Cut Spending by . . . Cutting Spending
No more sacred cows for either party — it’s time to get serious.


Michael Tanner

House and Senate budget conferees have begun meeting in an attempt to head off another potential government shutdown when the latest continuing resolution expires, on January 15. In theory, the committee is supposed to report no later than December 13, but few on Capitol Hill expect them to come up with a deal by that deadline. As usual, the two parties are at loggerheads over taxes and spending. The Democrats want more of the former and none of the latter; for Republicans, it’s the reverse. Another crisis looms.

But there is a way that the two parties can come together to solve this problem, if members are willing to compromise.  

It is important to understand that a compromise doesn’t require new taxes. According to the Congressional Budget Office, revenues will return to their historic average without any new tax hikes. And, between the new taxes in Obamacare and the fiscal-cliff deal last December, Democrats have already pushed through more than $2.8 trillion in new taxes over the next ten years. The basis for any budget compromise must come on the spending side.

And there’s reason to believe that this can be done. Over the last few years, both Democrats and Republicans have suggested ways to cut spending, only to be blocked by the other party. Now, however, is the time for both parties to cut programs even if they are championed by special interests in their parties. There can be no more “sacred cows.”

To show how this could be done, scholars at the Cato Institute have put together a plan that balances the budget without tax increases and reduces our dangerously high debt burden, by cutting $3 trillion over the next ten years. It builds on good ideas from both Republicans and Democrats, liberals and conservatives, to expand individual freedom and reduce the burden of government.

Cut Corporate Welfare: For too long both parties have endorsed giveaways to major corporate interests. This is not even a question of dubious tax breaks — which, it can at least be argued, allow people to keep more of their own money, even if the tax breaks are distortionary — but rather of direct payments and subsidies. Such corporate welfare has nothing to do with capitalism or free markets. Among the worst examples are agricultural subsidies, included in the “farm bill” currently making its way through a conference committee, and energy subsidies, including such notorious boondoggles as Solyndra. Phasing out farm and energy subsidies would save $160 billion over the next ten years.

More Privatization: Many things done by government today can be done more efficiently by the private sector. For example, President Obama has suggested privatizing the Tennessee Valley Authority. Other candidates for privatization include Amtrak, the Corps of Engineers, federal dams, airport screening, and air-traffic control — which would save at least $110 billion.

Trim the Intelligence Budget: In the wake of the NSA scandal, Americans have become increasingly aware of abuses by the intelligence community. The budgets of the CIA, the NSA, and other intelligence agencies have become bloated with spending on vast and often intrusive data-collection efforts and armadas of drone aircraft. These efforts, Cato and others argue, have not made us safer. Cutting intelligence spending by 25 percent would not make us more vulnerable, and we’d save $110 billion.


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