So long as the focus of solving our budget deficits is on finding more revenue, we’re going to be treated to sorry spectacles like watching the Business Roundtable champion corporate tax reform for themselves while also calling for higher taxes on small businesses and individuals.
No, grasping for ever more revenue is not the answer, won’t solve the problem anyway, and simply further divides our already divided nation into self-interested factions. Our problem is that a federal government loosed from its constitutional restraints has also been loosed from any rational fiscal restraint. We have a spending problem.
And most Americans realize this. Even though they re-elected the biggest spending president in history, exit polls showed that 51 percent of voters want a smaller government that provides fewer services, and 63 percent opposed raising taxes in order to reduce the deficit.
So the question is: If people believe that government is too big and spends too much money, and they don’t support tax increases as the solution, why can’t we build political support for spending cuts?
The reason, I believe, is that the numbers are no longer meaningful. People simply cannot get their heads around trillions of dollars.
And, frankly, neither can I. How much should we spend on education at the federal level? I don’t know, but I’m sure it’s less than the $153.1 billion we couldn’t afford to borrow from China to spend in 2012. But what IS the right number?
We need perspective, and perspective is what percentages are for. People understand percentages.
For instance, Americans saw their wealth plummet 40 percent during the recession. Median income fell 8 percent, and the value of retirement accounts declined 7 percent.
Meanwhile, over that same period, the federal government grew its spending from $4.9 trillion to $5.9 trillion, a 20 percent increase.
See, percentages are useful, and they do put things in perspective that are otherwise hard to grasp.
That’s why the only way to build political support for spending restraint is something like this: An across-the-board 1 percent cut in spending—all spending. And a real cut, not just an adjustment in scheduled growth.
Over the past few years, Americans have cut back on their lifestyles by far more than 1 percent. It will be hard to demagogue successfully against a 1 percent reduction in government spending.
And guess what? If we cut federal spending by only 1 percent for five years, we balance the federal budget without any need for tax increases. We solve a spending problem with spending restraint, returning spending to Clinton-era levels.
December 12, 2012