Milton Friedman famously said, “I am in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it's possible.” That’s all well and good, but tax cuts without spending cuts aren’t truly tax cuts — they’re simply tax cuts for now that must be paid for with future tax hikes.
With all the focus in Congress on passing a tax reform bill, it seems everyone has forgotten the spending side of the budget debate. Speaker of the House Paul Ryan used to draft balanced budgets and entitlement reforms in his free time, but now he hardly mentions spending cuts as part of his push for tax cuts. President Trump promised “big league” spending cuts on the campaign trail and followed it up with a draft plan to cut spending by 10 percent at certain federal agencies, but seems to have neglected that effort of late.
Government spending is the true way to measure the size of the government. The amount a government takes from its populace in taxes is part of the equation, but that’s only necessary to fund the spending that goes out.
That's why, if Republicans in the future want to cut taxes more or avert future tax hikes, they should cut spending today.
There is no shortage of government spending, and there's no shortage of ideas on how to cut government spending.
One concept to consider is the “penny plans” that have been proposed at various times by Sen. Mike Enzi, R-Wyo., Sen. Rand Paul, R-Ky., or former Rep. Connie Mack, R-Fla. These generally take the current level of government funding and cut it by one percent every year until the budget is balanced.
Trump’s plan to cut funding for certain agencies, including cutting staff by 20 percent, was wise and should be resurrected. Of course, any meaningful spending cuts will include entitlement reforms — mandatory spending and net interest make up 70 percent of the federal budget and are projected to rise to 77 percent by 2027 under current law. The ongoing efforts to eliminate waste, fraud, and abuse in federal programs are helpful, but one bucket can't hold back the federal spending flood.
Republican leaders in both chambers should make it clear to appropriators, particularly the subcommittee chairmen (known as the "cardinals") that their job is to cut spending. If they can’t manage that, congressional leaders should resurrect a version of the Byrd Committee (no relation to Robert Byrd), which once existed solely to cut nonessential federal spending.
The only problem with all of these ideas is that, if enacted, future sessions of Congress can undo the progress. That’s why a balanced budget amendment to the Constitution has to be on the table.
Some of the blame in overspending lies on voters, who are just as shortsighted as the politicians they elect. Ask the average voter if they’re concerned about the federal debt and deficit and they’ll say, “sure.” But ask them if they want a tax cut or more funding for the federal program that directly benefits them and they’ll say, “absolutely!”
Worse, the press equates funding with effectiveness and assumes any cut to a program makes it is less effective. But completely lost is any question of whether government spending on those programs is a proper role of government.
Our problem is not with the GOP tax reform bill — on the whole, it represents progress, though it has a few imperfections. But tax reform is only half the battle. When Congress returns from its Thanksgiving break and has a budget fight on its hands, it should be prepared to cut off the federal spending bender.