Other Comments: The Folly of Flood Insurance; Election Quid Pro Quo; Solving Our Spending Problem
We need perspective [on spending], and perspective is what percentages are for. People understand percentages. For instance, Americans saw their wealth plummet 40% during the recession. Median income fell 8% and the value of retirement accounts declined 7%. Meanwhile, over that same period, the federal government grew its spending from $4.9 trillion to $5.9 trillion, a 20% increase.
The only way to build political support for spending restraint is something like this: An across-the-board 1% cut in spending—all spending. And a real cut, not just an adjustment, in scheduled growth.
Over the past few years, Americans have cut back on their lifestyles by far more than 1%. It will be hard to demagogue successfully against a 1% reduction in government spending. And guess what? If we cut federal spending by only 1% for five years, we balance the federal budget without any need for tax increases. We solve a spending problem with spending restraint, returning spending to Clinton-era levels.
—Tom Giovanetti, president, Institute for Policy Innovation