How To Cut Federal Spending Without Eliminating Essential Services
There is one inescapable political truth. Every penny a government spends has to be financed. To raise needed revenue, legislators impose a variety of direct and indirect taxes. Any family that is paying upwards of 50% in combined federal/state/local income taxes, payroll, property, sales, social security, utility, and capital gains taxes should not imagine living in a free country.
Once taxes prove inadequate, governments begin amassing annual budget deficits. They market Treasury bonds and other securities to pay their bills. Already having to finance a $34.5 trillion accumulated national debt, the federal government is adding another $1 trillion in debt every three-and-a-half months.
That dramatically depletes the financial assets that would otherwise have financed private business activity and job growth around the country. When all else fails and the federal government still lacks the wherewithal to finance its spending, the Federal Reserve must pump billions more into the national economy. That's when inflation jitters hit the headlines.
Virtually every American family is reeling from its failing ability to keep up with rising living costs. The politicians tell us that inflation is moderating. Nothing could be further from the truth.
The Consumer Price Index (CPI) can say prices are rising by a mere 3.5% annually (just 1.5% above the Fed's target rate). But then the CPI doesn't account for rapidly rising insurance and interest charges. Car purchases, monthly electricity bills, home heating costs, credit card interest rates, mortgage insurance, local property and sales taxes, and the cost of financing needed appliances.
These are expenses families can't escape and it accounts for the spreading anxiety that is killing the American dream that once promised opportunity and serenity for all. So what to do?
Lowering taxes will likely raise more - not less - tax revenue, as it did for JFK, Reagan, and Trump. However, it will not bring in enough revenue to match the current levels of spending. Nor will the tired, old effort to cut waste, fraud, and mismanagement from the budget.
A balanced budget could help. But it will take as much as a decade to enact that measure with no guarantee that it will be honored by future administrations. Such "radical" reforms, if they come at all, will come too late and accomplish too little.
There's no safe way to pay for a runaway welfare state, especially one that is haunted by the specter of a global climate crisis.
The majority can no longer afford to remain silent. The price they will pay is just too great. It's time to wake the friends and neighbors and send an army of Mr. Smiths (i.e., statesmen) to Washington to CUT individual programs and CLOSE specific agencies. What good will that accomplish?
First, if spending is cut, taxes can be dramatically reduced, leaving more disposable income, (purchasing power) in the hands of American families. Second, if the federal government won't need to borrow upwards of $1-2 trillion to close annual budget deficits that money will remain in the private market. It will be borrowed by entrepreneurs looking to start new or expand existing businesses. The higher potential for profits that come with lower taxes is all the incentive businessmen need to open shop.
All that will translate into (1) expanded opportunities for job seekers, (2) more business activity and steeper market competition, (3 ) a far larger supply of products relative to consumer demand and so, (4) lower market prices, all around. This will no doubt happen, that is if enormously burdensome regulatory policies can be lifted off the shoulders of business and the agencies that recklessly write and enforce those onerous directives are downsized or just eliminated. But first things first.
Our political leaders debate endlessly a wide variety of public policy issues. But their discussions rarely reach the root of what ails us. Long ago, the nation stopped asking the truly foundational questions. What is government for? What must it do for us and what must we be allowed and expected to do for ourselves and one another? When must a people say to their elected representatives this far and no farther?
Failing to ask such questions we find ourselves in a fiscal predicament of truly perilous proportions. Millions fear the country is heading in the wrong direction and that the need to reverse course could not be more urgent. But what exactly will a successful reversal of course look like?
We need to know how much and on what government is spending the revenue it raises. Why does spending have to exceed revenue year after year? We will start with one "modest" recommendation here and save the larger budget-cutting details in Part Two of this series.
The fastest rising expense over the past few years has involved the effort to combat the impending climate "crisis." Recent legislation, including the Inflation Reduction Act ($669 billion), the Bipartisan Infrastructure Law (BIL), and remaining American Rescue Plan Act (ARPA) funds will authorize over $2 trillion in investments in climate, infrastructure, clean energy and water to be released over the next 5-10 years
How necessary are these massive expenditures? Is there a climate crisis, at all? Are excessively dangerous levels of carbon being pumped into the atmosphere? If the answer is yes and it's such a dire state of affairs, why don't the climate activists ever protest the far more "dangerous" greenhouse gases produced by the oil wells of Iran, Russia, and Venezuela?
To prevent a climate calamity, the activists would gleefully deprive Americans of every comfort and convenience that industry has made possible over the past two centuries (from wood-burning stoves to gas-powered cars). Given the enormous sacrifices Washington's policy professionals are demanding, the whole global climate change thesis demands closer scrutiny.
Is it climate justice the activists seek or are they just trying to punish Americans for their steadfast embrace of capitalism? After all, the climate has been changing ever since there's been a climate.
Since the 1960s and 1970s, environmental warriors have denounced the greed and unequal distribution of wealth that the culture of capitalism creates. Long ago, the philosopher/novelist Ayn Rand called the Green movement The Anti-Industrial Revolution.
Wrong Speak is a free-expression platform that allows varying viewpoints. All views expressed in this article are the author's own.
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great article with a simple concept--cut spending. Although finding a politician willing to cut spending is rarer than finding a white buffalo, we must do just that. And we must elect more who will.
Jerome Huyler for President 2024.