control and reduce federal spending

ISSUE

Federal government spending is rising, deficits are chronic, and accumulated debt is reaching dangerous levels. Growing spending and debt are undermining economic growth and may push the nation into a financial crisis in coming years. The solution to these problems is to downsize every federal department by cutting the most harmful and unneeded programs. These specific cuts would balance the budget and reduce projected spending by almost one-quarter within a decade.

 

SOLUTION

Congress should:

  • terminate damaging programs, such as farm subsidies and corporate welfare;

  • privatize activities that can be funded in the marketplace, such as postal services, passenger rail, electric utilities, and air traffic control;

  • phase out aid-to-state programs, including those for education, housing, transportation, and welfare;

  • cut traditional Social Security benefits and replace them with private retirement accounts;

  • move to a Medicare system based on individual savings, competition, and choice;

  • convert Medicaid to a block grant and cap spending growth.

 

SAVINGS

These reforms and reductions will cut federal spending from 21 percent of gross domestic product to less than 18 percent. They will balance the budget and enable us to begin paying down the debt.

 

Note: These proposals are based in part on policy analyses developed by the Cato Institute.