Balancing the Federal Budget

This useful chart illustrates how federal spending and taxing levels have varied over the last few decades.

Clearly, federal spending has risen dramatically in recent years, while the economy has hit tax revenues. The chart is taken from an article written by Veronique de Rugy at the Mercatus Center who puts a few big-picture ideas on the table for balancing the budget.

As de Rugy notes “Since Bill Clinton left the White House in 2001, total federal spending has increased by a massive 60 percent in inflation-adjusted 2010 dollars. In fiscal year 2010, which ended September 30, the federal government spent $3.6 trillion, or 25 percent of Gross Domestic Product. That’s the most spending, in terms of percentage of GDP, since 1946. Likewise, last year’s $1.5 trillion deficit, as a percentage of GDP, was the largest deficit since 1945.”

Most people didn’t think the federal government was “too small” when Clinton left office. It would seem that some tough decisions on spending should be all that we need to eliminate the deficit and that significant tax hikes as outlined in the federal debt commission would be unnecessary if Congress and the White House get serious about cutting the federal budget down to size.

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4 Replies to “Balancing the Federal Budget”

  1. Efforts to get the massive federal government to “cut spending” are fantasy: even if short term cuts occur, they are temporary. Politicians gain power by growing government, tweaking the tax code and redistributing money to the takers. Class warfare punishes the makers, punishes success, punishes the educated, punishes workers who work overtime and punishes saving and investment. To cut government spending, the source of political power, the income tax must be eliminated permanently and replaced by a consumption tax. If everyone pays a national sales tax for example, the political pressure to lower taxes and decrease the size of government would be enormous because everyone would benefit.

  2. I’m not optimistic about pruning government. It may be that we’re past the tipping point where enough people are paying no taxes, are receiving government benefits, and/or have been dumbed down by the government schools that we won’t be able to consistently get enough votes to effect real change. That’s particularly true in light of the ever-expanding ravenous hordes of overpaid, pampered government employees, “workers” who don’t have to work and usually don’t.

    Maybe the best way would be to quit pretending that oppressive bumblers like the TSA airport squads bear no responsibility and are merely following lawful orders to do outrageous things to “protect” us. That crap didn’t work for Nazi war criminals, and we should make it clear to both those flunkies and to our “betters” in elective office that it won’t work here.

  3. Cutting Spending is not a fantasy if voters would simply kick the incumbents out! They will soon get the message although in the last election the GOP believed the large change vote was an endorsement of their programs, which it wasn’t. Doing the same thing in 2012 to the GOP and Democratic leaders will encourage them to start rethinking their platforms and agendas. Our representatives are NOT smarter than their constituents, although they believe they are. Private groups should set up polls that show how the majority vote on topics such as errors of enchantment has for how to cut the budget. Do you really want to cut the budget? Lets introduce legislation that that our representatives’ salary is reduced 2% for every $100K of budget deficient. Do you know that at the end of every fiscal year, millons of taxpayers budget is recklessly spent because department heads know if they don’t spend their budget then they won’t get the same amount next year? They are chastised by their superiors for being under budget and are told to spend it. How about an incentive for department heads to be under budget? For one I do not want a balanced budget. That is like a family trying to pay only the interest on a credit card account. I want a 10 year plan to pay off the deficient without raising taxes.
    Tom K was right about the ego’s of politicians and their greed for power. The intimidating structures, titles and protocol is what strokes their ego. Let’s take that away from them. They will get our praise when they deserve it.

  4. Almost all societies and governments that are effective and promotive of liberties possess an effective alignment of socialist infrastructure and libertarian, entrepreneurial initiatives. And I would refer you to the example of Queen Isabella providing the capital infrastructure for Columbus to undertake his libertarian, entrepreneurial venture.

    People have generally proved throughout history that they will not save for their retirement or invest in an early age in their health. It can logically be deducted that this is an appropriate infrastructure position for government. An early investment in health could reduce the current horrendous spending on health care.

    While welfare spending may be dysfunctional or disincentivizing and general non-productive; the money spend on welfare recipients does go back into circulation in this country. But welfare military spending for throwing tanks down holes in foreign countries is a waste of capital that is destroying this country. Close down about 800 of the 850 military bases around the world and the U. S. would have one humming economy and a population of energized people. We could operate with four Cabinet Departments: Administrative Health and Retirement Services; Intelligence and Military Security; Operations: Economic Growth and Environment and Logistics and Infrastructure. Problem solved

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