No act of federal spending restraint will ever shrink the federal government. That’s because spending cuts ignore what’s enabling the relentless growth of federal government: humongous federal tax revenues in the present, and federal tax revenues in the future that will make the present appear impoverished by comparison. All of this is in The Deficit Delusion. Barring a read, just dust off Robert Caro’s masterwork, The Power Broker.
Caro’s book could have saved Elon Musk and his DOGE team from a lot of wasted effort, and a read of it will similarly save spending cut advocates of the future from naïve attempts to shrink government by reducing the cost of a few or many programs. That’s because no spending cut overseen by reformers ever shrinks government. Caro could have shown Musk why in about 30 seconds through the subject of his remarkable book, legendary appropriator Robert Moses.
Moses always said he just needed a shovel in the ground. That’s all it took for little expenditures to become big ones. New York City and its surroundings are a monument to this truth.
What governments don’t budget for through spending cuts merely frees up money for other new spending ideas. There’s the shovel concept that Moses used on the path to power broker status. A shovel in the ground was his symbolic allusion to the bitter truth (for reform types, at least) that any government expenditure, no matter how little, won whatever project he was working on constituents in government, and from both sides of the proverbial aisle. The path from little to big became simple from there.
Considered in the present, Musk learned what Ronald Reagan did, that every government program has Democrat and Republican supporters. Which means once a program is in place, it’s exceedingly difficult to cut it or sunset it. Which is a comment that spending cuts or attempted spending cuts amount to wasted political capital, at best. Except that there’s a silver lining to failed efforts at government shrinkage.
To see why, contemplate the long-term spending effects if Musk had succeeded, or a future reformer succeeds where Musk didn’t. What would Congress do with trillions in savings? To say that it wouldn’t give it back to those who largely paid the taxes (the top .000001% of taxpayers), or burn it, insults obvious. Instead, present and future Congresses would find all new ways to spend the savings.
That’s why spending cuts, or routinely rhapsodized over “entitlement reform” are strongly recommended against in The Deficit Delusion. Consider Robert Moses yet again. He just needed a shovel in the ground, and spending cuts would unearth all manner of shovels. In thinking about them, readers should never forget that Medicare began as a $3 billion annual program…
Which means the better, more government-growth-restraining solution is to pursue no spending cuts, and no entitlement reform. Let Social Security and Medicare in particular swallow up more and more federal revenue, and let interest payments on the debt swallow more.
Use the waste described above to buy time for tax cuts so large that tax revenues go down. That’s the only way to shrink government as is. If revenues increase, so will spending and the ability of Treasury to borrow to fund new programs. Government growth is an effect of revenue growth, and the ease of borrowing against it. So shrink the inflows, not the spending.
If not, plan on learning the hard way that spending cuts will always fail exactly because cost savings in government are opportunities for would-be government appropriators. See Robert Moses…
