"Commentary"-Spending Restraint
Monday, May 19, 2008SUSIE GHARIB: Tonight's commentator says there are two key words this presidential election year: spending restraint. He's Glenn Hubbard, dean of Columbia University's school of business and former economic advisor to President George W. Bush.
GLENN HUBBARD, GRADUATE SCHOOL OF BUSINESS, COLUMBIA UNIV: In this presidential campaign, some candidates argue that large tax increases are necessary to fund the nation's priorities. These arguments assume, of course, that current and planned future spending levels reflect those priorities. But that is a big assumption. The Federal government has been on a bipartisan spending binge for a decade. Compared to the 1997 level, adjusted for inflation and homeland security spending, actual non-defense spending was $125 billion higher in 2007 or $900 billion excess for the decade.
Some of the binge is pure pork, for political pet projects. Citizens Against Government Waste tells us that that we are wasting $18 billion this year alone with a like amount in recent years. In not too many years, we face an avalanche of spending to pay for growth in Social Security and Medicare. And the spending binge and pork projects cast doubt on the notion that any tax increases would be saved for the future.
A better course, as with our present spending woes, would be to slow the growth of spending -- in this case by trimming entitlement benefits for the better off and improving health care markets. If we go this route, we avoid the economic costs in growth and jobs of large tax increases. Question for candidates urging tax increases: is our government so fit and trim that no spending diet is possible? I'm Glenn Hubbard.
