RALEIGH – “Senate backs higher spending limits than Bush wants.”

That was the headline of an Associated Press story (not online) that ran in Thursday’s News & Observer of Raleigh. It gave an account of an 76-vote alliance among Democrats and some Republicans in the U.S. Senate that rejected the president’s proposed spending authorization for transportation. Of course, I would have voted against Bush’s proposal too – it’s far too big and includes plenty of silly mass-transit projects, including some here in North Carolina. Indeed, as I have argued frequently in the past, the federal government should get out of the transportation-funding business altogether and let states raise and spend their own dollars on their own priorities.

But that’s not what motivated the “no” votes in the Senate. They thought that the Bush administration wanted to spend too little.

The disagreement isn’t huge by Washington standards — $284 billion from Bush vs. $295 billion from the bigger-spenders. But it is important symbolically. The federal-budget deficit is massive in dollars. As a percentage of gross domestic product, however, it is lower than we have seen during many recent administrations. Even if you believe that budget deficits raise interest rates or cause trade deficits, which would be bad economics on your part, you have to admit that the U.S. is a model of fiscal balance when compared to many European countries. In short, hyperventilation isn’t warranted.

It doesn’t matter. Politically, deficit spending is a sign, a potent sign, that federal spending is excessive and federal politicians are irresponsible.

There are some appropriate federal expenditures for which borrowing makes sense. Should Washington really pay cash for an aircraft carrier? Of course not. It is a long-lived asset whose benefits will accrue to generations of taxpayers. Most federal borrowing doesn’t fund such investments. It consists of transfer payments or finances extra-constitutional pork. To the extent politicians are allowed to borrow money today to pay benefits today, they’ll do so to get votes today – knowing full well that it will be someone else’s problem to pay the bills tomorrow.

Voters don’t like deficits. To a fault, perhaps, they believe that balanced federal budgets are critical to the nation’s economic health. Thus, as columnist Bruce Bartlett has pointed out, chronic deficits often lead to political pressures for higher taxes, which then fuel another round of excessive spending.

Fiscal conservatives worried about this dim prospect should have voted to strengthen, not bust, the president’s spending caps. Too many were on the other side of the vote tally – including North Carolina’s Elizabeth Dole and Richard Burr.

Count me unimpressed, to say the least.

Hood is president of the John Locke Foundation.