Four radical reforms to shrink our federal budget

OPINION:

It was exactly 50 years ago that the liberal post-Watergate Congress, dominated by Democratic big spenders, passed a new set of budget rules called the Budget Reform and Impoundment Control Act.

This law has been a complete and unmitigated disaster. In the 50 years since its passage, the budget has been balanced four times and unbalanced 46 times. This was by design. Despite being called a “budget reform” law, it was intended to grease the skids for new spending.

To that extent, the law worked.

This year, Congress hit a new low. Even with record-high deficits of nearly $2 trillion a year, Democrats and Republicans on Capitol Hill held hands in bipartisan agreement to spend $95 billion on a foreign aid bill for Ukraine and Israel without a penny being paid for with offsetting spending cuts — even though the flabby budget now exceeds $7 trillion.

Members of Congress should wear T-shirts that read “Stop us before we spend again!”

So I’d like to suggest four commonsense ideas about when citizens should impose a fiscal restraining order on Congress and the White House.

1. Bring back presidential impoundment authority.

The president — like the CEO of any company — should have the power to suspend spending on programs if it is deemed unnecessary. Presidents from Thomas Jefferson — who used the power to stop some shipbuilding for the military — to Abraham Lincoln to Franklin Roosevelt — who used the authority to end New Deal programs as we entered World War II — to Richard Nixon exercised this control. In a $7 trillion budget, there are thousands of instances where money authorized by Congress is no longer needed. So let the president cancel it.

2. Establish a supermajority vote requirement to raise taxes.

President Biden wants to balance the budget with $4 trillion of economically disastrous tax increases and no spending cuts. But the spending is out of control, not the tax revenue. Any tax increase enacted by Congress should require a two-thirds vote in both houses to be approved. This is what many well-run state governments require, and there should be similar safeguards in Washington.

3. Eliminate subsidies to millionaires.

This is an idea that the late great economist Walter Williams and I proposed more than a decade ago. The idea is that no individual with an annual income of more than $1 million should be eligible for federal aid payments. No business entity with more than $1 billion in annual revenue should be eligible for federal corporate welfare subsidies. This would have rendered the so-called Inflation Reduction Act, with its tens of billions of dollars in handouts to green energy and semiconductor companies such as Intel, null and void.

4. Issue ’budget stamps.’

This simple idea would effectively require a balanced budget each year. The concept was originally proposed by then-Reagan administration economist John Rutledge. Under this plan, the government would issue a special blue currency called “budget stamps” to all recipients of federal spending — much in the way that food stamps are issued to the poor. The value of budget stamps, however, would fluctuate with the amount of excess spending authorized by Congress — much as the dollar fluctuates in value every day relative to the price of gold or other currencies.

Recipients of federal assistance, federal employees, and those who run federal agencies would receive $6 trillion in budget stamps this year. (Interest on the debt is excluded.)

But that money in total would be worth only as much money expected to be collected in taxes that year. So if the tax collections were estimated at 90% of the spending, then every budget stamp would be worth 90 cents, not a dollar. The bigger the expected deficit, the less that a budget stamp would be worth.

This would create competition for dollars between agencies and programs. Each dollar allocated to foreign aid would be one less dollar available for the Pentagon, Social Security recipients, defense contractors, green energy programs, bilingual education and sugar subsidies.

Deficits would be impossible since the government under the new rule would be incapable of spending more than it took in. Because Congress’ salaries and staff would be paid in budget stamps, Congress would have a financial incentive to cut unnecessary and wasteful spending.

Almost no one in the Washington swamp will like these ideas, which is all the more reason to adopt them.

• Stephen Moore is an economist at FreedomWorks and a co-founder of the Committee to Unleash Prosperity. His latest book is “Govzilla: How the Relentless Growth of Government Is Devouring Our Economy.”