Cutting Spending, as Opposed to Raising Taxes, Is Right Way To Balance Budget — and Spark Economic Revival

A small but influential wing of the GOP has a passion for supposed bipartisanship — inevitably ending up supporting higher taxes, more government, bigger bureaucracy, more regulations, and slower growth.

AP/J. Scott Applewhite, file
Senator Romney, who is retiring, at the Capitol, March 16, 2022. AP/J. Scott Applewhite, file

Most Republicans oppose tax increases. They strongly favor lower taxes, fewer regulations, and smaller government. They like faster economic growth and increased take home pay. However, a small but influential wing of the Republican Party has a passion for supposed bipartisanship. These Republicans inevitably end up supporting higher taxes, more government, bigger bureaucracy, more regulations, and slower economic growth.

Senator Mitt Romney’s Bipartisan Fiscal Commission proposal is a good example of the latter’s work. The proposal, co-written with Senator Joe Manchin, clearly calls for tax increases. For starters, the senators have publicly expressed openness to lifting the Federal Insurance Contribution Act cap, which cuts off Social Security and Medicare taxes after a certain income level. 

As Americans for Tax Reform reported, “The Romney-Manchin-Biden payroll tax increase will hit workers, small businesses and the self-employed. The tax hike saddles main street businesses and hard-working contractors with what amounts to a significantly higher marginal tax rate.”

Citing past reports from The Tax Foundation, Americans for Tax Reform noted that payroll tax increases inevitably result in lower pay for workers. 

The central role of tax increases in the Romney-Manchin scheme is clear. As Center on Budget and Policy Priorities Senior Vice President for Federal Fiscal Policy Joel Friedman told Aris Folley with The Hill, “You can’t responsibly reduce the deficit without having revenues be a central component of any type of plan.

“You really need some type of commitment, upfront and clear, that revenues will be part of this. Otherwise, you’re just setting it up for failure… And then it’s sort of, you know, what’s the point of doing a commission if it’s just going to fail?”

There is an alternative to Mr. Romney’s fiscal commission. Simply focus on cutting spending, bureaucracy, and regulations. Then pass pro-growth tax cuts. Controlling spending, reforming programs, and cutting taxes and regulations will dramatically increase economic growth. Revenues will then increase even with a lower tax rate. This can lead to a balanced budget.

We know this is true because we balanced the federal budget for four straight years when I was Speaker. These were the only balanced federal budgets in your lifetime. The momentum of growing the economy and balancing the budget was so great that in 1998 Federal Reserve Bank Chairman Alan Greenspan said, “If current budget trends continue, it is not inconceivable that the debt could be entirely eliminated within a decade.”

Of course, the tax-and-spend Republicans who followed us did not understand what we had done. They promptly went back to borrowing, taxing, and spending. A great opportunity for fiscal sanity was lost.

So, we know how to balance the federal budget – with a dramatically bigger economy. It is the opposite approach from the Romney-Manchin tax increase model.

We also know there is a huge difference between a fiscal commission and a serious effort to reform and cut spending.

As Alec Mena with Citizens Against Government Waste has observed, President Reagan’s Private Sector Survey on Cost Control, better known as the Grace Commission, made proposals that saved taxpayers some $424 billion over a three-year period. 

Indeed, Mena wrote that the commission’s work has saved taxpayers $2.4 trillion to date. Specifically, the related Base Realignment and Closure Commission, which I worked with in Congress, saved the Department of Defense $12 billion annually between 1988 and 2005.

The House Budget Committee chairman, Jodey Arrington, was on the right track when he got his members to report out a budget that would have been in balance by 2034.

Republicans should reject Mr. Romney’s tax-and-spend proposal and stick to the Reagan-Gingrich-Trump policies of reforming programs, cutting bureaucracies, controlling spending, maximizing economic growth — and getting back to a balanced budget. We’ve done it before. We can do it again.

The New York Sun

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