by Dan Mitchell |
Self
awareness is supposed to be a good thing, so I'm going to openly acknowledge
that I have an unusual fixation on the size of government.
I
don't lose a wink of sleep thinking about deficits, but I toss and turn all
night fretting about the overall
burden of government spending.
My
peculiar focus on the size and scope of government can be seen in
this video, which
explains that spending
is the disease and deficits are just a symptom.
Moreover,
my
Golden Rule explicitly targets the spending side of the budget. And I also
came up with a "Bob
Dole Award" to mock those who mistakenly dwell on deficits.
With
all this as background, you'll understand why I got excited when I started
reading Robert
Samuelson's column in today's Washington Post.
Well,
there’s a presidential whopper. Obama is right that the role of the federal
government deserves an important debate, but he is wrong when he says that we’ve
had that debate. Just the opposite: The White House and Congress have spent the
past five years evading the debate. They’ve argued over federal budget deficits
without addressing the underlying issues of what the government should do, what
programs are unneeded, whether some beneficiaries are undeserving... The
avoidance is entirely bipartisan. Congressional Republicans have been just as
allergic to genuine debate as the White House and its Democratic congressional
allies.
By
the way, I have mixed feelings about the final sentence in that excerpt. Yes,
Republicans oftentimes have displayed grotesque levels of fiscal
irresponsibility. Heck, just look at the new farm
bill. Or the vote on the
Export-Import Bank. Or the vote on housing
subsidies. Or...well, you get the point.
On
the other hand, GOPers have voted for three consecutive years in favor of a
budget that restrains
the growth of federal spending, in large part because it includes
much-needed reforms to major entitlement programs such as Medicare
and Medicaid.
But
Republican inconsistency isn't our focus today.
He
argues that you can't balance the budget merely by cutting discretionary
programs. That's technically untrue, but it's an accurate assessment of
political reality.
I'm
much more worried about his assertion that you can't balance the budget even if
entitlement spending also is being addressed.
Let's
look at what he wrote and then I'll explain why he's wrong.
Eliminating
many programs that are arguably marginal — Amtrak, subsidies for public
broadcasting and the like — would not produce enough savings to balance the
budget. The reason: Spending on Social Security, Medicare and other health
programs... But even plausible benefit trims for affluent retirees would still
leave deficits. There would still be a need for tax increases.
This
is wrong. Not just wrong, but demonstrably inaccurate.
The
Ryan
budget, for instance, balanced the budget in 2023. Without a single penny of
tax hikes.
Senator
Rand Paul and the Republican
Study Committee also have produced balanced budget plans. Even as scored by
the statists
at the Congressional Budget Office.
By
the way, you don't even need to cut spending to balance the budget. Spending
cuts would be desirable, of course, but the key to eliminating red ink is simply
making sure that government spending climbs at a slower rate than revenues.
And
since revenues are expected to grow by about 6 percent per year, it shouldn't
take advanced knowledge of mathematics to realize that the deficit will fall if
spending grows by less than 6 percent annually.
Indeed,
we could balance
the budget as early as 2018 if spending merely was restrained so that the
budget grew at the rate of inflation.
But
never forget that the goal of fiscal policy should be shrinking the size and
scope of the federal government, not fiscal balance.
Ask
yourself the following questions. If $1 trillion floated down from Heaven and
into the hands of the IRS, would that alter in any way the argument for getting
rid of wasteful and corrupt parts of the federal leviathan, such as the Department
of Housing and Urban Development?
If
the politicians had all that extra money and the budget was balanced, would that
mean we could - or should - forget about entitlement
reform?
If
there was no red ink, would that negate the moral
and economic imperative of ending the welfare state?
In
other words, the first part of Samuelson's column is right. We need a debate
about "the underlying issues of what the government should do, what programs are
unneeded, whether some beneficiaries are undeserving."
But
we're not going to come up with a good answer if we don't understand basic
fiscal facts.
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