Where are the conservatives?

OMB Director David Stockman told William Greider almost two decades ago that one of the biggest reasons the Reagan deficit reduction plan was in trouble was because there were few true conservatives in Congress. Now, as the budget debate continues to shift from how to reduce the deficit to what to do with the surplus, it is becoming increasingly clear that Stockman's observations were remarkably prescient-with federal revenues rolling in, the conservative label can be accurately applied to fewer and fewer members in either chamber.

The terms "conservative" and "fiscal conservative" have been used interchangeably, when there really is a substantial difference between the two.

For years, the common presumption has been that anyone in favor of additional federal spending is not a conservative. But under that very simple definition, the overwhelming and decidedly bipartisan majority of the House and Senate who voted for last year's big highway bill or emergency spending legislation do not qualify. Nor do the very large number of legislators from both political parties who this year are supporting increases for the Pentagon, education, farmers or something else; or those in the congressional leadership who are either hinting or stating outright that the caps on appropriations should be raised.

In fact, there are few members of the House and Senate who are not on at least one of the above lists.

But spending is not really the conservative litmus test that some make it out to be because, as far as the federal budget is concerned, the bottom line is the same whether spending is increased or taxes cut-they both have the same impact on the national debt.* This means that a tax cut when there is a surplus has the same effect on the budget as a spending increase. And it calls into serious question the use of the conservative label by tax cut supporters, no matter how much they want everyone to believe otherwise.

Perhaps the problem is that up to now the terms "conservative" and "fiscal conservative" have been used interchangeably, when there really is a substantial difference between the two.

The first label-"conservative"-generally is applied to someone who believes the government's role should be restricted as much as possible. That means a tax cut, if combined with other policies that at the same time limit government spending, could indeed be considered to be "conservative." But a tax cut that leaves federal borrowing higher than it would otherwise be does nothing to reduce government activity. Because federal borrowing will rise, federal interest payments will continue to be a significant demand on taxpayers in the future, and interest rates for everyone will be higher than they would otherwise be, a strong case can be made that such a tax cut is anything but conservative.

The second term-"fiscal conservative"-should not be automatically applied to someone just because they support a tax cut. To a fiscal conservative the whole question of tax cuts vs. spending increases is secondary to a number of other issues. That person is someone who:

• Demands that cautious, almost pessimistic economic assumptions be used in the budget because spending can always be increased and taxes cut later if things turn out to be better than anticipated;
• Is slow to incorporate more optimistic forecasts into long-term projections until there is some reason (other than wishing and hoping) to believe they will continue;
• Believes that repaying the national debt is an important aspect of fiscal policy that should be considered whenever the overall economic situation warrants; and,
• Does not make spending or taxing decisions based on long-term forecasts that are virtually certain to be wrong.

What makes this most interesting is that the average voter (recently, at least) may be far more fiscally conservative than Congress. For months the polls have shown that voters prefer debt reduction to either a tax cut or a spending increase. Perhaps that is why both parties are having so much trouble getting political traction for this year's budget policies.

*(I am aware, of course, that some believe a tax cut increases rather than decreases federal revenues. However, until the Joint Committee on Taxation, the Congressional Budget Office, the Office of Management and Budget and the U.S. Treasury adopt "dynamic" scoring, my inclination is to use the current, and far more conservative, static modeling to judge a proposal.)

The Budget Countdown

As of Tuesday there are only 17 potential legislative days left before the April 15 statutory deadline for passage of the fiscal 2000 congressional budget resolution. If Mondays and Fridays, when the House and Senate typically are not in session, are excluded, there are only 12 days.

Question Of The Week

Last Week's Question. Last week's question asked you to come up with the name for an annual federal budget award similar to the Oscars? And the winner is... Diana Meredith from the Office of Management and Budget, who suggested that it be called the Proxmire in honor of the former Wisconsin senator who did so much to reveal waste, fraud, and abuse while he was in office. The bonus question winner is Kay Kinney of Dworbel, Inc., who suggested that Sigfried and Roy, "the masters of tacky illusions and over-the-top shows," host the awards ceremony.

Diana and Kay, who will both get "I Won A 1999 Budget Battle" T-shirts, would like to thank their agents, parents and elementary school math teachers for all their support through the tough times.

This Week's Question. Want your own "I Won A 1999 Budget Battle" T-shirt to wear at the gym while you get in shape for the warmer weather? Just answer this question: Before Stockman was appointed by President Reagan to be OMB director, he was a member of Congress from which state? Send your response to scollender@njdc.com. If there is more than one right answer, the winner will be selected at random from all of the correct entries.