This article from George Marotta was originally published in “The Conservative Digest,” Volume 11 Number 3 on March, 1985. We republish it here over 40 years later when the U.S. federal budget deficit in America has increased tremendously.
One of the major issues in the 1984 presidential election campaign was the federal budget deficit. This is a huge problem—an excess of $175 billion in spending over revenues for the year just ended. In August alone we spilled $33 billion in red ink—over $1 billion a day.
The federal budget has been in deficit for 26 of the last 30 years. The biggest deficit, $195 billion, was in fiscal year 1983. Surpluses have been scarce and small.
Large deficits became common in the late 1960s when we put a man on the moon, tried to create a Great Society, and fought a war in Vietnam—all with “pay later”—financing.
This year’s spending level is projected at $932 billion; the first trillion dollar budget will be reached next year.
Federal spending is out of control because pressures for spending far exceed the forces favoring increased taxes, reduced expenditures or a balanced budget.
The principle culprit is Congress. Politicians win their positions by promising to “assist” carefully selected interest groups. The old saw is correct: “No man’s property is safe while Congress is in session.”
During the recent period of rapid inflation, government was both the major cause and beneficiary of inflation. For every 10 percent increase in inflation, the government collected 16 percent more in revenues due to “Bracket Creep.” This unlegislated tax lowered living standards and provided Congress with extra billions.
Restraining Congress
To prevent a recurrence, Congress must be prevented from repealing the tax indexing system due to go into effect in 1985.
As Parkinson’s law instructs, most bureaucrats’ efforts are directed toward self-preservation and more spending. Bureaucrats provide congressmen with arguments to double and triple programs. Furthermore, the bureaucrats must spend all this year’s budget to justify increases for next year.
Lobbyists provide legislative and executive officials with arguments to enact pet laws and programs. Most of the 10,000-plus lobbyists in Washington, D.C., seek more government.
How can America cope with these entrenched forces that would take us down the “Road to serfdom” Hayek warned us about: the more government helps us, the stronger it becomes, which increases the likelihood that we will end up virtual serfs to that once “helpful” force.
There are actions that would restrain the growth in government spending.
One proposal is to adopt a constitutional amendment to require that budgets be in balance. This proposal has been passed by close to the required number of state legislatures.
A partial solution is to give the President the power to veto specific line items of legislative bills. The President should have the ability to delete selectively specific spending measures sent to him by Congress. If the President had such veto power, we could hold him more responsible.
A long-term solution to ever-expanding social programs is to transfer these activities to the state and local level. This would give local residents more control over the levels of payments, and better assurance that recipients are those most in need. State and local governments cannot print money or run sustained deficits.
Experts believe that a simple 19 percent flat-rate income tax would raise all the revenues needed to balance the budget. These lower tax rates would tap the $100 billion in non-reported and underground tax liabilities as well as shift capital from tax shelter schemes to more productive investments.
Another way to shake up the federal government is to force it to compete with private enterprise. For example, private package delivery services have proven more efficient and less costly than the U.S. Postal Service.
Many federal programs redistribute wealth from high-income persons to lower-income persons. However, at least $150 billion worth of federal programs do the opposite—redistribute wealth upward. Recipients include corporations, tobacco and dairy farmers, airplane and yacht owners.
Eliminating these programs would wipe out most of the deficit.
A final alternative is an across-the-board cut of 15 percent in all federal programs. This is based on the assumption that current allocations are correct and that an “equal distribution of pain” is the most equitable way to solve the deficit problem.
Government has become too intrusive, and we have become addicted to the benefits. Federal programs grow because the government gives concentrated benefits to special interest groups, while the tab is paid by dispersing the costs over the rest of the population.
The Iron Triangle of congressional committees, vested-interest lobbyists and the bureaucracy is a formidable force that requires powerful countermeasures.
But we will have a better society when government becomes the last resort—instead of the first—in solving our problems.
Photo by Ian Hutchinson on Unsplash. Image has been cropped.
