Balancing the budget will never, ever shrink the federal government opposite what the experts at Cato, Mercatus, and other right-of-center think tanks tell you. The reason why can yet again be found in national debt of $39 trillion.
The debt is a loud, market signal that government revenues in the future will make those of the present appear small by comparison. Markets aren’t stupid, and there’s no way there would be all this debt absent lender optimism about soaring government revenues in the future. That’s why a balanced budget amendment today, tomorrow or ten years from now would codify a massive and growing government burden for the sainted grandchildren.
What the various right-wing economic religions aren’t seeing is that the debt is a symptom of a much bigger, much more problematic rising tax revenue problem. Almost uniformly lacking in private sector experience, the various budget experts can’t see that as is the case with individuals and businesses, the greater the revenue intake the greater the ability to borrow.
All of which is magnified when government is the borrower. Since no one spends or borrows as carefully with money not their own, politicians with taxable access to the most enterprising people on earth borrow in uncaring fashion since the debt isn’t theirs. Even better, the bigger the government they create via soaring tax revenues that enable a lot of spending and borrowing, the bigger their retirement as they lobby the actions of a government the cost of which grows by the day.
Again, we have a too much tax revenue problem, and the debt is a logical symptom of it. That’s why spending cuts and entitlement reform will do less than nothing to shrink government. Instead, they’ll just free up dollars for the introduction of all new government programs that will grow to the sky, not to mention that a focus on spending cuts and entitlement reform is a focus on symptoms once again, as opposed to the too-much-tax revenue problem that enables all the spending, borrowing and big programs.
To which some respond that this column must be calling for a “starve the beast” plan. No, it’s not. Assuming “starve the beast,” the electoral response from an electorate that allowed all the spending and programs would be of the kind that un-elects the few (if any) politicians who grasp the too-much-tax-revenue problem.
Instead, the aim should be to feed the existing beast. Awful as Medicare and Social Security are, they’re priced. Let them consume greater amounts of increasing tax revenue. That way new programs are difficult to introduce.
From there, it would be difficult to find something more bullish than the cost of interest payments on the debt. The libertarians at the Cato Institute lament the latter, but it’s limited government personified. Let the trio of Medicare, Social Security and interest payments swallow growing amounts of government (yes, feed the beast) to avoid voter upheaval that would unseat the smaller number of legislators interested in containing government.
While this is taking place, as in while a large government is made large by very few expenses, acknowledge what's never been acknowledged: big government and debt spring from too much tax revenue.
From there, make it policy to fully fund what exists while substantially decreasing forward levels of taxation to ensure that tax revenues don’t explode in the future. In other words, feed the government beast, and pay interest on the debt now while capping future tax revenues to ensure that the beast doesn’t grow many more heads in the future.
