Federal spending is growing. The national debt is growing.
In 2000, federal spending was $1.79 trillion. In 2010, it rose to $3.46 trillion. This year it will go higher than $4.8 trillion. The federal debt in the same 20 years grew from $5.6 trillion in 2000 to $26 trillion this year. If changes are not made, both spending and debt will climb further.
In 2000 and again in 2016, we elected a Republican Congress and a Republican president. Republicans are supposed to fight to limit government spending and borrowing. But do they? It is true that when the Democrats won control of both Congress and the presidency in 1992 with Clinton and again in 2008 with Obama, spending did surge. And, yes, when Republicans retook the Congress, they were able to slow the Democrat spending plans.
Still, to date, Republican control of Congress and the White House has not been enough to turn the tide. Why? What must, what can, be done to reduce federal spending, borrowing and debt?
Here are six steps we can take to restore fiscal sanity to our country.
Focus on the right metric
The true cost of government is total spending plus the imposed cost of regulations as a percentage of the total economy. (A properly run U.S. government will still be larger than the Canadian government.) Spending is the number to be wrestled to the ground.
“The deficit” is the unimportant number that is the difference between two very important numbers: how much the government spends and how much it takes in taxes. Democrats are always willing to “fight the deficit” by raising taxes. That does not rein in spending—it feeds it. (RELATED: Federal Deficits Don’t Matter, But Federal Spending Certainly Does)
Keep your eye on the goal: Government spending should decline as a percentage of the economy.
Reform entitlement spending. Block grant welfare spending to the states
Our government is not too large because of defense spending. Pentagon spending cost taxpayers approximately $730 billion last year or 3.4% of GDP. And that is down from 10% in 1955 and 6% in 1986. (And yes, more can and should be done.)
Nor is the challenge federal spending on roads and bridges, NASA, education grants or other spending voted on each year. (And yes, that can and should be reduced.)
The key factor driving overspending is the collection of “entitlement” programs whose cost is mandated by law and grows each year without a vote by Congress or signature of the president.
Former House Speaker Paul Ryan proposed sending each state a block grant for the cost of all “means tested programs” or welfare programs such as food stamps, Medicaid, and traditional welfare. We have an example to follow: Then-President Bill Clinton signed a Republican-passed welfare reform in 1996 that block granted spending on Aid to Families with Dependent Children (AFDC) and limited its growth. States could try 50 different approaches to targeting welfare to those who really need it and requiring that able bodied people work.
Block granting all welfare programs and limiting their growth to the wage increases of taxpayers would save trillions over the next 75 years. Block granting Medicaid alone would save $700 billion over a decade. (RELATED: Ignoring the National Debt Means Massively Burdening Future Generations)
End unfunded liabilities by making all government pensions “defined contribution” like an IRA or 401(k)
Too many government pensions are Ponzi schemes. They promise today — to pay tomorrow — large pensions to employees who will retire years after generous politicians have retired or passed away. Today, state and local government have overpromised by $5.2 trillion.
Most Americans working in the real economy have a defined contribution pension such as an IRA or 401(k) where you put away money for retirement and it is under your control and you know exactly how much there is. Newer federal employees now have such pensions. The military is moving over to defined contribution and states such as Utah have moved all new hires over to the fully funded worker-controlled IRA-like pension plans. Over time, this will end unfunded liabilities and the debt and taxes they create.
The final three actions to limit government spending are changes in the structure and culture of Congress.
Term Limit Appropriators
The painful joke in politics is that while there are two political parties in America, there are actually three political parties in Washington DC: Republicans, Democrats, and Appropriators – the members of the 24 House and Senate Appropriations (or spending) subcommittees.
To keep good Republicans from “breaking bad” their time on a spending committee should be limited to six years. We do that now for committee chairs and it has changed congress for the better.
Keep and strengthen the earmark ban
Earmarks are the currency of corruption in Washington and state capitals.
Congressmen are given “earmarks” — targeted spending for special interests in their districts — in return for voting for massive spending bills. This once “legal” bribery is now banned. Not surprisingly, some appropriators want to end the ban.
Bring back the “anti-appropriations committee” to combat the appropriations committees
Lastly, we can recreate a successful model of how America once kept spending (somewhat) in check.
To help reduce federal spending so the nation could focus on winning World War II, then-Virginia Sen. Harry F. Byrd demanded the creation of the “Joint Committee on Reduction of Nonessential Federal Expenditures.” He chaired the committee from 1941 to 1965.
The committee had 14 members: three from each of the House and Senate Appropriations committees, three from the House Ways and Means Committee, and three from the Senate Finance Committee. There were eight Democrats and four Republicans, as the Democrats held the majority in Congress. The Treasury secretary and the director of the bureau of the budget also served on it. The committee could recommend budget cuts and the Congress would vote on them.
The Work Projects Administration (WPA), the National Youth Administration and the Civilian Conservation Corps were downsized and then abolished. If these programs had not ended in the 1940s they would today be multi-billion dollar, immortal and unchallengeable “entitlements.”
From 1941-1945, the committee made recommendations that resulted in real savings of $2.5 billion or almost $31 billion in today’s dollars. (The committee’s work cost only $45 million. Nice ratio.)
Young, ambitious congressmen and women today gravitate to the spending committees as the way to “make friends and influence people” (and raise campaign funds). An anti-appropriations committee would offer another path to fame, fortune and higher office: recommending ways to reform government to cost less. Year after year. (RELATED: House Passes Massive Spending Package In Attempt To Avoid Shutdown)
We can stop the march to bankruptcy and over-taxation. We have to. We will.
The good news is that we have small successes in the past that we can build on. We can wait and implement such reforms after the crash. Or we can act now to avert a looming national disaster.
Grover Norquist is president of Americans for Tax Reform.
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