Downsizing the Federal Government – Chris Edwards
“Federal government spending is rising, deficits are chronic, and accumulated debt is reaching dangerous levels. Growing spending and debt are undermining economic growth and may push the nation into a financial crisis in coming years.
The solution to these problems is to downsize every federal department by cutting the most harmful programs. This study proposes specific cuts that would reduce federal spending by almost one-quarter and balance the budget in less than a decade.
Federal spending cuts would spur economic growth by shifting resources from lower-valued government activities to higher-valued private ones. Cuts would expand freedom by giving people more control over their lives and reducing the regulations that come with spending programs.
The federal government has expanded into many areas that should be left to state and local governments, businesses, charities, and individuals. That expansion is sucking the life out of the private economy and creating a top-down bureaucratic society that is alien to American traditions. So cutting federal spending would enhance civil liberties by dispersing power from Washington.
The Congressional Budget Office (CBO) projects that federal spending will rise from 20.7 percent of gross domestic product (GDP) in 2017 to 23.4 percent by 2027 under current law.1 Over the same period, tax revenues are expected to rise much more slowly, reaching 18.4 percent of GDP by 2027. As a consequence, fast-growing spending will produce increasingly large deficits.
Policymakers should change course. They should cut spending and eliminate deficits. The plan presented here would balance the budget within a decade and generate growing surpluses after that. Spending would be reduced to 18.0 percent of GDP by 2027, or almost one-quarter less than the CBO projection for that year.
Some economists claim that cutting government spending would hurt the economy, but that notion is based on faulty Keynesian theories. In fact, spending cuts would shift resources from often mismanaged and damaging government programs to more productive private activities, thus increasing overall GDP. Markets have mechanisms to allocate resources to high-value activities, but the government has no such capabilities.”
Read more here.