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September 23, 2005

Transcript

LEAD STORY

PAUL GIGOT: Welcome to THE JOURNAL EDITORIAL REPORT. The word in Washington this week was offsets. If we're facing enormous bills for rebuilding the Gulf Coast how do we offset that spending with cuts elsewhere? Conservative Republicans in Congress and even some of their democratic colleagues started a talk about facing up to the hurricane costs, especially against the background of spending that was already at record highs.

With me to discuss the options and whether there is any real chance this could be more than talk are Dan Henninger, columnist and deputy editor of the Wall Street Journal editorial page, Steve Moore, our chief economics writer and a member of the editorial page who's been covering developments in Washington this week and Rob Pollock, a senior writer for the editorial page.

It started of course with the most obvious target -- all those expensive gifts in the federal highway bill.

In Washington it's called pork. Pet projects earmarked by congressmen and attached to appropriations bills. It is estimated that there is $24 billion dollars of earmarked projects buried in the $286 billion dollar federal highway bill signed by President Bush. $24 billion dollars is more than 10 percent of the estimated $200 billion dollars it will take to fix what Katrina broke. And where is that money going? Here are some of the big and small examples of the 6,371 projects in the bill; New York City is getting $6 million dollars to clean up it's ubiquitous graffiti which from experience likely means simply giving graffiti artists clean canvasses to work with. The highway renamed the Ronald Reagan Freeway which runs through Ventura and Los Angeles is to get a facelift at a cost of $2.3 million dollars. Beautification apparently was not an issue when the highway was still known as the Simi Valley Freeway.

It's worth nothing that President Reagan vetoed a transportation bill in 1987 because it contained too much pork. There are nearly $29 million dollars set aside for bike, pedestrian and hiking paths around the country. India Point in Rhode Island gets $2.5 million to buy its power lines. The town of Weedsport, one square mile metropolis situated in rural upstate New York, gets $200,000 dollars for a deer avoidance system. There's a $25 million dollar allocation for a bridge across a swamp like river in South Carolina between Lone Star, population 1,600, and Remini, population 800, to be built just 10 miles upstream from an existing bridge.

But perhaps the biggest windfall has been reserved for Alaska, home state of Congressman Don Young who happens to be the chairman of the House Transportation Committee which oversees the highway bill. Young earmarked nearly a half billion dollars for two bridges; the first costing $230 million is appropriately named Don Young Way. It replaces an 80 mile drive with a two mile bridge link connecting the Port of Anchorage with Port McKenzie. The second, another $230 million dollar bridge, connects Gravina Island, population 50, with the Alaska mainland at Ketchikan. Residents and visitors will have to contend with the present seven minute ferry ride until the bridge is built.

One enterprising critic of the project calculated that the cost of building the 5.9 mile bridge would be enough to buy every island resident his or her own Lear jet which could be kept at Ketchikan Airport which was built on the bridgeless Gravina Island. By comparison that 24-mile bridge over Lake Ponchartrain, the longest bridge in the world until Katrina destroyed it, served 35,000 motorists a day and will cost about $600 million dollars to replace.

PAUL GIGOT: Steve, are we finally seeing a grassroots and congressional revolt against this kind of pork bill spending?

STEVE MOORE: Well Paul, in Washington the pork has finally hit the fan and what's happening in this town is you're starting to see Americans all over the country seeing these visions of all of this pork in the bill and they find it to be repugnant. The problem for Republicans is when they took over Congress back in 1994 they pledged to get rid of all this irresponsible wasteful spending and now a lot of voters, especially conservative voters, are looking at what's going on in the Republican Congress when people like Tom DeLay say "We can't find anything to cut." And they're saying wait a minute, now we've got two big government parties in Washington.

PAUL GIGOT: Nancy Pelosi, the democratic house leader, this week volunteered to give up $70 million dollars worth of roads and other projects in her district in San Francisco which struck me Rob as both good policy, but also very smart politics trying to reclaim the fiscal conservative mantle from the Republicans.

ROB POLLOCK: Absolutely. Look, there's a moral dimension to spending here and that's what we're seeing. Spending is ultimately about taxes, it's about coercion. I was surprised yesterday, Mary Landrieu, senator from Louisiana, she's requesting $250 billion dollars to be spent on her state alone. She says she admits that that's a lot of money. Well, how much money is that? That's $2,500 dollars per household in America.

PAUL GIGOT: Wow, that's astonishing. What I like about this is that it's finally forcing Congress to choose. You know, we had to rebuild and spend more after 9/11, after September 11th, because the military spending had fallen so much in the '90s. That's gone up substantially and that's going to cost more, but what Congress hasn't done is actually then give up anything, Dan. This is at least finally forcing them to confront some choices.

DAN HENNINGER: Well, that's a start and I think if we can do anything to rationalize the spending process it's a good thing. My concern here, the silver lining is the public is finally focusing on these incredible figures; $200 billion, $286 billion dollars in a highway bill. Now we're talking about spending $200 billion on the reconstruction of the Gulf.

ROB POLLOCK: One state.

DAN HENNINGER: On state. And we could be talking about shifting the accounts from one area of wasteful spending to another area of wasteful spending. My fear about the Gulf reconstruction is that it could make the Teapot Dome scandal look like a tea party.

STEVE MOORE: Paul, we had a wonderful story in the JOURNAL last week about this town Bozeman, Montana that's getting $4 million dollars from this obese transportation bill for a parking garage and many of the citizens in Bozeman said wait a minute, let's send this money back to Washington so it can be used for hurricane relief, not for pork projects. You're starting to see that happen all over the country. Even some of the people in Alaska are embarrassed by these bridges to nowhere and so on. So I think Republicans better get their hands on this because you're right, when you have Nancy Pelosi moving to the right of the Republicans on waste it's a big political problem for the GOP.

PAUL GIGOT: Other than the highway bill there were some Republicans who came up with some other ideas this week to offset some of the spending for Katrina and hurricane relief. What are some of those other ideas?

STEVE MOORE: Well, there's a group called the House Republican Study Committee headed by Mike Pence of Indiana. They came up with a list of nearly a trillion dollars of spending cuts over the next 10 years.

PAUL GIGOT: Wow.

STEVE MOORE: They range from things like delaying the Medicare Prescription Drug Bill for senior citizens by a year or two, maybe not going to Mars with NASA until we get this spending problem cleaned up. Some just wanted an across the board two or three percent cut in all the other programs to bring the budget down. Remember Paul, even before Katrina the budget was already growing by seven percent this year.

PAUL GIGOT: So that if you spread it across all these programs then everybody in a sense shares paying for this national disaster.

DAN HENNINGER: But if you're going to make those painful cuts, I think the public is going to want much more oversight over the $200 billion you're spending on Louisiana. You can't just throw the money into that state and expect to get away with it.

PAUL GIGOT: What about the idea of a Grace Commission which was back in 1984 I think, a proposal that under the Reagan Administration we had big deficits. There was an idea to look through the whole budget and come up with what we need to spend. Is that making a comeback?

ROB POLLOCK: Yeah it is. I mean look, everyone complains about waste, fraud and abuse in government. Well 20 years ago we had a commission to look at waste, fraud and abuse. They came back with recommendations and those recommendations got followed. Well it's been 20 years since we've done that. How do we know we're ripe for another Grace Commission? We know that Congress is now funding about 160 to 170 unauthorized programs, that's just programs they're afraid to look at and see what's in there and actually formally reauthorize.

PAUL GIGOT: One of the issues here is actually what the president is going to do. Because the president has said he's going to spend whatever it takes. I think that was his phrase. Yet this is his party running Capitol Hill and he has never vetoed a single spending bill, Steve.

STEVE MOORE: And that's just come back to bite him right now. A lot of Republicans are looking to the president for the leadership. To expect Congress to cut spending is sort of like asking a scorpion not to sting. I mean it's in Congress' nature to want to spend money. The president is really going to have to step forward. What he can do is something called the rescission process which is like a line item veto, not quite as powerful, and say okay, we're going to cut $50 billion dollars out of these 25 or 50 wasteful programs, send that to Congress, give them the list and make them vote up or down on that.

PAUL GIGOT: Put it as one big package.

STEVE MOORE: Right.

PAUL GIGOT: Sort of like the Base Closing Commission. You have to vote up or down on it. Now Congress would not necessarily have to take that vote under the current law, but if the president did not make an issue out of it and took it around the country...

STEVE MOORE: Exactly. The whole purpose of the rescission process is when you have an emergency or some changed circumstance where you have to spend money on a war or a national emergency like this. You divert spending from one area of the budget to another.

PAUL GIGOT: We had an exchange this week with a White House official Rob who said we had got it wrong because there's something called the Stafford Act passed in 1988 which requires the federal government in these cases of natural disasters to spend the bulk of the money, something like 80 or 90 percent, what do you think of that argument?

ROB POLLOCK: That's right, a White House aide sent out an email complaining actually about one of Steve's pieces saying that it was ill-informed and didn't we know that the government had to spend all this money? Well you know, that's preposterous. It's a basic principle of constitutional law, one Congress cannot bind another Congress. The Stafford Act is an enabling statute so that the president may authorize this spending if he wants to.

PAUL GIGOT: Okay. Now the real problem down the road here if you don't get spending under control is that you end up having to finance the spending somehow and if you don't do it with borrowing you do it with tax increases, Steve. Has this spending, which the president hasn't been willing to get under control, put his tax agenda in jeopardy?

STEVE MOORE: It has and I've talked to a lot of economists this week and I've asked them about the fallout on Katrina. What they're saying the biggest danger is not actually the physical damage that was done, because we have the resources to rebuild. The biggest danger is that Republicans are going to retreat from their pro-growth agenda, capital gains tax cuts, the dividend tax cuts. Remember the economy was booming before Katrina. We had strong growth, employment growth and so there's a real danger Republicans are going to retreat and that will bring an end to Bush's domestic agenda.

PAUL GIGOT: And there's also a danger that just for the 2000 bi-elections, the Congressional elections, that Republican voters will decide you know what, we're not as enthusiastic as we used to be and they may not come out.

ROB POLLOCK: Yeah, you have a president saying he wants strict constructionist judges and then you have a president who turns around and envisages patterns of federal spending that would have made the founders blanche. There's an obvious disconnect there and the voters are going to see that.

PAUL GIGOT: Okay Rob, thank you.

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