Invest and Grow

Invest and grow-or should we rein in our spending desires?

With the Bush administration in full lame-duck mode, every important group in Washington is focusing on the upcoming transition and the policies that our new president might adopt.

Management issues, of great interest to senior executives, are one focus of attention. With many agencies now rife with vacancies, reformers are pushing to speed the process of nominating, confirming and briefing incoming officials, and getting them acclimated to their new working environments. The Council for Excellence in Government is planning orientation activities for political appointees. The National Academy of Public Administration has completed a detailed report on mitigating the risks attendant to transition in the Homeland Security Department during a time of war and terrorism. Professor Paul Posner of George Mason University and executives at the IBM Center for the Business of Government are developing a broad agenda for reform in the vital field of federal contracting.

Higher on the agenda during the heat of the campaign season are questions about the size and role of government, and here the battle is waged to win the hearts of the candidates on issues of spending and taxation. As I witnessed during two briefings in May, groups backing more spending are out in force, fighting against the smaller armies of those who advocate more fiscal restraint.

The first gathering raised the alarm about the poor state of the nation's infrastructure-highways, bridges, levees, railroads, power grids, water and energy supply, and air traffic control systems. Janet F. Kavinoky, director of transportation infrastructure at the U.S. Chamber of Commerce, talked about her organization's Let's Rebuild America initiative and its offshoot, Americans for Transportation Mobility, and said business would put aside its distaste for taxes to help finance the necessary work fees. Organized labor is in the same camp, said Donald J. Kaniewski, former legislative and political director of the Laborers' International Union of North America. He decried the "politics of smallness," advocating an "invest-and-grow" counter to the "tax-and-spend" epithet often hurled at Democrats in Congress. Fixing America's infrastructure would cost $1.6 trillion, according to the American Society of Civil Engineers. But even though Americans waste nearly $80 billion of time stuck in traffic, it's a hard sell. As Sen. Chuck Hagel, R-Neb., noted at the forum, the idea is "not particularly inspirational, kind of like buying tires for your car."

Inspirational or not, the infrastructure deficit brings together a lot of groups that want to spend money to fix it. And it should be fixed, even if the high cost of doing so requires cuts in other programs.

This kind of trade-off was discussed at another meeting in May, organized by the Committee for a Responsible Federal Budget. The committee has unveiled U.S. Budget Watch (www.usbudgetwatch.org), designed to put the country's long-term fiscal problems on the public and political agenda. An all-star cast of budget specialists, Democrat and Republican, argued that we are in a dangerous "borrow and spend spiral," as former congressman and federal budget director Leon Panetta noted. He fears that the presidential candidates are promising fiscal policies that will dig the hole deeper, instead of reining in health care and retirement programs whose unrestrained growth will require much more from the federal coffers in years to come. Spending restraint, and probably tax increases, need to begin soon.

Maya MacGuineas, president of the Committee for a Responsible Federal Budget, observed that many groups, probably including some right there in the Mayflower Hotel that day, were plotting new spending initiatives. Some, like infrastructure improvements, are worthwhile, but the toughest task-one not yet addressed by the presidential candidates-is to frame them in a context that also addresses the spiraling fiscal crisis.