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Repeat After Me: There Are No Sacred Cows in the Federal Budget

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By Mai Tram @ Shutterstock.com

My friend Chris Edwards, director of tax policy studies at Cato Institute, has politely disagreed with economist Martin Feldstein on the topic of federal budget cuts. Feldstein has called for cuts to entitlement programs, but said “Defense spending and nondefense discretionary outlays can’t be reduced below the unprecedented and dangerously low shares of GDP that the CBO projects.”

That’s where Chris disagrees. He wants “a more expansive view of what can and should be cut.” He says all portions of the federal budget should be open for cuts, and gives some suggestions here:

  • Social Security. Congress should raise the retirement age as Feldstein advises, but also switch the indexing of initial benefits from wages to prices to slow growth, while also reforming disability insurance to encourage work.
  • Medicare. Congress should increase premiums and cost-sharing while moving to a system of vouchers to encourage competition and cost control.
  • Medicaid. Congress should convert federal aid to block grants in order to cut federal spending and encourage state innovation and cost reductions.
  • Defense. The largest federal bureaucracy is the Pentagon’s civilian staff of 750,000. A Washington Post investigation suggested that bloat in the defense bureaucracy cost more than $100 billion year. I don’t know whether that is true, but the Pentagon could certainly save money by tackling excessive layering, cost overruns, and corruption.
  • Interest. Without reforms, interest costs are expected to double over the next seven years, but those costs would fall if Congress cut spending.
  • Other Spending. Congress should cut food subsidies, farm subsidies, energy subsidies, housing subsidies, rural subsidies, development subsidies, K-12 subsidies, college subsidies, welfare subsidies, disaster subsidies, security subsidies,  community subsidies,  developer subsidies,  water subsidies,  grazing subsidies,  unemployment subsidies,  training subsidies,  highway subsidies, transit subsidies, airport subsidies, rail subsidies, worker subsidies, foreign aid subsidies,  business subsidies,  flood subsidies,  power subsidies,  and much more.

There shouldn’t be any sacred cows in the federal budget. The massive deficits that have plagued America in the 21st century are not sustainable, and shouldn’t be tolerated. Chris Edwards is offering American politicians a way forward. They should take it.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com