Sunday, August 26, 2007

Chalk up another one for divided government.

Stephen Slivinski, economist, author of Buck Wild, Director of Budget Analysis for the Cato Institute, and DWSUWF favorite, comments on recently released CBO budget estimates in "Finally, Some Not-So-Bad News on the Budget" posted at Cato@Liberty:
The big surprise in the Congressional Budget Office mid-year budget estimates released today isn’t that the year-to-year deficit shrank again. Or that the long-term liabilities in Medicare and Social Security continue to impend. The surprise is that federal spending will only grow about 3% in the current fiscal year that ends this October. That’s a big improvement over the annual average 7% growth we’ve seen since the first day of the George W. Bush presidency. How did that happen? Those familiar with my previous research will probably not be surprised to hear that the new political reality – divided government – has something to do with it... Earlier this year, the new Democratic Congress decided to put the federal budget on auto-pilot until October. Instead of passing new appropriations bills to fund the government for the entire year, they passed what is called a “continuing resolution” to keep the government operating. This didn’t happen because the Democrats were all that interested in spending less money. They just wanted to get the old budget work left to them by the outgoing Republican Congress off the table so they could get on with more ideological-base-friendly legislation, like the minimum wage increase. And the Democrats knew that the president might finally start vetoing legislation, too. A protracted battle over the budget wasn’t something they wanted to spend their energy on in the first half of the year. Thus, the auto-pilot continuing resolution: a piece of legislation that keeps the government running at basically the inflation-adjusted level of the previous year. With the White House veto strategy finally a credible threat, it looks like we might have a similar sort of outcome on spending this year, too. Isn’t divided government wonderful?
Good news. Since its inception, this blog has been in the service of promoting the concept of voting for divided government as a way of limiting the growth of federal government spending, among other beneficial effects. After divided government was re-established in the 2006 midterms we outlined assumptions for continuing to support this concept in the 2008 presidential election in the post - "2008 Election Prologue - Check your assumptions":

Assumption 1) The Divided Government hypothesis holds true to form.
We will have divided government for the next two years. Minimally, we expect to see restraint in the growth of spending and some evidence for more fiscal discipline on the part of the federal government. If that does not happen, the foundation for advocating divided government will collapse, and we will refocus on abalone diving on the Mendocino coast.
Looks like the abalone will have to wait. Divided Government Rules!

Reminder - We are one week away from the next edition of the Carnival of Divided Government. The Carnival of Divided Government Sextus Decimus- Special Labor Day Edition, will be posted on or about September 3rd, 2007. Blog articles may be submitted for the carnival of divided government using the carnival submission form. Past posts can be found here or on our blog carnival index page.

Divided and Balanced.™ Now that is fair.


Alex said...

Chuck Hagel? ...really?

Superdestroyer said...

Of course when Senator Clinton is elected President and the Democratic party is the only relevant political party, spending is once again increase.

I wonder how spending will be when the Republican party collapses and we are only left with the Democrats. If you look at staeslike New Jersey, Mass, or California, spending will be out of control very quickly.

mw said...

Really. Preference not prediction.

Agreed. Except I am not convinced that a Clinton / Dem victory for the presidency is inevitable. Time is running out, but the Republicans could still get their act together and get behind an anti-war Republican candidate like Hagel and salvage the White House (agree that both legislative houses are a lost cause for the Reps in 2008).

If the Dems are installed in single party control of the federal government in 2008, history says you are right, and we can expect spending to again accelerate out of control. Single party control by the Democrats will be every bit as bad as single party control by the Republicans for the last six years.