Can We Afford All This?

The White House gets much of the blame from fiscal conservatives for allowing Congress to break the bank. "George Bush doesn't really have an anti-Big Government bone in his body," says Stephen Moore, president of the Club for Growth, a group that promotes limited government. "Compassionate conservatism means never having to say no."

Bush officials argue that most spending increases were necessary to fight terrorism and that smaller tax receipts resulting from the economic downturn played a bigger role than Bush's tax cuts in the deficit increase. The President has now promised to cut the deficit in half over the next five years. To achieve this ambitious goal, he wants to limit discretionary growth to 4% next year. But his budgeters are likely to make that number by not counting emergency, defense and homeland-security costs. Above all, the Bush team is counting on growing out of the deficit. If economic activity is robust, the thinking goes, revenues from taxes will increase despite lower rates. Thus far, the economy is doing its part to make that happen, churning in the third quarter at a scorching 8.2% pace. Job production appears to be inching back, and consumer confidence is at its highest level in more than a year. Deficits are bad, White House aides concede, but slavish concern about them--which they associate with Clinton Treasury Secretary Robert Rubin--would have kept them from passing the tax cuts they argue are fueling the current boom. "All the fears of Rubinomics have not come to pass," says a senior White House official.

The Democrats, meanwhile, are not helping deficit hawks make their case, having shown few signs of running on fiscal restraint themselves. In fact, last week one presidential contender, Senator John Kerry of Massachusetts, tried repeatedly to paint the field's putative front runner, former Vermont Governor Howard Dean, as a "balanced-budget freak" and to nail him for once wanting to "slow the rate of growth" of Medicare. Dean bobbed and weaved, proving that he too knows there is no political appetite for a candidate who serves up hard choices. The polls don't seem to give him or his competitors much incentive to do otherwise: fully 72% of Democratic voters say the country should go into debt to spend more on social programs, according to the Pew Research Center, a 20-point increase since 1997, when budget balancing was in high fashion.

Bush's tax cuts have been such nectar to conservatives that there's little danger of a broad fiscal revolt from his base. Furthermore, embracing the prescription-drug entitlement helps build the kind of governing majority that Bush's political brain Karl Rove has long dreamed of. When they were a minority party, Republicans could preach fiscal discipline. Now that they control Congress, the White House and more than half of the state houses, they have to show that they are listening--specifically on issues like health care and education, which were once considered territory only Democrats cared about. So if a little money needs to be spent along the way to buy votes and expand their base, the White House seems happy to open the store. --With reporting by Eric Roston and Douglas Waller/Washington