I’m testifying tomorrow to the Joint Economic Committee about “The Economic Costs of Debt-Ceiling Brinkmanship.”
I won’t give away what I’m going to say (though you can probably figure out my views rather easily by reading this, this and this), but I do want to share a chart from my testimony.
It shows that it is remarkably simple to balance the budget with a modest amount of spending restraint.
Based on Congressional Budget Office data, we can balance the budget in just three years if spending grows by “only” 1 percent per year.
The chart also shows that you can balance the budget in just four years if spending is allowed to grow “just” 2 percent annually.
And if you for some reason think that the burden of government spending should rise faster than inflation, then we can balance the budget in seven years by restraining spending so that it grows 3 percent each year.
Here are a couple of relevant observations.
There’s no need to raise taxes. Indeed, there’s amply room to lower the tax burden and reform the corrupt tax code.
If you use honest budget numbers, there’s no need to impose steep spending cuts, though that actually would be desirable.
Good things happen when you follow my Golden Rule for fiscal policy.
Our main goal should be reducing the burden of government relative to private output, not balancing the budget.
That being said, one of the reasons that it’s so simple to balance the budget is that we’ve actually enjoyed two consecutive years of government spending being lower than it was the year before. Something to keep in mind just in case you thought the Tea Party didn’t make a difference or if you didn’t think sequestration was a big victory.
Here’s the video I keep recycling that explains why it’s important to restrain the growth of spending and also shows that when you address the disease of spending, you easily deal with the symptom of deficits.
If it worked for Bill Clinton, it could also work for Barack Obama.
[…] if we want to deal with America’s real fiscal challenge, that means modest spending restraint in the short run and genuine entitlement reform in the long […]
[…] if we want to deal with America’s real fiscal challenge, that means modest spending restraint in the short run and genuine entitlement reform in the long […]
[…] we’ve made some progress in the last two years thanks to genuine fiscal restraint, and we can balance the budget in a very short period of time if lawmakers impose a very modest bit of spending discipline in the […]
@Mark Daniel Johansen
Very imaginative, a great idea!
best of luck……….
Good luck Dan.
It’s going to be tough to answer politicians when they ask:
-What kind of agency or committee do we need to fix this problem?
I think that if I ask my boss for a 10% raise and he tells me that the most he can give me is 3%, I should be able to deduct the 7% difference as a loss on my income taxes. If they calculate it that way when spending my tax dollars, I think they should calculate it that way when collecting my tax dollars.
I am looking forward to learning more about your testimony tomorrow. Will you please post a video of it or a transcript of your testimony, if that is possible. In other words, I want to understand exactly why these cuts will have the desired effect. And then act to spread the word and help to bring them about.
It is not an overstatement for me to say that my husband and I, small business owners, are very afraid of the economic and fiscal future of our country. And I want to have impact on our country’s economic policies, starting with a framework of commonsense. Thank you for your work and blog! Liz