Economy & Budget

5 ways to cut government down to size

Education traditionally has been considered the purview of private action and state and local governments. Yet “free” community college and federally funded preschool and daycare were the centerpieces of President Obama’s recently proposed budget.

{mosads}A smaller, more limited federal government would focus on assuring national security, a basic social safety net and provide other essential services — but it would otherwise leave individuals free to determine their own affairs. Instead, the national government has expanded far beyond its proper scope, to the point that it now extracts money from taxpayers to provide start-up funding for pet shampoo companies and to promote American whiskey producers abroad.

Small wonder that federal spending now consumes nearly $30,000 for every household in America and is on the rise. The federal budget, now at $3.5 trillion, is projected to grow to more than $6 trillion by the end of the decade.

When federal involvement extends beyond legitimate national priorities, it creates costs beyond those that are captured by budget numbers. Such off-budget expenses include the government picking winners and losers, making our economy less productive than if markets were allowed to function and discouraging work among able-bodied adults.

What follows are five ways to establish opportunity for all and favoritism to none by cutting government in both size and scope. Congress should:

End corporate welfare. Corporate welfare, or the provision of financial and other benefits to businesses, distorts markets and creates economic waste. It also breeds corruption. Ending corporate welfare in practice means, for instance, shutting down the Export-Import Bank and ending energy mandates, loan programs and agriculture subsidies. Taxpayers and the economy would be better off if government stopped doling out favors to special interests.

Refocus entitlement and welfare programs. Entitlement spending increased more than fivefold over the last 40 years, faster than the gross domestic product (GDP) and all other government spending. This massive increase is a direct consequence of wrongly targeted programs that provide benefits to recipients who should not be receiving them. Government should limit benefits to those who actually need them and provide them as efficiently as possible. For example, Medicare should be transformed into a premium-support program for seniors who need the support the most. Welfare programs should first and foremost promote self-sufficiency, requiring all able-bodied adults to work, prepare for work or look for work in exchange for receiving assistance. With the right reforms, Congress can better protect America’s most vulnerable populations by providing a durable safety net without burdening younger generations with crippling debt levels or higher taxes.

Reduce wasteful spending through greater oversight. Each year, the Government Accountability Office (GAO) releases a report detailing duplication across federal government agencies, along with recommendations on how to address it. Congressional oversight should tie agency funding to improved management of taxpayer resources. Other GAO-identified actions require changes in the law, such as disallowing individuals from double-dipping from unemployment and disability benefits. Moreover, reducing improper payments through better oversight and management could save billions every year. The federal government wasted more than $100 billion in 2013 by making improper payments, such as sending checks to people who should not receive them and overpaying for medical equipment. 

Establish a government waste commission. A specifically dedicated, independent commission with the charge to eliminate waste, cut programs that are outside the proper scope of the federal government, and consolidate duplicative programs, could help Congress eliminate waste and control government spending. Such a commission should also be charged with identifying government programs that properly fall in the private sector, or that should be in the purview of state and local government. It should also judge programs based on objective performance measures, like outcomes of randomized controlled trial experiments.

Enact and enforce firm spending caps. Firm spending caps encourage lawmakers to better prioritize federal spending in the national interest. Spending caps give Washington an excuse to say “no” to the bottomless appetites of special interests, which helps to protect American taxpayers from wasteful spending burdens. Congress should consider adopting a sustainable cap on the overall federal budget, including policy triggers to achieve savings when programs exceed their budgeted amounts. This is particularly important as higher spending is driving deficits to never-before-seen heights, and Congress refuses to limit its spending spree with an effective debt limit.

Reining in the federal government is key to keeping Washington bureaucrats from meddling in affairs better left to individuals, businesses and state and local government. The Heritage Foundation Budget Book presents 106 ways to help Congress get started this year.

Boccia is the Heritage Foundation’s Grover M. Hermann Fellow in Federal Budgetary Affairs and co-author of Heritage’s 2015 policy guide, “Opportunity for All, Favoritism to None.”

Tags Corporate welfare Fiscal policy GAO Government Accountability Office Government spending government waste Medicare

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