Grand Ol' Party-ers

When presidents talk about restraining domestic spending, don't read their lips - read their budget actions.

"Republicans rather than the Democrats are the real 'big government' party," according to a study by C. Eugene Steuerle and Gordon Mermin of the Urban Institute, a Washington think tank.

The study finds that spending is not so much a question of political ideology as opportunity.

Over the past 100 years, four of the five biggest-spending presidents were Republicans. Or at least they presided over the largest growth in domestic spending as a percentage of the economy (gross domestic product).

One big surprise - FDR. Domestic spending under Franklin D. Roosevelt fell as a fraction of GDP (see chart).

"How can this be?" ask Messrs. Steuerle and Mermin. "The massive World War II defense buildup crowded out domestic spending."

Moreover, FDR's New Deal programs were primarily short-run, meant to provide jobs or unemployment compensation in Depression times. During the war boom, this spending faded fast.

By contrast, Republican President Herbert Hoover had boosted domestic spending by 4 points.

Almost half of that growth came because the economy itself shrank, but Hoover's popular image doesn't reflect his spending effort.

Under President Clinton, often dubbed a big spender by Republicans, first-term domestic spending rose a mere 0.1 percentage point.

In relation to GDP, spending will shrink 0.1 percentage point for both Clinton terms, if his proposed budget for 1998 serves as a guide.

Congress, of course, controls spending at least as much as presidents do.

Mr. Clinton has a Republican Congress to restrain spending. Presidents Bush and Nixon faced a Democratic Congress.

Steuerle and Mermin, both economists, define domestic spending as total federal outlays minus defense and interest on the national debt.

The results would look quite different for the entire budget, but budget battles usually swirl around domestic issues.

The two economists did not consider the Clinton-Republican budget deal, because talks are incomplete.

"One suspects it probably reduces spending [as a share of GDP], though not very much," says Mermin.

Both the Senate and House Budget Committees were hoping to settle on a broad outline this week.

The Steuerle and Mermin study shows that presidents and Congress tend to be budget opportunists. If money - such as savings on defense spending - is available, politicians grab it for domestic programs.

"This allowed Eisenhower, Kennedy, Johnson, and Nixon to increase domestic spending more easily than other presidents," they say.

Since the Korean War, the defense budget has declined from about 14 percent of the economy to 3.4 percent now. By 2002, it could be 2.7 percent.

Inflation also helped. From the end of the Korean War through the 1970s, it pushed taxpayers into higher tax brackets, which meant high tax revenues for Uncle Sam.

Now, Steuerle and Mermin see the nation in a "fiscal straitjacket," deprived of the old financing techniques. Inflation is modest. Tax brackets were indexed to inflation in 1984.

And entitlements such as Social Security, Medicare, and Medicaid gobble up ever bigger pieces of the budget pie: from 28 to 53 percent between 1962 and 1995.

And unlike most FDR programs, these measures grow faster than the economy.

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