't imply anything about budget priorities. The two don't have anything to do with each other under current circumstances.
This fact may make it harder for Bush to reduce spending, even with Republican control of Congress. Historically, Congress has only cut spending in response to budget deficits. Without such deficits, it will be hard to motivate members of Congress to vote to cut or restrain spending, especially on programs they were not willing to cut even when deficits were menacingly large.
To be successful, Bush needs to provide a philosophical rationale that says it is just wrong for the government to spend the public's money on things that don't meet the test of need or effectiveness. He might consider resurrecting an old idea from the Carter administration called zero-based budgeting. The idea, borrowed from the business world, is to make every program justify itself annually. Instead of having a presumption that it will get the same money each year plus inflation, zero-based budgeting would have a presumption of zero spending. Thus every program would have to prove itself every year -- and those that could not would automatically cease to exist.
But there is a deeper point, as well. Since the New Deal, Americans have slowly forgotten that the Constitution puts great limits on what the federal government can do. As recently as the 1950s, people could still question whether the federal government ought to build a national highway system. In order to justify that program constitutionally, it was called the National Defense Highway Act. Today, of course, any notion that such a program would need that sort of constitutional veneer to gain passage is absurd.
Bush can help himself and his tax and budgetary plans by trying to reinvigorate constitutionality as a rationale for his actions. Programs that do not rest on a clear grant of constitutional power should be abolished or transferred to the states.
He can even argue that tax rates that are too high violate the Constitution's prohibition against unlawful seizure. Constitutional scholars such as the University of Chicago's Richard Epstein have argued forcefully that one's tax payments should approximate the benefits one receives from government. Adopting this "benefit principle" leads logically toward a low flat-tax system.
At this late date, it is doubtful that many of Bush's critics will be swayed even if it could be shown conclusively that some program he wants to cut are unconstitutional in the first place. They will simply take the view that it is solely up to the Supreme Court to make such a ruling. But in fact, the Founding Fathers saw defense of the Constitution as a responsibility shared by all three branches of government. In the 18th and 19th centuries, it was common for presidents to veto bills and members of Congress to vote against them because they were unconstitutional, in their view. In the last 50 years, this has largely disappeared.
By making a constitutional case for his programs, Bush will strengthen his hand and make his critics look petty. It has the added virtue of being the right thing to do.