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March 18, 2005



PAUL GIGOT: Welcome to THE JOURNAL EDITORIAL REPORT. Last November, the American people elected a Republican president and a Congress with larger Republican majorities in each house. The Republican agenda on money matters was clear: low taxes and restraints on spending. This week's budget battles were the first important test of whether the bigger Republican majorities could govern the way they promised, in a philosophically consistent way. The results were mixed. Congress kept spending increases in the new budget to 2.1 percent overall, the smallest increase in eight years.

A small group of House Republicans forced some rules changes that should help enforce discipline on spending. And by a 50-50 vote, the Senate defeated budget language that would have made it much harder to extend tax cuts. On the other hand, in a setback to President Bush and the GOP leadership, Congress failed to make big cuts in Medicaid spending. Republican Senator Judd Gregg said this failure would "gut the only thing in this budget" that would enforce fiscal discipline, and he added, "It's being done by Republicans. You just have to ask yourself how they get up in the morning and look in the mirror." There was also that bloated highway spending bill, which we'll get to later.

Here to discuss all this are: Bret Stephens, a member of THE WALL STREET JOURNAL editorial board; Jason Riley, a senior writer for the editorial page who covers politics; and Rob Pollock, a senior editorial page writer. So Bret, what kind of start are the Republicans off to here in the early days?

BRET STEPHENS: Well, they are in a cosmic battle between the better angels and the worst angels of their nature for the soul of the Republican party. And on the side of the better angels you have people like Congressman Mike Pence from Indiana and 24 other back benchers who decided that -- or who insisted on a little sunlight in the budget stuffing process by which we get these gigantic appropriations bills. And on the side of the not-so-great angels, you have people like Don Young, who's trying to build on a 125 million dollar bridge to nowhere in the middle of Alaska.

And what this really comes down to is a choice for the Republican party. Do they want to be the party that is "of government," which is to say getting re-elected year after year by sending pork back home the way the Democrats did for 40 years? Or do they want to be a party that's in government and that can continue to sell itself as a tax cutting party? It's becoming very hard to do if they can't get the spending under control.

PAUL GIGOT: Jason, the Republicans have blown the bank, the doors off spending in the last four or five years. They seem like --

JASON RILEY: They have. But I do think, in their defense, that they've gotten off to a pretty good start in using their increased majorities. They've gotten class action reform, for instance, something they've been trying to do for a long time, cutting down on frivolous lawsuits in our court system. They've gotten a bankruptcy bill passed that will help prevent affluent people from walking away from their debts. And it looks like they might get drilling in Alaska, which is something they've been trying to get for a long time, and it's pretty important. I mean, high oil prices are one obvious reason we should be drilling up there. It's not going to give us energy independence, but it is going to provide something of a cushion for the next time there is an oil crisis. And that's something -- the environmental concerns are overblown. They always have been. We're talking about drilling on 2,000 acres of land. In a state the size of Alaska, that's the equivalent of a coffee table on a football field.

PAUL GIGOT: What about tax cuts, Rob? Because we did have an election that was clearly fought over this. John Kerry said let's repeal the Bush tax cuts. The President said, look, I want to make them permanent. And yet it doesn't look like Republicans have the 60 votes needed to make them permanent.

ROB POLLOCK: No, it doesn't. And where I'd like to think that there's a real battle going on here -- and while I do think that this Congress is off to a good start -- we have to remember they have a lot of sins to atone for in the last Congress, particularly the Medicare bill. We're talking about seven trillion in new liabilities that --

PAUL GIGOT: The prescription drug benefit and Medicare.

ROB POLLOCK: Yes, the prescription drug benefit and the Medicare bills. That's a lot to atone for. And it's important to remember that this group of 25 in the House that succeeded in passing this modest budget restraint is the same group that fought unsuccessfully to prevent the Medicare entitlement from happening. So it remains to be seen how successful they'll be in the future, I think.

PAUL GIGOT: Now it's often said that the most dangerous place in Washington is between a Congressman and asphalt. And members of the House this week reverted to the usual form when it came to spending on transportation projects that are near and dear to their hearts. By a vote of 417 to nine -- 417 to nine -- they approved spending 284 billion dollars on highway and other projects over the next six years, 28 billion more than the president proposed last year, and 66 billion more than the last six-year highway bill. A lot of work on the transportation infrastructure does need to be done and paid for. But this bill also provides for such things as 423 million for two bridges in Alaska, including one for about 24 people who live on an island, three million for improvements to an Ohio museum dedicated to the Packard automobile, and seven million dollars for snowmobile trails in Vermont -- in all, more than 4,000 projects costing about 12 and a half billion dollars were included at the request of individual congressmen.

Jason, I know you really care deeply about the Packard automobile, but what does this performance say about the Republican commitment to fiscal conservatism?

JASON RILEY: Well, what is says is that there is a bit of cognitive dissonance going on in the Republican party. Bret alluded to it a little earlier. On the one hand, they're trying to do some good things. They're trying to reduce spending on entitlements, something that hasn't been done since 1997.

PAUL GIGOT: Those are the automatic spending programs like Medicare and Medicaid.

JASON RILEY: They're trying to cut back subsidies on Amtrak. So they're trying to do some good things. But on the other hand, they're busting the bank on the highway bill, which makes it very difficult to think that they're serious about cutting spending.

PAUL GIGOT: Rob, you're shaking your head.

ROB POLLOCK: These kind of earmarked programs are just sinful. And call me old fashioned, but I don't think it's entirely irrelevant that the man who wrote our Constitution, President Madison actually vetoed -- one of his famous vetoes was of a highway bill. And why did he veto it? He said, "I don't think this is one of the enumerated powers in the Constitution." I don't think any party in its sort of doled-out pork in terms of earmarked road projects, can claim to believe in fiscal discipline.

BRET STEPHENS: Well, what's actually extraordinary, also, is if you look at the figures, the Republicans are crying -- some of the Republicans are crying bloody murder because they're having their pork somewhat pared back. This budget is about 391 billion -- which is about three billion dollars less than last year, so it's less than one percent. And this is supposed to be a major cut-back. Under the Republican Congress in the last four years, we've seen discretionary, non-defense spending go up by 110 billion dollars. That's extraordinary.

PAUL GIGOT: But Bret, if you talked to some of these Republican members of Congress, what they'll tell you is, "so what?" Voters hate congestion, they love roads. There is going to be no political price for this. And so, Rob, what political price are they going to be paying?

ROB POLLOCK: Well, the political price they're going to pay is if they stay in government they're going to have to raise taxes to pay for all this. And I think it's important to broaden this discussion out a bit. I mean, to point out, yes, the highway bill is sinful, it's wasteful. The broader spending problem is the entitlement problem. And I think we do have to give Republicans credit for bringing that up. And the Democrats are putting their heads on the sand saying there's no social security problem. The Republicans are bringing up the issue and trying to do something. They do deserve credit for that.

There is, of course, the worry that this is going to end up like the Medicare debate and we're going to get another big entitlement out of this, not a reduction in liability.

JASON RILEY: That is the point exactly. This spending could lead to higher taxes. Republicans are in control. They could get blamed for those higher taxes. And more importantly, when it comes to bigger entitlements like Social Security, higher taxes, a stagnant economy, much more difficult to reform entitlements when the economy isn't growing.

BRET STEPHENS: There's also a basic political problem. If you want 394 billion in non-defense spending, elect Democrats. What is the Republican party about at the end of the day if they aren't for smaller government, for going through the add-ons, these sorts of ridiculous programs, and weeding them out? This is what got the Republicans elected in '94?

PAUL GIGOT: All right. One other big issue this week in Congress, the hearings over steroids, where baseball stars like Mark McGwire and Sammy Sosa appeared and were asked to state whether they had ever used steroids, and what they thought of it. Jason, is this any business of the United States Congress?

JASON RILEY: Well, if this, investigating Mark McGwire's steroid use, is the most important issue in the country, then we're doing pretty good.

PAUL GIGOT: As a country?

JASON RILEY: My initial reaction. The only honest thing I've heard the committee say about these hearings is that Barry Bonds was not invited because he was going to steal the show, and they were being perfectly honest. They didn't want anyone to steal the show from them. This is about grandstanding, and not much else.

PAUL GIGOT: What's wrong with a little educating the public, Jason? I mean, actually this brought enormous attention to the problem of steroids, did it not, Bret? And these things are, by the way, illegal, number one. And number two, kids use them to imitate their heroes. And I don't think we want that. Certainly we don't want it in young athletes. What's wrong with this educational rule for Congress?

BRET STEPHENS: I think it's absolutely appropriate. And I think what's happened in baseball is a scandal. And you can say well, this isn't properly the role of Congress. But as you said, that's right. We do have a kind of educational function, and it does matter that our national pastime is basically being junked and being made an arm of a wrestling and freak show. I think that's a shame. And I think if Congress can put a spotlight on that, it's a good thing they do.

ROB POLLOCK: I think it's a shame, too, but I'd say it's their funeral. And like Jason, I think the Founding Fathers probably envisage steroid hearings in Congress even less than they envisioned Congress building roads.

JASON RILEY: Even if I concede Bret's point, even if you believe that Congress has a role here, until 2003 it wasn't against baseball policy to use steroids. Now it is against baseball policy to use steroids, and there are penalties put in place for players who violate the rules. So even if you believe Congress has a role here, they are about two years late in investigating the problem.

BRET STEPHENS: Well, (a) steroids are often illegal, whatever the rules are in baseball. And (b) I think there is just a larger problem about what this sport is about, and what we want sports generally to be about. Now you can say that Congress shouldn't have a legislative role in it. But it does have a role in having hearings about this and making people think about it. You know, you cannot compare Sammy Sosa to Babe Ruth any more, or Mark McGwire, because you're comparing some kind of human freak to an actual athlete. And I think it's a pity that those distinctions, or those commonalities, no longer exist.

PAUL GIGOT: Okay, Bret, we're going to have to give you the last word on that one. Next subject.