Washington's $782 Billion Spending Spree

"If we don't … reaffirm our commitment to fiscal responsibility, years of hard work could be squandered," Federal Reserve Chairman Alan Greenspan recently told Congress. Considering the ever-climbing spending levels on Capitol Hill these days, his warning makes perfect sense.

It didn't used to be this way. In the mid-1990s, politicians began cutting wasteful government spending to balance the budget and bring relief to overtaxed families. Since 2000, however, things have changed, with almost-daily reports of yet another "record spending increase" from Congress.

With the 2003 federal budget almost done, there's now a price tag for this 2000-2003 spending spree: $782 billion in new spending. Not $782 billion in total spending, mind you, but $782 billion above what Washington spent in the previous four years. Eventually, taxes will need to be raised by more than $5,000 per household to pay for it. With the exception of World War II, on a per-household basis, 2000-2003 will become the largest four-year federal spending spree in American history.

How did Congress and the president do it? Did they carefully assess the nation's needs and then decide that one or two national priorities were worth an extra $782 billion? No. It's a classic case of death by a thousand blows -- record spending increases for dozens of programs, none by itself fatal but collectively lethal. It's what happens when undisciplined policymakers refuse to set priorities or say no to special interests.

Many lawmakers have tried to blame Sept. 11th-related defense spending. But new defense spending represents just 21 percent of the $782 billion total spending increase, and less than a quarter of that increase can be attributed directly to the war on terrorism.

Others finger big-ticket entitlements such as Social Security, Medicare and Medicaid, claiming that they're growing uncontrollably. However, these program's budgets haven't grown any faster over the last four years than they did over the past two decades.

In fact, there is no way to explain or excuse the general pattern of persistent fiscal recklessness one finds in the federal budget. Over the past four years, Washington has heard calls for massive spending increases for numerous programs: farm subsidies, highways, education, healthcare, defense, homeland security, you name it. Had policymakers limited the hikes to one or two priorities, they could have controlled costs. Instead, they threw vast sums of money at all of these programs. The result: an unaffordable "guns and butter" budget.

Congress and the president couldn't say no even to the lowest-priority programs. Few taxpayers can claim the Denali Commission (an Alaskan public-works program) enriches their lives. But Washington increased its four-year budget from $1 million to $169 million. How much of a national priority is the Bureau of Export Administration? The Maritime Administration? The Foreign Agriculture Service? Most Americans have never heard of these obsolete agencies, yet Congress and the president bumped each of their four-year budgets by more than 70 percent.

From 2000-2003, Washington had a rare opportunity to save the average household nearly $2,500 in taxes without reducing any federal services. After 50 years of steady increases, interest payments on the national debt declined by $247 billion from 2000 to 2003, thanks to the balanced budgets of the 1990s. Like the post-Cold War "peace dividend," Congress and the president got a once-in-a-lifetime "interest dividend" of $247 billion.

And they squandered every penny.

They allocated all $247 billion to new spending, and when that money ran out, spent $782 billion more. That's $1.029 trillion in new non-interest spending in just four years -- the largest increase since World War II.

More seems to be on the way. Congress and the president may spend as much as $600 billion over eight years for prescription drugs. Senators have endorsed a 600 percent increase for Amtrak. The House of Representatives passed legislation doubling the National Science Foundation's budget. The Senate is in the process of adding $6 billion in farm subsidies, despite this year's enactment of a record $180 billion farm bill. No one is proposing rolling back any of the 2000-2003 spending increases to pay for these new priorities.

Recession-weary policymakers may think this new spending will help the economy by injecting money into it. But they forget that every dollar the government spends must first be taxed or borrowed. The $5,000 per-household tax hike that will follow this spending spree can't help but discourage the extra working, saving and investing we need to jumpstart our economy.

Politicians who want to spend even more money are telling taxpayers that it's time to sacrifice. To which taxpayers should reply: "You first."

Brian M. Riedl is the Grover M. Hermann fellow in federal budgetary issues at The Heritage Foundation (www.heritage.org), a Washington-based public policy research institute.