Froma Harrop: Democrats resist urge to spend

“Go ahead!” the gremlins hiss into Democratic ears. “Spend and borrow. The Republicans did it. Don’t be a goody-two-shoes about this ‘pay-as-you-go’ stuff.”

The gremlins are hard at work trying to throw a wrench into the Democrats’ Paygo resolve. For them, getting Democrats to abandon their promise of fiscal discipline would be a splendid act of sabotage.

Under the Paygo rules, new entitlement spending must be offset by tax hikes or savings elsewhere. Tax cuts must be matched by spending reductions or more revenues. The point of the exercise is to rein in budget deficits.

Democrats have honored the Paygo pledge so far, but show signs of weakening. For example, they want to add $20 billion to the farm bill for conservation, renewable fuels and other good things, but some farm-state Democrats don’t want to free up the money through cuts in the subsidy program.

“It’s a mess,” an unidentified senior House Democratic aide told The National Journal. “It’s very difficult, if not impossible, to comply with Paygo and still do everything we want to do.”

How do you explain a quote like that? Gremlins.

Of course it’s very difficult to comply with Paygo “and still do everything we want to.” Isn’t it always?

The Senate Finance Committee says it just agreed on a bill to expand the State Children’s Health Insurance Program. The addition of $35 billion over five years is less than the $50 billion the Democrats had originally wanted – and must be paid for with a “politically difficult” 61-cent-a-pack increase in the federal cigarette tax. It’s not easy, but the money will be found for a program that the public deems important.

The Republicans let Paygo expire in 2002, freeing themselves to spend, cut taxes and leave the bills to future generations – though they pretend otherwise. President Bush was just in Cleveland bragging that his tax cuts are lowering budget deficits – from $248 billion last year to an estimated $205 billion in 2007. What really caused that modest improvement were a strong stock market and bigger paychecks for the richer folk – events that mainstream economists say had little to do with the tax cuts.

It’s outrageous to have any deficits at this high point in the business cycle. The Clinton administration ran enormous surpluses in the good times of the late ‘90s – without the “help” of the Bush tax cuts, which actually drain more revenues than they raise.

Democrats can use the budget discipline forced by Paygo to improve programs. For example, the current farm subsidies go mostly to a few big agri-businesses. Democrats could reduce these corporate welfare payments and use the savings to promote ethanol production. That would do more for rural America than writing checks that encourage the creation of mega-farms and the depopulation of the countryside.

South Carolina Rep. John Spratt, chair of the House Budget Committee, has been swatting gremlins for a long time. When Republicans were in charge, Spratt tried to moderate their tax cuts. Hero to the fiscally conservative blue dog Democrats, Spratt is now fighting to keep his party on the path of fiscal virtue. May the hounds prevail.

Early this year, a Gallup poll showed that 76 percent of Americans considered the budget deficit “extremely” or “very” important. And an ABC News-Washington Post poll found that 59 percent trusted the Democrats to handle the federal budget, while only 32 percent trusted Bush.

Do Democrats want to lose this moral high ground? Sure, they could spend and borrow, just as Republicans did. But that’s one of the reasons Republicans are no longer running Congress – as the gremlins know so well.