'The Problem Is Spending'

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https://reason.com/2024/07/24/the-problem-is-spending-libertarian-presidential-nominee-chase-olivers-vision-for-the-future/

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Now it's former President Donald Trump versus Vice President Kamala Harris.

But there will be another choice on your ballot: Chase Oliver.

Both Trump and former Democrat-turned-independent Robert F. Kennedy Jr. addressed the Libertarian Party convention, asking for their nomination, but Oliver won their votes.

He's a 38-year-old political activist and businessman. Rolling Stone called him "the most influential libertarian" because he forced a runoff in Georgia's last U.S. Senate race.

Oliver has interesting ideas that we don't hear from the major-party candidates. He also explains them better than they usually do.

As I moderated RFK Jr.'s alternative debate a few weeks ago, I kept wishing that Trump, President Joe Biden, and Kennedy spoke as clearly. And intelligently.

Oliver says, "Your body is your body, your business your business, your property your property."

That lays out libertarian philosophy pretty well.

Oliver supports gun rights.

"As a gay man," he says, "I can better protect myself from being bashed if I'm armed….I have great appreciation for our right to defend ourselves."

Oliver also wants to privatize government programs. "Why take tax money out of somebody's pocket to fund a program through government? Just about every program could be better done through the private marketplace."

Right. The U.S. Post Office couldn't deliver mail overnight. UPS and FedEx made it happen. Private companies try harder because they have to compete.

Oliver believes even welfare would be better off in private hands.

"Take money out of the government coffers, put it back in our pockets, and we can better allocate helping our neighbors and our communities ourselves without government programs."

By contrast, government poverty programs perpetuate poverty. They encourage people to be dependent.

The poverty bureaucrats want to help people. But they also want to keep their jobs in the poverty bureaucracy.

So government just grows.

Oliver pledges, "I'll be challenging Congress to get to a neutral budget so we're not adding to the debt and deficit."

I push back. "They'll say, 'Sure, we'll balance it. We'll raise taxes.'"

"That won't happen under me," replies Oliver, saying he'd veto any tax increase.

"Cutting spending is what's important," he says "We're not going to tax our way out of this problem. We could tax everybody to 100 percent—all the millionaires and billionaires that are 'not paying their fair share'—and that would fund the government for just a few weeks. The problem is spending, not taxing."

True.

Trump promised to cut government and "drain the swamp." He didn't. He hired more people and spent more money.

Oliver says: "I would like to drain the swamp by actually removing the size and the scope of the federal work force by finding programs and departments that are inefficient and redundant….Remove departments wholeheartedly."

Like the Department of Education.

"I would eliminate it," he says. "Education should be at the most local level possible. It should be up to parents to determine the school their kids go to."

He'd also "get government out of the business of higher education."

If students borrowed from private lenders, banks would assign tuition loans "on the basis of how valuable that degree is. They'll be much more apt to loan an engineer than someone who's getting a degree that won't make as much money. This will encourage colleges to actually lower the cost of these programs in accordance with what the marketplace is, as opposed to getting all this government free money."

Free government money wrecks a lot of things.

I wish Republicans and Democrats were as sensible as the Libertarian candidate.

So do I.

 

[Muda69]

Rand Paul's Plans To Balance the Budget Are a Useful Illustration of Congress' Addiction To Borrowing: https://reason.com/2024/09/25/rand-pauls-plans-to-balance-the-budget-are-a-useful-illustration-of-congress-addiction-to-borrowing/?itm_source=parsely-api

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As he does every year, Sen. Rand Paul (R–Ky.) asked the Senate on Wednesday to balance the federal budget by trimming a few pennies from every dollar that the government spends.

Yep, it's actually that easy.

The predictable result: a 39-56 vote that probably overstates the popularity of Paul's proposal—how many would vote for it if they believed it actually had a chance of passing, one must wonder.

If it had passed, Paul's "Six-Penny Plan" would balance the budget within five years by cutting six pennies off every dollar the government spends. That translates to a $329 billion cut for the new fiscal year that begins on October 1—a fiscal year that seems likely to begin without a real budget having passed Congress. It would make the 2017 tax cuts permanent (and would account for the decline in future revenue that would result from that change), would preserve Social Security, and would otherwise leave Congress to determine the specifics.

"There is no free lunch. You can't have free college—somebody has to pay for it. There's no money up here," Paul said during a speech on the Senate floor Wednesday. "They're not giving you somebody else's money. They're not even taxing the rich. They're just borrowing it."

The most notable part of this thankless annual ritual of Paul's is not the results of the roll call vote, but the number of pennies that the senator asks his fellow lawmakers to trim. That's become a useful illustration of how out of whack the federal budget has gotten, and how much harder the task of bringing it into balance has become.

When he first offered what was then called the "Penny Plan" in 2018, Paul was asking for a $400 billion cut in government spending followed by 1 percent annual increases. Had that been adopted, the budget would have been on course to balance by 2023 (although the COVID-19 pandemic may have interfered with that trajectory).

A year later, Paul was back with the "Pennies Plan" that called for a 2 percent across-the-board cut for five years, followed by a two percent annual increase in spending for the five years after that. That would have amounted to a $184 billion cut in the first year, but overall spending would have grown by 18 percent over the full 10 years of the plan—and the budget would have balanced at the end of the decade.

By 2021, it was a "Three Pennies Plan," and you probably get the gist. "When I started offering these kinds of budgets four years ago, we could balance with a freeze in spending. Not cut anything, then we went to just a penny, then two, now it is three," Paul said that year.

Well, it's now 2024 and the federal government will spend well over $6 trillion this year, up from about $4.1 trillion in 2018. The government is going to borrow nearly $2 trillion in the fiscal year that ends later this month. As a consequence of all that borrowing, the national debt now exceeds $35 trillion, more than $12 trillion higher than it was in 2018.

Fixing that mess is no longer possible by cutting a penny or two or three. It now requires six.

Still sounds pretty achievable, but the trend is undeniably heading in the wrong direction.

This uncontrolled borrowing and spending is going to create a nightmare for our children and grandchildren.  Who here wants that?

 

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Budget Deficit Hit $1.8 Trillion After Huge Increase in Borrowing Costs: https://reason.com/2024/10/09/budget-deficit-hit-1-8-trillion-after-huge-increase-in-borrowing-costs/

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The federal government posted a $1.8 trillion budget deficit during the fiscal year that ended on September 30, despite an increase in tax revenue, thanks to higher spending and the rapid growth of interest costs tied to the $35.6 trillion national debt.

The only good news contained in the Congressional Budget Office's latest revenue report is that the federal budget deficit did not get significantly worse during the most recent fiscal year. The deficit increased by a mere $139 billion when compared to the previous year.

But the fact that the deficit increased at all in a year when revenue from federal tax collections climbed by 11 percent—from $4.4 trillion to $4.9 trillion—suggests something about the nature of the fiscal problems facing the federal government. Specifically: that it's a spending problem. The federal government spent $6.75 trillion last year.

More specifically, it's a borrowing problem. While spending increased by about 10 percent from the year before, the interest payments on the national debt ballooned by 34 percent—from $710 billion to $950 billion. That sharp increase reflects both the size of the national debt, which is now roughly as large as the nation's annual economic output for the first time since World War II, and the rising interest rates that have been a feature of the economy for the past few years.

Interest rates might be on their way down, but that's unlikely to provide much relief. According to CBO projections published earlier this year, the cost of serving the national debt will continue to skyrocket in the coming years. By 2034, the CBO estimates that the federal government will spend more than $1.6 trillion on interest payments.

Higher debt means lower economic growth and more difficult decisions about how the government should prioritize the tax dollars that are left over after the interest payments are made. But you'd never know that from this year's presidential campaign, where discussion about the debt has been largely absent.

Instead, both Vice President Kamala Harris and former President Donald Trump have been eager to pitch ideas that will widen the deficit and pile on additional debt. According to an analysis by the Penn Wharton Budget Model, a fiscal policy think tank at the University of Pennsylvania, Trump's proposals would add $5.8 trillion to the deficit over the next decade. Harris, meanwhile, would add an estimated $2 trillion in larger deficits over the next decade, thanks to a combination of higher government spending and lower economic growth (a result of her plan to hike taxes).

Separately, the Committee for a Responsible Federal Budget (CRFB), which advocates for smaller deficits, estimates that Trump's campaign trail promises would add around $7.5 trillion to the deficit over the next decade. The same group estimates that Harris would add around $3.5 trillion to the deficit. (In both cases, the numbers could vary widely based on what policies get implemented and several other factors—but the one constant across the CRFB's estimates is that the deficit will grow.)

This year's election is by now a missed opportunity for the country to have a serious debate about how much the federal government should spend and (perhaps even more importantly) how that spending should be funded. Americans are paying more and more every year to fund the federal government—and yet, those taxes are once again insufficient to meet the government's seemingly endless appetite for spending.

Yep, the federal government is spending it's way to oblivion, a bleak future for our children and grandchildren.

[Muda69]

https://reason.com/2024/12/13/federal-government-has-grown-too-big-promised-too-much-subsidized-too-many-warns-former-gao-boss/

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The United States is likely to face a debt crisis within the next five years unless Congress undertakes serious fiscal reforms, says a former comptroller general who is urging lawmakers to treat the budget and deficit with the seriousness it deserves.

"The federal government has grown too big, promised too much, subsidized too many, undercut states' rights, and lost control of the budget," David Walker, who led the Government Accountability Office from 1998 until 2008, told members of the House Budget Committee on Wednesday.

Unless Congress puts the country on a different fiscal course, Walker believes there is a 70 percent chance of a serious debt crisis before the end of the decade. That crisis would have "serious adverse economic security, national security, diplomatic, and domestic tranquility consequences," he warned, adding that the middle class would "be affected the most on a relative basis" if standards of living are suddenly hit with a debt-induced shockwave.

This week's hearing was intended to highlight bipartisan agreement on the seriousness of the federal government's fiscal problems, said Rep. Jodey Arrington (R–Texas), the committee's chairman.

"We've got major fiscal problems and a completely unsustainable fiscal trajectory. I haven't heard anyone, Democrat or Republican, witness or member, that [sic] doesn't accept that fact," he said. "We won't know when the dominoes fall on us in a sovereign debt crisis, it's going to be difficult to put the pieces back together and maintain our global leadership."

Those remarks echo warnings issued in recent years by governmental entities like the GAO and the Congressional Budget Office, as well as outside groups like the Penn Wharton Budget Model. Since 2015 the gross national debt has doubled, from $18 trillion to over $36 trillion. Debt held by the public, which most economists consider the more significant measure, sits at more than $28 trillion, or 99 percent of GDP. Deficits of nearly $2 trillion are expected for the foreseeable future.

Douglas Elmendorf, the economist and dean of the school of government at Harvard University, who was invited to speak at the hearing by Democrats, also stressed the need for immediate action.

"Although we are not in a crisis now, delaying action has significant costs," Elmendorf said. "The accumulation of debt crowds out capital investment, which holds down wages and pushes up interest rates relative to what would happen otherwise. In addition, the accumulation of debt limits the government's ability to borrow when truly needed to respond to problems in the future."

While there is little disagreement about the seriousness of America's fiscal problems, the committee hearing also inadvertently highlighted the immense difficulty of solving them.

During his testimony, Walker proposed what he called a "fiscal responsibility amendment" to the U.S. Constitution, which would bind Congress' ability to borrow recklessly. This could take several different forms. Germany, for example, has a so-called "debt brake" rule—which it hasn't followed in recent years—that says the government's annual budget deficit cannot exceed 0.35 percent of gross domestic product (GDP). By contrast, the U.S. federal government ran a deficit of $1.8 trillion last year, which is about 6 percent of America's current GDP of about $29.3 trillion.

Another example is on the books in Colorado, where the growth of government spending is limited by a formula that takes into account population growth and inflation.

Those are good models to follow, but imposing those restrictions via a constitutional amendment seems like a nearly impossible lift. Amendments must be passed by a two-thirds vote in both chambers of Congress and subsequently ratified by three-quarters of the states, and no amendment has successfully navigated the process since 1992.

Of course, lawmakers don't need a constitutional constraint to prevent them from borrowing too much. They could simply pass a budget that doesn't depend on trillions of dollars in annual borrowing.

Yes, yes, it's okay to laugh. But that is the thing that must happen. New constitutional amendments or other mechanisms like debt commissions—a solution favored by Cato Institute budget expert Romina Boccia, who also testified at this week's hearing—are fine ideas worth pursuing. Embedded in both those ideas, however, is the admission that our elected leaders are somehow unable to do their most fundamental jobs without artificial constraints.

And that may very well be true: Available evidence certainly points to that conclusion. But the biggest budgetary constraint of all is the one Walker (and plenty of others) believe is looming just over the horizon. Congress cannot ignore it any longer.

Our Country is in big fiscal trouble.  What is the solution?