Budget & Budget Reform: A Tea Party Patriots` Perspective

Overview
The growth in the size and scope oI the Iederal budget is a uniIying Irustration among the
majority oI American taxpayers. Over the past decade, as a result oI historically irresponsible
spending, the Iederal budget ballooned Irom $1.9 trillion in 2001 to more than $3.8 trillion today.
This out oI control government spending has impacted the United States economy and American
taxpayers in a myriad oI ways. Since money that otherwise would have been used to start
businesses, buy equipment and Iinance investments was instead used to Iund government
programs, the economy has stalled and job creation is stagnant. The massive annual Iederal
deIicits resulting Irom overspending has leIt the United States taxpayers with the largest debt in
the history oI the world. Lawmakers hoping to pay Ior lavish government spending through tax
increases would only worsen the nation`s current economic instability.
Improvident presidents and careless congressmen have allowed unsustainable growth in Iederal
spending. As a result, the United States is in the midst oI its worst economy in recent history.
UnIortunately, with the cost oI entitlement programs expected to soar in the coming decades,
America`s economic Iorecast appears bleak Ior years to come.
Fortunately, options are available Ior Iorward-thinking lawmakers seeking to avert this looming
crisis. By limiting spending, reducing the size and cost oI government, reIorming entitlements
and ensuring that taxes are low, the worst oI the budgetary disaster can be averted and the
American economy can once again become the model oI stability and prosperity Ior the world.


Where We Are
From the time the United States Congress Iirst met in 1789, it took the United States 198 years
until 1987 to enact a Iederal budget that reached $1 trillion in spending.
In 2002, a mere 15 years later, the budget topped $2 trillion Ior the Iirst time.
1

As a result oI an explosive growth in Iederal spending under George W. Bush and Barack
Obama`s $787 billion stimulus plan, Iederal spending surpassed $3 trillion only seven years
later, in 2009.
The Iederal budget currently hovers just below $4 trillion and will likely exceed that mark in
either 2013 or 2014, unless Congress and the president are willing to stop the growth oI
government and curb proposed increases in spending.
In 2011, the Iederal government will spend $3.82 trillion an average oI $12,263 Ior every
single man, woman and child in the United States.
2

The Price of Spending
All oI this spending comes at a steep cost to Americans.
There are three ways to pay Ior America`s soaring government spending, each harmIul to the
American economy and U.S. taxpayers:
1) Raising Taxes Tax increases discourage work, saving and investment, as well as
hurting America`s competitiveness in the international marketplace.

2) Borrowing Money When government borrows money, it consumes investment capital
that would be better used by productive private companies.

3) Printing Money Relying on the printing presses as a source oI Iederal revenue causes
steep inIlation, resulting in economic instability.
3

No matter how the government Iinances its spending, every dollar that the Iederal government
spends, is one less dollar that goes towards the productive sector oI the economy. When more
dollars are devoured by government and Iewer dollars reach the productive sector oI the
economy, the result is Iewer jobs Ior Americans.
ore Spending Equals Fewer Jobs
Since World War II, Iederal spending has decreased three times, during the late 1940s, the mid-
1950s and the mid-1960s. All three times, business owners and entrepreneurs had more money in
their pockets and less government spending to chew into economic growth. As a result, millions
oI jobs were created, greatly reducing poverty and unemployment, and raising the standard oI
living Ior all Americans.
4

During the presidencies oI Ronald Reagan and Bill Clinton, the Iederal government grew slower
than gross domestic product (GDP). As a result, an average oI more than 1.5 million new jobs
were created annually between 1983 and1988 and more than 2 million jobs were added each year
during Clinton`s term.
5

It should come as little surprise that iI jobs are created quickly when government spending
decreases or increases more slowly than the rate oI economic growth, the opposite should also be
true: As government spending increases Iaster than taxpayers` ability to pay Ior it, job growth
slows or stops. Judging by the unemployment data during the George W. Bush and Barack
Obama administrations, that certainly is the case.
Federal spending grew 83 during the Bush presidency, while job growth grew a paltry 2.3. In
eight years under Bush, only 3 million new jobs were created.
6

In January 2009, when Obama took oIIice, 141.7 million Americans were employed, according
to the Department oI Labor`s Bureau oI Labor Statistics.
7
By August 2011, only 139.6 million
Americans had jobs.
8
Despite spending $787 billion to stimulate jobs, there are actually 2.1
million Iewer jobs in the United States today than when Obama took oIIice.
Drowning in Debt
While America hemorrhages jobs and the economy continues to Ialter, perhaps the most obvious
byproduct oI the growth in Iederal spending is the rise in the national debt. In 2011, the Iederal
government increased the statutory debt limit to more than $14.3 trillion. That staggering Iigure
amounts to a debt oI $44,516 Ior every man, woman and child in the United States.
9

The United States` suIIocating national debt isn`t the result oI a sagging economy or Americans
shelling out too little in tax money. Quite simply, government has grown too large and spends
too much.
Adjusted Ior inIlation, America`s median household income in 1965 was $39,732. That same
year, the total combined spending oI local, state and Iederal government in the United States was
$21,893 per household.
By 2009, the median household income in the United States grew 26.5 to $50,255. Combined
government spending, however, more than doubled, exploding to $47,824 an increase oI a
staggering 118.4 Irom 1965-2009.
10

When government grows Iaster than taxpayers` ability to pay Ior it, the result is a loss oI
personal Ireedom since government takes away taxpayers` ability to decide how to best spend
their hard-earned money.

Where We`re Going
According to the Congressional Budget OIIice (CBO), Iederal spending as a percentage oI GDP
is on track to increase Irom 17.2 oI America`s total GDP in 2010 to nearly 40 by 2075.
11

In other words, unless lawmakers enact substantial reIorms to improve our country`s budgetary
situation, when children born today reach retirement age, two out oI every Iive dollars the U.S.
economy produces each year will go to subsidizing the Iederal government. Astoundingly, that
suIIocating Iigure does not include the amounts devoured to Iund state and local governments.


FederaI OutIays by Category, 1950 to 2075
12


(As a percentage of GDP)
FiscaI
Year
SociaI
Security Medicare Medicaid
SociaI
Security,
Medicare,
and
Medicaid
Combined
AII Other
Spending,
ExcIuding
Interest
Expense
Interest
Expense TotaI
1950 0.3 n.a. n.a. 0.3 13.5 1.8 15.6
1960 2.2 n.a. n.a. 2.2 14.2 1.3 17.7
1962 2.5 n.a. * 2.5 15.1 1.2 18.8
1970 2.9 0.7 0.3 3.9 12.8 1.4 19.3
1980 4.3 1.2 0.5 6.0 13.7 1.9 21.6
1990 4.3 1.9 0.7 6.9 11.7 3.2 21.8
2000 4.2 2.2 1.2 7.6 8.5 2.3 18.4
2010 4.4 2.7 1.8 8.8 7.6 0.8 17.2
2020 5.4 3.6 2.3 11.3 7.1 -0.5 17.9
2030 6.2 4.9 2.8 13.9 7.1 -0.2 20.8
2040 6.2 6.0 3.4 15.5 7.1 1.1 23.8
2050 6.0 6.7 3.9 16.7 7.1 3.1 26.9
2060 6.1 7.7 4.3 18.1 7.1 5.8 31.0
2070 6.2 8.9 4.9 20.0 7.1 9.4 36.5
2075 6.2 9.6 5.3 21.1 7.1 11.5 39.7
Source: Congressional Budget Office.
* = less than 0.05 percent.

As the chart indicates, the primary causes Ior the Iuture surge in Iederal spending are entitlement
programs, including Social Security, Medicare and Medicaid. Federal revenues, including
individual and corporate income taxes, payroll taxes, excise taxes and all other Iorms oI
government tax revenues, traditionally consume approximately 18 oI GDP. With entitlement
spending on the three programs estimated to eclipse 18 oI GDP by 2060, Social Security,
Medicare and Medicaid will consume all Iederal revenues.
To make matters worse, unless Congress acts quickly, America`s entitlement problems will not
end at Social Security, Medicaid and Medicare. The Patient Protection and AIIordable Care Act
or, as it is commonly known, 'Obamacare, passed in March 2010 and will ratchet Iully into
place by 2018.
Beginning in 2014, when most oI the provisions oI Obamacare are implemented, the scheme
stands to cost American taxpayers between $200 billion and $300 billion per year, according to
recent Iigures Irom the CBO.
13
As a result, the United States` already dim budgetary Iuture
stands to get even worse.

What We Can Do About It
The Iuture looks bleak iI America continues down its current path oI excessive spending and
rampant borrowing. The U.S. will become less competitive and less relevant in the world
economy and American taxpayers will be swamped under stiIling tax rates and mountainous
national debt.
Fortunately, the Iederal government has an array oI reasonable options available to improve the
budget process, reduce runaway spending, shrink the national debt and help the United States
regain a Iirm Iinancial Iooting going Iorward.

imit Spending
The most straightIorward approach to ensuring the Iederal budget does not grow Iaster than
taxpayers` ability to pay Ior it is by implementing one or more spending limits. A reasonable
spending limit would allow the Iederal government to meet its constitutional duties without
allowing Congress to embark on uncontrolled spending binges that compromise the American
economy, swamp Iuture generations with stiIling debt and unjustiIiably raid taxpayers` wallets.
Additionally, spending limits compel Congress and the President to do what most Iamilies across
America do every single month: Prioritize their spending.
Examples oI spending limits that would require the Iederal government to engage in reasonable
Iiscal discipline include:

O A Balanced Budget Amendment Originally devised in the 1930s as a way to
limit the size oI the Iederal debt, a balanced budget amendment would alter the U.S.
Constitution to require that the Iederal government spend no more than its revenue. II
Congress exceeded its spending limit, cuts to the budget would be made automatically to
ensure the budget would not exceed the constitutional limit. As a result, deIicit spending
would become largely Iorbidden except in rare cases war or national emergency.

O The Gramm-Rudman-Hollings Act Named Ior its Senate sponsors, this 1985
legislation Iorced Congress to automatically cut certain discretionary spending in the
Iederal budget iI a series oI deIicit-reduction targets were not reached.
14


O PAYGO Recently reinstituted in a watered-down version by President Obama,
'PAYGO or "pay-as-you-go" budget rules encourages budget prioritization by requiring
that new expenditures be oIIset by cuts to existing expenditures, so that the budget
remains deIicit neutral. As it stands, the current version oI PAYGO only applies to
expansions to entitlement programs, and can be easily bypassed. An eIIective version oI
PAYGO would apply to every bill enacted by Congress and would require that any
newly enacted spending be paid Ior by reducing or eliminating existing Iunding by at
least the amount oI the new expenditures.
15


O Spending Caps Currently more than 20 states enIorce reasonable spending
limits to cap budget increases Irom one year to the next.
16
While oIten easily overridden,
the caps generally restrain spending so that government spending does not grow Iaster
than some measure oI economic growth or taxpayers` income. Congress could statutorily
apply such a common sense spending limit to the Iederal budget. By limiting the growth
in Iederal spending to the same percentage as the growth oI GDP or inIlation plus
population growth, Congress would be Iorced to live within its means.

O Reality-Based Budgeting When developing a budget, Congress and the
President begin every year the same way. They take the current budget and start adding
money Irom there. Reality-based budgeting breaks that mold and Iorces lawmakers to
develop budgets 'Irom the ground up based on priorities and perIormance by
considering the Iollowing questions at the start oI each session oI Congress:

1. What must the state accomplish?
2. How will the state measure its progress and success?
3. How much money does the state have available to spend?
4. What is the most eIIicient and eIIective way to deliver essential services within
available Iunds?
17


While statutory spending limits, like the Gramm-Rudman-Hollings Act, PAYGO and spending
caps can be rewritten or bypassed, organizations like the Tea Party Patriots would play an
important role in ensuring that Congress held to their spending limits.
18
The result would be a
leaner, more responsible budget, a shrinking national debt and a surging economy that grows
Iaster than the government.

#educe the Si:e and Cost of Government
It goes without saying that a $3.82 trillion budget is Iilled with programs that are wasteIul,
unnecessary, overreaching and ineIIective. It is government`s responsibility to the citizens it
serves to spend money wisely, eIIiciently and eIIectively, providing value Ior taxpayers and
allowing Americans to keep as much oI their hard-earned money as possible.
In order to create a budget that is more responsible, sustainable and respectIul oI taxpayers,
Congress should eliminate programs that:
O Are wasteIul, 'duplicative, obsolete, mismanaged, ineIIective, or subject to high
levels oI Iraud and abuse.

O Reward special interests at the expense oI average citizens and taxpayers.

O Distort the economy, incentivizing individuals to behave in ways that are not in
their best economic interest.

O Should be the responsibility oI state and local governments.

O PerIorm services that are best leIt to private businesses, individuals and charities.

O 'iolate the Constitution and exceeds the limits oI Iederal power.
19


#eform Entitlements
Government insurance schemes, or 'entitlements, have become the greatest burden Ior
American taxpayers. In 2011, 59.2 oI the Iederal budget more than $2.2 trillion will go
towards unsustainable entitlement programs. These programs, including Social Security,
Medicare and Medicaid, will grow to consume nearly 14 oI America`s GDP by 2030 iI leIt
unchecked.
ReIorming the Iederal government`s deIective entitlement system would almost single-handedly
shore up the economy and reduce the Iederal government`s biggest expense to American
taxpayers.
The Iollowing steps are necessary to reIorm entitlements:
O Either privatize entitlement programs or Iund entitlements Iully Irom 'speciIically
identiIied and allocated taxes and Iees that cannot be used to pay Ior anything other than
the program that they are intended to Iund.
20
In other words, money collected Ior
entitlements would actually have to remain in lock boxes Ior those entitlements.

O Reduce the cost oI entitlement schemes by altering beneIits available to
recipients, implementing spending and beneIits caps within each entitlement program and
taking steps to eliminate the waste and Iraud currently Iound in the programs.

O Require a clear roll-call vote iI Congress wants to increase unIunded obligations
oI Medicare and Social Security.
21


ake Taxes ow and Fair

Rather than addressing structural problems with government spending, progressive lawmakers
and pundits commonly allege tax increases will Iix America`s budget crises. Since the budget
crisis resulted Irom historic increases in spending rather than a lack oI revenue, calls to increase
taxes are wrongheaded. Further, since raising taxes results in Iewer jobs, companies and
wealthy individuals Ileeing to countries with lower tax burdens, a less competitive international
economy, a reduction in investment and, possibly, less tax revenue, tax increases would be
economically devastating, especially in the current economic environment.

Conclusion
Each year, scores oI well-meaning congressmen who know that it is in the best interest oI
themselves, their constituents and the Iuture oI the United States to cut Iederal spending do not.
Instead oI listening to reason, they are swayed by lobbyists, unions and special interests groups
that act as parasites devouring Americans` hard-earned dollars to Iund Iailing organizations,
subsidize bad behavior and Iinance unjustiIiable boondoggles.
This army oI parasites makes wild claims that cutting Iederal spending even a small amount will
cause bridges to Iall, prevent children Irom learning and leave the sick dying in the street.
However, spending was cut in the mid-1960s and restrained considerably during the Reagan and
Clinton years, but Iew recall masses oI collapsing bridges, classrooms Iilled with illiterate
children or streets littered with the dead. Few recall such scenes because they never happened. In
many ways, those were some oI America`s greatest years. Jobs were plentiIul, the dollar was
stable and the economy was booming.
In Iact, many would agree that standards oI living were better and the nation was stronger during
these times when the government spent more responsibly.
The last decade has seen an explosion oI government spending, oIten in the name oI improving
the quality oI liIe Ior Americans. It is unlikely, however, that the Bush/Obama years will be
viewed with Iondness as a golden age Ior America. Instead, spending trillions oI dollars more
than necessary to provide government services has leIt the United States deeply in debt, without
enough jobs to go around and mired in the Great Recession.
America`s best days come when government is restrained enough to let citizens keep more oI
their own money and use that money to live the American Dream.

Related Quotes
"There are Iour ways in which you can spend money. You can spend your own money on
yourselI. When you do that, why then you really watch what you`re doing, and you try to get the
most Ior your money. Then you can spend your own money on somebody else. For example, I
buy a birthday present Ior someone. Well, then I`m not so careIul about the content oI the
present, but I`m very careIul about the cost. Then, I can spend somebody else`s money on
myselI. And iI I spend somebody else`s money on myselI, then I`m sure going to have a good
lunch! Finally, I can spend somebody else`s money on somebody else. And iI I spend somebody
else`s money on somebody else, I`m not concerned about how much it is, and I`m not concerned
about what I get. And that`s government. And that`s close to 40 oI our national income."
Milton Friedman
'When government grows, Ireedom shrinks. Ron Paul
"To preserve our independence, we must not let our rulers load us with perpetual debt. We must
make our election between economy and liberty, or proIusion and servitude." Thomas
JeIIerson

1
Executive OIIice oI the President oI the United States. OIIice oI Management and Budget. Historical Tables,
Budget oI the U.S.Government, Fiscal Year 2011. U.S. Government Printing OIIice, 2010. 21-23.
2
Chantrill, Chris. 'Federal Spending Ior United States. USGovernmentSpending.com. September 6, 2011.
http://www.usgovernmentspending.com/spend.php?spanusgs302&year2011&view1&expandF0&expandC
&unitsd&IyIy12&locals&stateUS&pieIed#usgs302F0~

3
Mitchell, Daniel. 'Eight Reasons Why Big Government Hurts Economic Growth. August 2009. Center Ior
Freedom and Prosperity. September 6, 2011. http://Ireedomandprosperity.org/2009/videos/eight-reasons-why-big-
government-hurts-economic-growth/~

4
PolitiFact 'irginia. 'Eric Cantor Says Less Government Spending Equals More Private Sector Jobs. #ichmond
Times-Dispatch. March 16, 2011. http://www.politiIact.com/virginia/statements/2011/mar/16/eric-cantor/eric-
spending-says-less-government-spending-equals/~

5
Ibid.

6
Real Time Economics. 'Bush on Jobs: The Worst Track Record on Record. The Wall Street Journal. January 9,
2009. , http://blogs.wsj.com/economics/2009/01/09/bush-on-jobs-the-worst-track-record-on-record/~

7
Department oI Labor. Bureau oI Labor Statistics. 'The Employment Situation: February 2009.
http://www.bls.gov/news.release/archives/empsit03062009.htm~

8
Department oI Labor. Bureau oI Labor Statistics. 'The Employment Situation: August 2011.
http://www.bls.gov/news.release/archives/empsit09022011.htm~

9
Tanner, Michael. 'Bankrupt Entitlements and the Federal Government. Cato Institute Policy Analysis. No.673.
March 28, 2011. 1,6.

10
GoII, Emily, Kathryn Nix and John Fleming. 'Total Government Spending Has More Than Doubled Since 1965.
June 1, 2010. The Heritage Foundation. September 6, 2011. http://www.heritage.org/budgetchartbook/total-
government-spending~
11
Congressional Budget OIIice. A 125-Year Picture oI the Federal Government`s Share oI the Economy, 1950 to
2075. Long-Range Fiscal Policy BrieI. No. 1, June 14, 2002; Revised July 3, 2002.

12
Ibid.
13
Anderson, JeIIrey. 'CBO: Obamacare Would Cost Over $2 Trillion. The Weekly Standard. March 18, 2010.
http://www.weeklystandard.com/blogs/cbo-obamacare-would-cost-over-2-trillion?page1~

14
Cato Institute. Cato Handbook Ior Policymakers, 7
th
Edition.2009. 56.

15
Riedl, Brian. 'Obama`s PAYGO Law Would Not Slow Spending or Budget DeIicits. February 26, 2009. The
Heritage Foundation. September 7, 2011. http://www.heritage.org/research/reports/2009/02/obamas-paygo-law-
would-not-slow-spending-or-budget-deIicits~

16
Cato Institute. Cato Handbook Ior Policymakers, 7
th
Edition.2009. 56.

17
Williams, Bob. 'Reality-Based Budgeting: How to Permanently Resolve State Budget Gaps. State Budget
Solutions. September 13, 2011. http://www.statebudgetsolutions.org/publications/detail/reality-based-budgeting-
how-to-permanently-resolve-state-budget-gaps~

18
Ibid. 57.

19
Cato Institute. Cato Handbook Ior Policymakers, 7
th
Edition.2009. 52.

20
Rahn, Richard. 'Time Ior a Constitutional Fix. The Washington Times. August 16, 2011.

21
Fraser, Allison Acosta, 'How to Fix the Federal Budget. March 1, 2011. The Heritage Foundation. September 7,
2011. http://www.heritage.org/research/reports/2011/03/how-to-Iix-the-Iederal-budget~