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The policy changes that SAFE advocates for healthcare, energy and education (see applicable pages of this Website) would go a long way towards closing the government’s widening fiscal gap. There are opportunities to economize in many other areas as well.
Effective cost cutting requires a two-pronged approach: (a) slash the dead wood, and (b) tighten up budget procedures.
Where to cut – Unnecessary government programs should be eliminated, such as agricultural subsidies, “corporate welfare,” and tax credits for favored industries. These programs do not serve the interests of the general public, nor do the beneficiaries need government support. Agricultural subsidies primarily benefit big agribusinesses and wealthy landowners, for example, while driving up food prices for all Americans.
Another problem is duplication. Federal programs often have overlapping objectives, resulting in turf wars and/or unnecessary costs to ensure coordination, e.g., several different agencies have been involved in water resources development. The solution is to pick the best programs and terminate the rest.
Federal grant programs should be eliminated, with the functions involved being left to state & local governments or the private sector. Some $426 billion in federal grants were paid in 2005, ranging from $186 billion for the federal share of Medicaid and the $71 billon cost of the Department of Education (mostly grants) to 50 different grant programs for the homeless in eight federal agencies.
What is wrong with grant programs? They encourage overspending for the stated grant purposes, foster the growth of federal, state and local bureaucracies to document compliance with federal mandates, and reduce the flexibility and innovation of recipients. For an in-depth discussion, see Downsizing the Federal Government, Chris Edwards, Cato Institute (2005).
The main obstacle to implementing these ideas would be mustering the political will to take action, which would be tough but not necessarily “impossible.” New Zealand halved its government spending in the 1990s! To learn how they did it, download this entertaining and inspiring audiotape (3 segments, 1.25 hours including Q&A) by Maurice McTigue (Mercatus Center). Enjoy the tape and share it with your family and friends. McTigue1, McTigue2, McTigue3. (.WAV files, compatible with Windows XP and Mac OS X).
Budget Procedures - A balanced budget amendment to the Constitution, either prohibiting deficit spending except in time of declared war or requiring a 2/3 majority to approve deficit spending in any given year, would be a tremendous help – if it could be adopted.
Giving the president a “line item” veto could be modestly helpful as a means of cutting pet Congressional projects (or “earmarks”) out of the budget. The ideal approach would be to restore the president’s impoundment authority, since presidential power to veto elements of Congressional authorizations would require a Constitutional amendment.
Another possibility is a “pay go” rule that would require that any spending increase or tax cut be “paid for” by offsetting changes in the budget. Such rules have proven only moderately effective in the past, however, and if overall budget control is maintained they serve no real purpose.
9/29/14 – The budget is on autopilot, and so are a lot of other things
9/8/14 – Global economic data raise questions about current policies
7/28/14 – Don’t forget the fiscal problem!
7/11/14 – Corporate welfare has nine lives
4/14/14 – Ryan budget dismissed as a “meanwich”
3/10/14 – President’s fiscal plan is a nonstarter, now what?
2/24/14 – Side B can and must offer a better plan
2/17/14 – Tax work, subsidize idleness, and batten down the hatches
11/11/13 – Budget talks resume, sides remain far apart
10/28/13 – Let’s make a deal: some thoughts for the budget conference committee
10/21/13 – The government shutdown ends, with unresolved issues aplenty
9/23/13 – Into the budget breach once more, but this time . . .
7/29/13 – The next budget battle takes shape
6/3/13 – SAFE’s latest letter to Congress
5/6/13 - A status report on the fiscal problem
4/29/13 – Some food stamps history and where to now
4/22/13 - Will another fiscal year start without a budget?
4/15/13 – The president’s budget
4/8/13 – Outside perspectives on the fiscal problem
3/25/13 – When budgets collide
3/4/13 – We can’t keep spending like this
2/18/13 – Government “investment” will not solve the fiscal problem
1/7/13 – Fiscal cliff debacle is over, but other issues loom
12/17/12 – Fiscal cliff notes
11/26/12 – RX for the fiscal cliff
11/19/12 – Stepping back from the fiscal cliff
10/29/12 – Foreign policy debate comes down to domestic issues
10/15/12 – SAFE’s jobs manifesto
10/8/12 – The first presidential debate was instructive
5/21/12 – Coming attractions: lame duck session
5/14/12 – What about the Export-Import Bank?
5/7/12 – The student loan iceberg
4/30/12 – Beware the Debt Bubble
4/9/12 – Bitter budget battle building
3/26/12 – House budget opponents circle the wagons
2/20/12 = Budget lands with a thud
2/13/12 – Plumbing the depth of the fiscal hole
1/30/12 – SOTU finesses fiscal responsibility
1/23/12 – Cut defense spending with care
12/19/11 – Beware the planning disease; it takes action to get things done
11/21/11 – GOP economic plan offers some good ideas, but weak execution
11/14/11 – “We can’t wait” campaign is a farce
11/7/11 – Flattering and cajoling the “Super Committee”
10/31/11 – Decision time for the Joint Committee
10/24/11 – Wasteful spending: the EEOC has outlived its usefulness
10/10/11 – Joint Committee must get back to basics
10/3/11 – JC update: hunting for a painless solution
9/26/11 – “Happytalk” revisited and what to do about it
9/19/11 – Elementary, my dear Holmes
9/12/11 – A tempting offer: spend now, pay later
8/29/11 – Congress’s ratings hit new lows: some thoughts about the stats
8/22/11 – A list of targeted spending cuts
8/15/11 – And so it begins: a “Super Committee” is born
8/8/11 – Debt limit deal settled nothing
8/1/11 – Who cut my credit rating?
7/25/11 – Looking at things in a different way
7/15/11 – Making sausage in DC: haggling over a debt limit increase
7/11/11 – When worlds collide: two very different strategies
7/4/11 – Remember the past to save the future
6/20/11 – Slouching towards a debt limit deal
5/30/11 – Never mind a 10-year plan; cut spending now
5/16/11 – Of course the debt ceiling will be raised, but on what terms?
4/18/11 – Stay alert: this will be a long, tough ride
4/11/11 – Government shutdown: a temporary reprieve
3/28/11 – A status report on the budget brawl
3/14/11 – How to keep big government going (for a while)
2/28/11 – The budget: will Congress save the day?
2/21/11 - The budget: a "lowball" offer
2/7/11 – SAFE to Congress: you need to do much, much better
1/31/11 – To win the future, do not let the government do it.
1/17/11 -- SOTU and budget preview
1/3/11 – The time for politics as usual is over
12/6/10 – Fiscal Commission sets stage for further discussion11/15/10 – Fiscal Commission: Co-Chairs’ Proposal
10/25/10 – Getting down to brass tacks about spending
10/18/10 – Surveying the path forward
10/11/10 – The bailout mentality puts us all at risk
10/4/10 – Fiscal Commission: tough decisions in November9/27/10 – The generational divide: two takes on the fiscal problem
8/2/10 – Fiscal Commission fiddles as budget burns
7/19/10 – Resolving the fiscal mess: SAFE responds to a fictional inquiry
7/12/10 – Re the cut spending/ raise taxes debate: “There’s more than one way to skin a cat” – all likely to be messy.
7/5/10 – Fiscal Commission update
6/28/10 - And never the twain shall meet: the Left/Right divide.
6/21/10 – The plan now, act later approach is a nonstarter.
5/24/10 – Fiscal Commission update: off to a somewhat promising start
5/17/10 – Greek debt crisis: a double-edged sword
4/26/10 – Fiscal Commission lifts off this week, but where is it headed?
4/19/10 – I.O.U.S.A. Solutions: a not so subtle pitch for raising taxes
2/22/10 – Here goes nothing: some thoughts about the Fiscal Commission
2/15/10 – Don’t just stand there, do something constructive
2/8/10 – Sorry, but the budget was dead on arrival.
1/4/10 – The wrong way to defuse the debt bomb
8/31/09 – If you can’t hear what we hear, you aren’t listening.
4/27/09 – Delaware’s fiscal situation: a case study
3/16/09 – A tale of two summits [re fiscal responsibility and healthcare, respectively]
3/2/09 – The young and the reckless
2/9/09 – Looking ahead to the Fiscal Responsibility Summit
2/2/09 – Economic stimulus package: what’s the rush?
1/12/09 – Madoff writ large
1/5/09 – Some call it stimulus; we call it pork
12/1/08 – Once again, this time in plain English
11/24/08 – First things first: time to clean up the fiscal mess
11/10/08 – Election over: now what?
10/27/08 – What would you like, central planning or an eclectic mix?
9/1/08 – Not another one: the first “economic stimulus package” was bad enough
6/16/08 – To win “Budget Hero,” raise taxes.
5/19/08 – Strategies to cut government spending
3/3/08 – Connecting the dots: earmarks matter, and words also.
2/18/08 – Let’s hear it for real change!
2/4/08 – State of the budget: the road ahead
1/28/08 – State of the budget: a 40-year slump
1/7/08 – Cut the pork; earmarks need to go.
12/17/07 – Government spending: what crackdown?
12/3/07 – Learning from experience: why government programs fail
10/1/07 – Enough already with government grants!
9/10/07 – The coming fiscal storm: an historical perspective