Cutting the Size of Government is Hard, People Like Their Free Stuff.

by Rod Williams, Dec 27, 2024- I wish I could be more hopeful that Trump's Department of Government Efficiency would actually accomplish something, but I have doubts it will accomplish much. 

In conversations with people who are concerned about the deficit, you will hear them call for cutting government spending. When pressed for specifics they will call for cutting fraud and waste and inefficiency. Sure, there is some of that, but it is hard to root out and even if you could, compared to the size of the budget it is insignificant. You can't balance the budget by cutting waste. 

Another favorite response to the question of what to cut is foreign aid. "Stop giving all this money to other countries," the memes scream. All foreign aid amounts to only 1% of the federal budget. Foreign aid is an essential foreign relations tool and most of it is not just mindlessly given away to foreign governments but serves America's interest.

Another call is to cut the Defense budget. Like any agencies one could find waste in the defense budget. However, if anything, we need more defense spending. Our Navy especially is inadequate to meet the challenges of a more powerful China. A weakened America is more likely to go to war than a strong America. We need peace through strength. You can't have it on the cheap.

I don't think Donald Trump has the desire or the instincts to cut the deficit. During the campaign he promised lots of giveaways, including no tax on Social Security and no tax on tips. Trump has also promised not to touch Social Security. If you recall, during Trump's first term, Congress passed a $600 per person Covid relief bill. It was President Trump who argued it should instead have been $2000.  I just don't think it is in Trump's nature to make serious cuts to federal spending. 

Also, many in Congress, in the abstract, are for cutting government spending, but when it comes to something like closing a military base in their district, or cutting farm subsidies, they vehemently oppose it. Also, people like free stuff. They like farm subsidies, student aid and Social Security. 

All of this is not to say we must not try to do something. Daily our financial situation gets worse. We are headed for a severe crisis with real consequences. The Social Security Trust Fund will be exhausted in 9 years, but in the last week, instead of addressing it, Congress, with Trump's blessing and the support of President Biden, passed legislation that moved up the date of insolvency by six months. If we are not talking about addressing mandatory spending, we ae not serious. 

We must address entitlements. I don't think Trump will do it, nor do the American people want to give up their free stuff. The below article from the Wallstreet Journal addresses the issue of cutting the budget. Below are some excerpts: 

Cutting the Deficit Is Easy—It’s Just Unpopular

by Greg Ip, Dec. 26, 2024 - ... The federal deficit reached $1.8 trillion, or 6.4% of GDP, last

fiscal year, a record outside of war, recession or emergency. Musk and Trump have promised to attack it by cutting federal spending. One simple step would be to stop adding to it. And yet last week neither stood in the way of Congress’s largess. Musk posted in favor of the money for disaster victims and farmers. The vice president-elect, Ohio Sen. JD Vance, co-sponsored the Social Security expansion.

The reason is obvious: Spending is popular with voters and both parties. This is why commissions, think tanks and earnest outsiders have been papering Washington for decades with ideas to cut spending and the deficit—and mostly gotten nowhere.

...  DOGE’s ideas mostly revolve around firing civil servants, closing or merging agencies, and cutting regulations. Whether this makes the government more efficient, it won’t save much money. Salaries for all civil servants cost around $200 billion to $250 billion a year—or roughly one-eighth of the deficit—and more than 60% of them work for military or security-related agencies, the functions Trump plans to beef up.

.... Moreover, some savings from shrinking the civil service could be illusory. Fewer Internal Revenue Service agents means less tax collected, for example.

The reality is that the big money isn’t tied up in the people who work for the government, but in the checks they send out. And the checks are much more popular than the people. 

For example, the Education Department, perennially marked for extinction by Republicans, spent more than half of last year’s $274 billion budget on loans and grants to students. The Transportation Department spent half its $117 billion budget on checks, mostly to state and local governments, for highways, bridges and other infrastructure. 

... At $4.1 trillion, mandatory is more than double discretionary spending and, because of population aging and health costs, growing much faster. ..  taming mandatory spending means reining in benefits. ... Trump, a populist, has built his economic platform around avoiding unpopular choices. If he’s going to make good on his promise of slashing the deficit while cutting taxes, he’ll have to do some unpopular things.

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