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. Why not take advantage of this paper to help balance the budget? Here is the third part.
A Plan to Cut Spending and Balance the Federal Budget
by Chris Edwards, Cato Institute
Introduction
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
Privatization
Conclusions
Subsidies to Individuals and Businesses
The federal government operates more than 2,000 separate subsidy programs, a doubling of subsidy programs since the mid-1980s.9 The scope of federal activities has greatly expanded in recent decades, along with the size of the federal budget. The federal government subsidizes farm businesses, retirees, school lunches, rural utilities, the energy industry, rental housing, public broadcasting, job training, foreign aid activities, foreign purchases of weapons, urban transit services, and many other types of activities and people.
Each subsidy program costs money, generates a bureaucracy, spawns lobby groups, and encourages more people to demand freebies from the government. Individuals, businesses, and nonprofit groups that become hooked on federal subsidies essentially become tools of the state. They lose their independence, they have less incentive to innovate, and they shy away from criticizing the government.
Table 1 includes cuts to subsidies in agriculture, commerce, energy, housing, foreign aid, and other areas. These cuts wouldn’t eliminate all of the unjustified subsidies in the federal budget, but they would be a good start. Government subsidies are like addictive drugs, undermining America’s traditions of individual reliance, voluntary charity, and entrepreneurialism.
Aid to State and Local Governments
Under the Constitution, the federal government was assigned specific limited powers, and most government functions were left to the states. To ensure that people understood the limits on federal power, the Framers added the Constitution’s Tenth Amendment: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” The amendment embodies federalism, the idea that federal and state governments have separate areas of activity and that federal responsibilities are supposed to be “few and defined,” as James Madison noted.
Unfortunately, policymakers and the courts have mainly discarded federalism in recent decades. Congress has undertaken many activities that were traditionally reserved to state and local governments through the mechanism of “grants-in-aid.” Grant programs are subsidies that are combined with federal regulatory controls to micromanage state and local activities. In fiscal 2011, federal aid to the states will total $625 billion, which will be distributed through more than 1,100 separate programs.10
The theory behind grants-in-aid is that the federal government can operate programs in the national interest to efficiently solve local problems. However, the federal aid system does not work that way in practice. Most federal politicians are consumed by the competitive scramble to maximize subsidies for their states, regardless of efficiency, fairness, or any appreciation of overall budget limitations.
Furthermore, federal aid stimulates overspending by state governments and creates a web of complex federal regulations that destroy state innovation. At all levels of the aid system, the focus is on regulatory compliance and spending, not on delivering quality public services. The aid system destroys government accountability because each level of government can blame the other levels when programs fail. It is a “triumph of expenditure without responsibility.”
The federal aid system is a roundabout funding system for state and local activities. It serves no important economic purpose. By federalizing state and local activities, we are asking Congress to do the impossible—to efficiently plan for the competing needs of a diverse country of more than 300 million people.
The grants-in-aid system should be dramatically cut. Policymakers need to revive federalism and begin to terminate grant programs. Table 1 includes cuts to grants in the areas of agriculture, education, health care, justice, and transportation. The justice grants, for example, are for funding such items as bulletproof vests for local police.11 There is no reason why such activities should not be funded at the city or county level.
Military Expenses
Cato Institute defense experts Christopher Preble and Benjamin Friedman have proposed a lengthy list of cuts to U.S. military spending totaling $1.2 trillion over 10 years.12 Within 10 years, their proposal would reduce spending by about $150 billion annually, based on a strategy of restraint and reduced intervention abroad.
In proposing their plan, Preble and Friedman argue that the United States would be better off taking a wait-and-see approach to distant threats, while letting friendly nations bear more of the costs of their own defense. They note that U.S. policymakers support many extraneous missions for the military aside from the basic requirement to defend the nation. There is no doubt that America’s military budget is bloated. Even aside from the wars in Iraq and Afghanistan, Department of Defense spending roughly doubled between 2001 and 2011.13
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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.
Sincerely,
The Daily Hatch 