Posted on 11/21/2016 5:06:08 AM PST by expat_panama
For believers in small government, there is a ray of hope on the horizon. We have a (nominally) Republican president-elect who loves to point out how he is not beholden to the usual special interests and Republican majorities in both the House and Senate. If federal spending is ever going to be reined in, now would appear to be the time. Federal spending for the 2016 fiscal year ran about $3.95 trillion, a record high. Without any spending cuts, federal spending is projected at $4.15 trillion for the current fiscal year which started on October 1 and runs through September 30, 2017, breaking the $4 trillion barrier for the first time. It seems like cutting spending would be easy, but the reality might be quite different.
At a quick glance, spending cuts look like they can be found everywhere. For an easy comparison, I took the federal fiscal year 2001 budget, President Clinton's last budget, then adjusted it for inflation and population growth. The idea is that Democrats cannot complain as strenuously about budget cuts if the remaining federal spending is still as high as it was under President Clinton. In fact, adjusting for both inflation and population growth is quite generous toward the big spenders because many departments' spending has nothing to do with the population in the U.S. (think Departments of Defense and State, for example).
This exercise provides a possible budget cut of $1.09 trillion, based on 2016 spending of $3.95 trillion and the adjusted 2001 figure of only $2.86 trillion. Federal spending that has risen over $1 trillion more than needed to keep up with inflation and population growth in just fifteen years makes it look like budget cuts can be found everywhere. Republicans should be able to make huge cuts in spending without breaking a sweat, right?
Unfortunately, as soon as you look at the cuts, problems start. Because the population is aging, $284 billion of the spending increase is in Social Security benefits which President-elect Trump has vowed not to cut. Veteran's Affairs is another $109 billion of the "excess" spending growth, not an area Republicans are likely to want to cut. Just these two agencies have shrunk the easy money from $1.09 trillion to $702 billion.
The Department of Health and Human Services is responsible for $457 billion of the spending growth above inflation and population growth. Some of that is for Obamacare subsidies, but a lot is for Medicare and Medicaid spending. Even if Republicans repeal and replace Obamacare, it is unclear how much money will be saved under the replacement and when those savings might arrive. A safe bet is that little of the savings will occur this year or next, but will more likely be realized in later years, after the replacement plan is phased in.
If we take spending on healthcare out for now, we are down to $245 billion. That is certainly not a trillion dollars, but it's not small change either. If President-elect Trump and Congressional Republicans cut spending by $245 billion, representing about a 6 percent cut in federal spending, most small government advocates and fiscal conservatives would consider that a huge victory and an excellent start. It would even cut the deficit by about one-third.
However, the caveat to that is that of the remaining $245 billion in spending that has grown above inflation and population growth, $131 billion is in military spending. If one believes that President-elect Trump and Republicans in Congress want to cut defense spending by over $100 billion, then we have hope for a more frugal federal government. If not, then they are left looking through the remaining agencies for small cuts that might reduce spending by around $100 billion.
Even a cut in federal spending of that size would be good for the economy and a great sign that Republicans are going to follow through on their promises to reform and shrink government. Lowering federal spending by three percent, which translates to about $125 billion, hasn't happened in the over 50 years of data I examined. The closest we came was in 2013 when the federal government spent a little more than two percent less than in 2012, mostly accomplished with cuts in defense spending and a drop in unemployment benefits after the recession (yes, the sequester worked).
This column is not to suggest that federal spending should not be cut (it should) or cannot be cut (it certainly can be and I, for one, would support cuts to well below the adjusted 2001 levels). The point is that given expected Republican priorities and the Democrats' commitment to fight cuts in domestic social programs tooth and nail, budget cuts may be harder to come by than they think. There doesn't really appear to be a simple place to go to cut federal spending. President-elect Trump and the Republican Congress will need to get down in the weeds and make some tough choices. They should, and I hope that they do, but they better be prepared, because it won't be easy.
Jeffrey Dorfman is a professor of economics at the University of Georgia, and the author of the e-book, Ending the Era of the Free Lunch.
And Bush. And Bush, Sr. And Reagan. I don't think we've seen a president shrink the government since the 1920's.
Eliminate multiple departments and agencies, severely cut the budget of others, reduce the number of Federal civilian employees by 2/3. Defense Dept. (except civilians), most intel agencies, parts of the FBI, and border patrol excluded.
...same crowd that thought a Trump Presidency was pure fantasy. Grain-of-salt News at best.
Some of these things could go under the auspices of smaller government entities. The Federal government has been distorted into a one-size-fits-all nanny. If, say, Tennessee wants to subsidize, say, Nashville country music, that might make sense. If New York wants to subsidize the high arts in New York, that might make sense. Please, though, Uncle Sam shouldn’t have even a single finger in that stuff.
1. Freeze non-essentual hiring.
2. Stop all payouts regarding Global warming.
3. End the automatic budget increase of 10%, go to baseline budgeting.
4. End all out of date programs that are no longer required by law.
5. End ALL funding for the arts, NPR, and any taxpayer funded TV.
6. Institute an accross the board budget cut excluding Veterens, Military, SS.
Donald is a rare bird, and already everybody is an expert on how it ought to fly.
Then only way to achieve a lasting spending cut is to remove entire line items from the budget, which’d require congress. You’d also have to stop adding new ones that aren’t needed.
Imagine renovating your house. What’s more effective at cutting costs, trying to find cheap labor, parts, tools, or taking on one of the tasks yourself, like painting?
Govt should stick to what you need govt to do and govt should stop doing what people can do on their own.
Building a military? Sounds like govt job. Feeding the poor? Job for charity.
It doesn’t take a govt to hand someone a sandwich.
I dont think deficit reduction is trumps agenda
I only bet what I can afford to lose, and only in the stock market. ;-)
I think in the long term, Donald wants America to be an overall financial success.
He’s as good as anybody here.
The only problem is that you'd need more than that half hour with a field telephone and alligator conectors to get each congresscritter to vote for the necessary legislation.
A wise policy. Personally I would be happy if the national debt is about the same when Trump leaves office as when he enters. But I fear it'll be much higher. The Republican in Congress and the Democrats in Congress only care about the deficit when the other party has the White House.
No budget. No continuing resolution. Done.
The blood suckers will riot.
“I am sure Trjmp knows what is easy and what isn’t.”.......
We can rest assured that Trump knows the difference between easy and impossible. He has and will continue to surround himself with people who also know the difference. I expect good things will happen once he is our new president. It is past time to accept he will be our new leader and what ever he does “positive” will outshine what odumbo has done these past eight years.
Too me it just seems like the kind of problem that Trump will jump on. It's simple math and requires the cutting of spending that is so wasteful that if we knew half of it we'd probably quit work and go on welfare. I actually trust Trump's ego a bit on this. He said he'd make America Great again and that involves a sound economy rather than a fake bubble. I hope to see that slightly smug face as he describes the improvements month by month.
This is pretty hopeful isn't it?
The problem is the next level down - actually getting what you are paying for at a reasonable price - and that is where the problem is, line by line, expense by expense. The whole federal struture has been hollowed out through ineptitude, inefficiency and cronyism. I would wager that well over 1/2 of expenditures do not actually contribute to the thing the public was paying for. Instead it goes to a host of regulators and the folks who are hired to comply; to constultants galore. Has anyone seen the highrise construction in Rockville Md or Tysons Virginia. Who is paying for all of that. The taxpayer is. And it represents ever more money being skimmed off the federal budget in the D.C. metropolitan area before a dime of it goes out to the folks who will actually do something with it.
Remember, the DC metro area does nothing useful or productive. It just processes the process to govern the country. It's like the old joke about one lawyer in town starves to death. Two and you have a going business. In DC all your money goes to folks who spend their time answering each other's mail.
Salvation will not come via budget cuts. The path to salvation requires growth, then devaluation and then inflation.
That trifecta is the only way the debt will be reduced
Eliminate baseline budgeting. Easy 1st step.
Not really. We're currently running about a half-trillion dollar deficit. Trump has made it clear that more money for the military and a trillion dollars for infrastructure are priorities. He's also said he will leave entitlements alone, will replace Obamacare with something else, and is big on funding school choice. I don't see where he can cut enough to balance the budget as it is much less the budget that will be. But hopefully he will prove me wrong.
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