As I See It: Balancing Budgets

October 15, 2018

Politicians in my party have historically rallied to the banner of a balanced budget. The passion appears to have cooled a bit over the last few years as deficits have nearly reached a trillion dollars under a Republican Administration. But even in past years, the political enthusiasm for fiscal balance has generally not been accompanied by realistic proposals to actually achieve it. There’s been the usual reference to eliminating waste, fraud, and abuse, as if that alone could do the trick. Unfortunately, it will take a great deal more effort. 

The most felicitous way to reduce the deficit would come through economic growth. If the economy grows at a high rate, say four percent, then government’s tax receipts would also grow at a high rate and fill a substantial measure of the fiscal shortfall. The tax and regulatory policies enacted during 2017 were designed to do just that. Some economists insist that the tax cuts will instead worsen the deficit, while others believe they will eventually reduce it. I’m in the latter camp. We will watch with great interest what actually transpires and presumably take future action based upon what we learn from the economic results. 

Even with high growth, we will have to reduce government spending if we are to reach a balanced budget. I have long favored a Balanced Budget Amendment that would help reduce the federal deficit and help rein in spending. Democrats may argue that raising taxes would do the trick; I believe, however, that raising taxes would slow economic growth, potentially reduce tax revenues, and put balance further out of reach. Therefore, taming spending will be a necessary part of the mix. 

If we are at all serious about balancing the budget, we have to look at where most of the money is spent. Medicaid, Medicare, Social Security, and other non-discretionary items make up about two-thirds of government spending.

Starting with Medicaid, the healthcare program for the poor, I would grant to each state the amount of Medicaid funding it received last year plus an additional quotient. States would manage Medicaid—under federal guidelines—as they felt best for their own citizens, living within the fiscal constraints of conservative growth and adjusting for population changes. This “state block grant” policy would allow states to develop innovative solutions and flexible programs for caring for their poor and uninsured.

Additionally, Medicare and Social Security should not change for those who have retired or who are nearing retirement. But for young people, I believe we should modernize the programs to assure they remain permanently solvent. Accordingly, for those under 55, I would gradually increase the retirement age by two years. And, again only for those under 55, I would lower the growth rate of payments for higher-income, wealthier recipients while maintaining it for lower- and middle-income recipients. These changes also reduce government spending by nearly one hundred billion dollars. And for our future seniors, we should offer the flexibility to use their Medicare dollars to either enroll in the traditional program, or in the private insurance plan of their choice—so that they have a say in their own healthcare.

These are proposals which Paul Ryan and I promoted when I ran for President in 2012. I was heartened by the fact that we received a majority of the votes among citizens over 65 years of age. 

The other one-third of government spending is roughly even between defense and everything else done by government, from farm support to education to the National Parks. In my experience, as a governor facing a multi-billion dollar budget gap, I found that in virtually every department and program there are opportunities for savings. The biggest opportunities will come by eliminating some programs altogether and by returning others to the states where they will be much more attentively managed. I’d close the dozens of federal job training programs, for example, and send money back to states to take responsibility for such training, presumably through community colleges. Similarly, I would eliminate or transfer to the states dozens of programs from other federal departments, including the Departments of Education, Transportation, and Health and Human Services. States will do a better job meeting the real needs of their citizens and are more suited to hold down program costs. It’s apparent to me that Utah knows better than Washington what’s best for Utah.

Defense spending is also eligible for savings. We must depoliticize the process of defense funding: Our military leaders should be trusted to make the decisions about which weapons programs receive funding, not politicians. I’m not yet ready to target specific defense programs for elimination but I have a few in my sights for in-depth analysis. 

My list of spending economies is quite long but not as long as I’d like it. As Ross Perot once said, “I’m all ears.” Your suggestions are welcome at tellmitt@romneyforutah.com.