President Donald Trump and the Republican Congress presented tax reform as a Christmas gift to the nation with the promise of stimulating economic growth. Just think how the power of the private sector could truly be unleashed if Congress could get its fiscal house in order, signaling to markets it is serious about reducing spending and removing the weight of the federal debt.
The federal government takes too much of Americans’ hard-earned money. Whether a student, a struggling single parent, a small-business owner or an employee at a multinational corporation, everyone deserves to keep more of what they earn.
The federal government also spends too much money. In fiscal year 2017, the federal government collected over $3.3 trillion and spent nearly $4 trillion. The $666 billion difference is what the federal government borrowed that year alone. Absent the requirement or political will to balance its budget, Congress borrows each year to pay for ongoing expenses, for a current total over $20 trillion. The last time Congress actually paid off the debt instead of borrowing? 1835, under President Andrew Jackson. File that piece of trivia under “sad but true.”
To put $20 trillion into context, imagine a pile of everything you own and produce. Then have everyone in Utah add to the pile everything they own and produce. Now, have everyone from every state put everything into that pile we call the U.S. economy, and it is the same size as the federal government’s debt. Not a great way to run a household or a business, and certainly not the country.
One criticism of the recent tax reform is an additional $1.4 trillion in debt over 10 years. This doesn’t mean the tax cuts were a bad idea. It means Congress did only half the job by ignoring the expense side of the balance sheet. Hence the false debate in Congress today, between the Republican approach of reducing taxes and increasing the deficit and the Democratic approach of increasing spending and increasing the deficit. Unfortunately for the American people, both approaches lead to the same outcome for the national debt.
This false debate is premised on a false choice: that a dollar of reduced spending equals a dollar in reduced services. The notion that a reduction in spending means a reduction in services is built on the assumption that the federal government is operating at 100 percent efficiency. Nothing could be further from the truth.
Even Utah, recently recognized as one of the best-managed states, has demonstrated areas for continuous improvement by Gov. Gary Herbert’s goal to increase operating efficiencies by 25 percent over four years. Three years into that goal, the state is ahead of schedule due to a relentless pursuit of excellence by state managers, innovation such as putting public services online and proper oversight by penny-pinching state legislators and auditors.
Last year, the White House set an ambitious goal for regulatory reform, and it is working. Now, if the White House would set a goal of 25 percent operating efficiency, and if Congress would provide appropriate oversight and if federal managers would be accountable to do more with less, then the American people could keep more of their money and still get the government services they are paying for. It’s all we want for Christmas.