Open letter to President Obama (Part 233)


President Obama c/o The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500

Dear Mr. President,

I know that you receive 20,000 letters a day and that you actually read 10 of them every day. I really do respect you for trying to get a pulse on what is going on out here.

Below is an excellent plan to balance the budget through spending cuts from Chris Edwards of the Cato Institute written in April of 2011. As President you should take the bull by the horns and offer some spending cuts suggestions so we can balance the budget. Here is the first part.

A Plan to Cut Spending and Balance the Federal Budget

by Chris Edwards, Cato Institute

Reducing Spending over 10 Years
Spending Cut Details
Subsidies to Individuals and Businesses
Aid to State and Local Governments
Military Expenses
Medicare, Medicaid, and Social Security


Federal spending is soaring, and government debt is piling up at more than a trillion dollars a year. Official projections show rivers of red ink for years to come unless policymakers enact major budget reforms. Unless spending is cut, the United States is headed for economic ruin.

The results of the 2010 elections made clear that Americans want an end to the spending spree in Washington. People fear that today’s spendthrift policies may lead to large tax increases and a lower standard of living for themselves and their children. The public has given Congress marching orders to start cutting spending and rein in debt.

Policymakers should implement an emergency plan of cuts to defense, domestic, and entitlement programs. This essay proposes spending cuts of more than $1 trillion annually by 2021, which would balance the budget without resorting to damaging tax increases. Federal spending would be reduced to 18.0 percent of gross domestic product by 2021 under the plan, which compares to President Obama’s projected spending that year of 24.2 percent of GDP.

Each of the spending cuts proposed here would make sense whether or not the government was running deficits. That’s because many federal programs reduce individual freedom and cause economic distortions. If these programs were cut, resources would flow from lower-return government activities to higher-return activities in the private sector.

In recent decades, the federal government has expanded into hundreds of areas that should be left to state and local governments, businesses, charities, and individuals. That expansion is sucking the life out of the private economy and creating a top-down bureaucratic society that is alien to American traditions. Cutting federal spending would enhance civil liberties by dispersing power from Washington.

The need to cut spending and debt is urgent. Numerous committees, think tanks, and members of Congress have proposed plans to tackle ongoing deficits, including the House Budget Committee, the House Republican Study Committee, Senator Rand Paul (R-KY), and President Obama’s National Commission on Fiscal Responsibility and Reform. The various plans are not in agreement about the role of taxes in reducing deficits, but there is fairly broad support for substantial spending cuts, particularly cuts to entitlement programs.

The plan presented here does not include tax increases. Official budget projections show that federal debt is exploding because spending is at abnormally high levels. With the 2001 and 2003 tax cuts in place, and with continued relief from the alternative minimum tax, federal revenues are expected to rise to at least 18 percent of GDP in coming years, which is about the average over recent decades. By contrast, it is federal spending—currently at more than 24 percent of GDP—that is above normal levels. During the last two years of the Clinton administration a decade ago, federal spending was just 18 percent of GDP.

Some analysts claim that cutting government spending would hurt the economy, but that idea is based on faulty Keynesian theories. In fact, federal spending cuts would shift resources from often mismanaged and damaging government programs to the more productive private sector, thus increasing overall GDP. Consider Canada’s experience. In the mid-1990s, the country faced a debt crisis caused by runaway government spending—similar to our current situation. The Canadian government changed course and slashed total spending 10 percent in just two years and then held it roughly flat for another three years.1 The Canadian economy did not sink into recession, but was instead launched on a 15-year economic boom.

Policymakers shouldn’t think of spending cuts as a necessary evil needed to reduce debt. Rather, the government’s fiscal mess is an opportunity to make reforms that would spur growth and expand individual freedom. The plan below includes a menu of spending cut options for Congress, and further reforms are described at

Reducing Spending over 10 Years

This section illustrates how a reduction in spending could eliminate the federal budget deficit over 10 years. It shows projections of revenues and spending as a share of GDP based on the March 2011 Congressional Budget Office estimates.2 My projections for revenues assume the extension of the 2001 and 2003 income tax cuts, extension of alternative minimum tax relief, and repeal of the tax increases in the 2010 health care law.3 My projections for spending adjust the CBO baseline to include more realistic assumptions regarding troop reductions in Iraq and Afghanistan and the extension of the Medicare “doc fix.”4

In Figure 1, the bottom line shows that federal revenues with tax relief in place are expected to rise to 18.0 percent of GDP by 2021 as the economy recovers and resumes normal growth. The top line shows President Obama’s proposed spending based on his fiscal 2012 budget.5 As a share of GDP, spending is expected to dip the next few years as funding from the 2009 “stimulus” bill peters out and war costs fall, but spending is expected to start rising again after that. That high spending path would lead to higher taxes, higher debt, or both.

Figure 1.
Projected Federal Revenues and Spending Percent of GDP

Figure 1.

The middle line in the chart shows spending under the balanced budget plan. Under this plan, spending cuts of more than $1 trillion annually by 2021 would be phased in over 10 years.6 Those cuts would generate substantial interest savings by 2021, and total federal spending would fall to 18.0 percent of GDP—the same level as federal revenues that year. With those cuts, federal public debt would peak at 75 percent of GDP in 2013 and then fall to 64 percent of GDP by 2021


Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your commitment as a father and a husband.


Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733,

Post a comment or leave a trackback: Trackback URL.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: