We should slash government budgets to deal with debt.


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While Washington, and the press, have been in an uproar over the government shutdown and the debt-limit negotiations, the debt itself has continued to climb. And that inexorable tide is going to cost us, eventually. As economist Herbert Stein once observed, something that can't go on forever, won't. And this can't go on forever. From this there are two lessons.
How bad has it gotten? In the past two years, the debt limit has grown twice as much as the economy. Can that go on forever? I doubt it very much.
As Niall Ferguson notes, while politicians crow that the deficit has dropped -- from super-enormous to merely really, really gigantic -- every year that we're in deficit adds to the debt. And the long-term trends are bad: "A very striking feature of the latest Congressional Budget Office report is how much worse it is than last year's. A year ago, the CBO's extended baseline series for the federal debt in public hands projected a figure of 52% of GDP by 2038. That figure has very nearly doubled to 100%. A year ago the debt was supposed to glide down to zero by the 2070s. This year's long-run projection for 2076 is above 200%. In this devastating reassessment, a crucial role is played here by the more realistic growth assumptions used this year."
Ah, yes. Growth. We've been pretty short of that over the last several years, as businesses -- even pro-Obama enterprises such as Google and Apple -- park increasing amounts of money overseas, unwilling to be subject not only to high U.S. taxes but, even worse, to the high levels of regulation of which Obamacare is only the most famous.
Something that can't go on forever, won't. Therefore, we won't keep borrowing more and more forever, with stagnant economic growth. So that's one lesson. But the other lesson can be found in the government shutdown: How many people really noticed?
The answer, of course, is so few that the Obama administration was forced to gin up a show with "Washington Monument" strategy efforts like closing war memorials and national parks, cutting off death benefits for dead troops, and the like in an effort to get people to care. These efforts seem mostly to have succeeded in driving Obama's poll numbers down to 37% in an AP poll last week, as a majority of Americans concluded -- correctly -- that he was putting his personal political interests ahead of the nation's.
The big lesson of the shutdown is that -- in a time when so-called "draconian cuts" usually refer to mere decreases in the rate of growth of spending on programs -- America was able to do without all the "non-essential" government workers just fine. (The same AP poll cited above says that 80% have felt no impact from the shutdown; a majority also oppose increasing the debt limit.) Turns out that most of those nonessential workers really are non-essential. And it's a safe bet that some of those who stayed on the job -- like the National Park Service people who chased veterans away from an open-air memorial -- could be done without, too, in a pinch. Under the shutdown, new regulations also slowed to a trickle, suggesting that we can do just fine without those, too.
With these lessons learned, here's my budget proposal: An across-the-board cut of 5% in every government department's budget line. (You can't convince me -- and you'll certainly have a hard time convincing voters -- that there's not 5% waste to be found in any government program.) Then a five-year freeze at that level. Likewise, a one-year moratorium on new regulations, followed by strict limits on new regulatory action: Perhaps a rule that all new business regulations won't have the force of law until approved by Congress.
This approach would drastically cut the deficit, and as the economy grew, our debt-to-GDP ratio would improve over time instead of steadily worsening. (And, with a guarantee of reduced spending and regulation, economic growth would probably also take off.)
Will we actually see anything like this? Alas, probably not. Smaller government and less regulation mean fewer opportunities for graft and for the personal and institutional aggrandizement that mean even more than money in Washington. But my proposal is what our leaders would do if their necks were on the line. Since it's only our necks at stake, though, I'm not very hopeful.
Glenn Harlan Reynolds is professor of law at the University of Tennessee and the author of The New School: How the Information Age Will Save American Education from Itself. He blogs at InstaPundit.com.

http://www.usatoday.com/story/opinion/2013/10/15/government-shutdown-washington-column/2976849/