How to Balance the Budget by Reducing Spending

Cato Institute
1000 Massachusetts Ave, NW
Washington, DC 20001-5403
Phone (202) 842 0200
Fax (202) 842 3490
Contact Us

April 22, 1993
Policy Analysis no. 194

by William A. Niskanen and Stephen Moore

William A. Niskanen is chairman of the Cato Institute. Stephen Moore, Cato's director of fiscal policy studies, is on leave to the minority staff of the Joint Economic Committee of Congress.

Published on April 22, 1993

PRINT PAGE

CITE THIS

Sans Serif

Serif

Share with your friends:

The federal budget can and should be balanced by the end of the decade without any increase in taxes. The Clinton budget, however, which includes increases in taxes and fees that are several times the proposed spending cuts, still leaves a projected deficit of about $300 billion in fiscal year 2000.

In the past decade, we should have learned that the federal deficit leads to some combination of reduced U.S. investment and increased borrowing from other nations, in effect increasing the tax burden on future generations; economic growth will not be sufficient to reduce the deficit without a major change in current federal fiscal policies; an increase in taxes is likely to be counterproductive because it would reduce economic growth and invite an increase in federal spending; and major changes in the main federal programs are necessary to reduce the growth of federal spending.

William A. Niskanen is chairman of the Cato Institute. Stephen Moore, Cato's director of fiscal policy studies, is on leave to the minority staff of the Joint Economic Committee of Congress.

More by William A. Niskanen

President Clinton is correct to challenge critics of his proposed budget to identify an effective alternative. This paper summarizes an alternative budget that would be balanced by the end of the decade without any increase in taxes. The major elements of this budget include a substantial reduction of U.S. military forces and the defense budget, two reforms to stabilize the Social Security system without reducing the real benefits of current retirees, several alternative reforms of medical care programs to reduce the increase in the relative prices of and expenditures for medical care, and 50 specific reductions in discretionary domestic programs. A serious effort to balance the budget must sort out our fiscal priorities and constrain federal spending to a level that is broadly supported.

View this Policy Analysis in HTML

Share with your friends: