How To Balance The Budget Without Tax Increases

Okay, looming large in the national debate is what to do about the massive federal debt that will eventually sink this country. I am willing to weigh in with not one, but TWO proposals for how to balance the budget without increasing a single tax. Are you ready?

Plan #1
Liberals will hate this plan, and even Conservatives will cringe. Why? Because this plan is fiscally responsible policy, but it's not politically appetizing. Quite simply, we start cutting spending. Massively, savagely, and immediately.

Let's start by eliminating (not reducing, but getting rid of) all those agencies that are not specifically authorized by the United States Constitution. These include, but are not limited to, the National Endowment for the Arts (NEA), Department of Education, and the Small Business Association. Just junk 'em. And we start reducing total spending amounts immediately.

We also need to reduce Social Security, Medicare, and Medicaid spending, so reforming benefits and participation for those programs should be on the agenda.

With all that in play, it shouldn't be too difficult to dramatically reduce spending and, maybe, turn the deficit into a surplus.

See what I mean about not politically appetizing?


Plan #2
The second method is quite different, and a lot less painful.

Let's look at a spending freeze at today's levels. We won't increase spending a single dollar for the next few years. Do you know what we have in 2016? We have a balanced budget. And we accomplish that without reducing a single dime of spending.

To work, this spending freeze would have to be across the board, including entitlement programs.

I hear you complaining loudly that we can't freeze spending. Okay, let's allow spending growth at NO MORE than 1% per year. At that rate, spending is still increasing every year, but we reach a balanced budget in 2017.

This is based upon the growth rate over the next decade that is predicted by the CBO... who we know never makes a mistake. (sarcasm alert) Obviously, if tax revenue growth varied from that amount, it would affect the time-line.

For more details, check out this in-depth analysis done by Cato.
http://www.cato.org/pub_display.php?pub_id=12160

Balancing the budget is not difficult. Getting rid of red ink is easily achievable with fiscal restraint. Obviously, we can — and should — do much more than simply limit the growth of federal spending. But I'm simply debunking the assertion that it is impossible to balance the budget without tax increases. Indeed, it can be balanced while making all the tax cuts permanent.

The key thing to understand is that there is no need for tax increases. Politicians might not balance the budget if we say no to all tax increases. But the experience in Europe shows that oppressive tax burdens are not a recipe for fiscal balance either. Milton Friedman was correct many years ago when he warned that, "In the long run government will spend whatever the tax system will raise, plus as much more as it can get away with." That's why spending restraint is the only effective, pro-growth way to balance the budget.

It's past time to give up the erroneous thought that debt reduction is only achievable through tax increases. There are other ways. Our Congress simply has to do the fiscally responsible thing.