Once again, the nation is confronted with the possibility of a shutdown of the federal government if Congress and President Donald Trump cannot come to a spending agreement by December 8, 2017. Democrats are opposed to the Republican tax reform proposal and President Trump’s continuing call to build a border wall to provide more security to stop illegal immigration. It is unclear if a compromise will be reached, but what is neglected is the broken budget process and uncontrolled federal spending. The national debt is already at $20 trillion and that is without including the unfunded obligations of entitlement programs such as Social Security, Medicare, and Medicaid.
Both parties can share in the blame of uncontrolled spending, and President Trump and Republicans in Congress should take the opportunity to fulfill a long-time Republican and conservative policy objective to limit the size and scope of government.
Reducing spending and cutting the size and scope of government will not be easy, but President Trump and Republicans can look to history for examples of how past administrations reduced spending. Applying historical examples is never easy because our culture and government have changed, but President Trump should look to Presidents Warren G. Harding and Calvin Coolidge as examples.
It is true that our government and culture have changed drastically since the 1920s, but both Harding and Coolidge also faced opposition to reducing government spending. Charles G. Dawes, who served as President Harding’s Director of the Bureau of the Budget, described the task of cutting government expenditures as using a “toothpick with which to tunnel Pike’s Peak.”
Harding and Dawes not only had to discipline their own Administration to adhere to budget cuts but also to battle Congress and special interests. One major example of Harding’s moral courage in keeping to a limited budget was over the issue of a Veteran’s Bonus Bill. Congress supported a bonus for World War I veterans, but Harding opposed the measure because it was not fiscally wise, especially as the nation was recovering from the depression of 1920. In addition, veterans were already receiving some benefits.
Historian Paul Johnson, in his book Modern Times, wrote that “Harding can be described as the only President in American history who actually brought about massive cuts in government spending…” Overall Harding achieved a significant reduction in spending. “Federal spending was cut from $6.3 billion in 1920 to $5 billion in 1921 and $3.2 billion in 1922,” noted Jim Powell, a Senior Fellow at the Cato Institute.
Harding and the Republican Party viewed a balanced budget as not only good for the economy, but also as a moral virtue. President Calvin Coolidge continued Harding’s objective of reducing spending. Under Coolidge, the federal budget fell from $3.1 billion in 1923 to $2.9 billion in 1928, with the low point being $2.8 billion in 1927. The spending reductions achieved by both Harding and Coolidge allowed them to pursue lower tax rates and debt reduction.
The Harding-Coolidge economic policy of reducing government spending, lowering tax rates, and paying down the national debt created a period of economic prosperity. This is a formula that President Trump and the Republicans in Congress should follow.
Senator James Lankford (R-OK) recently issued his regular Federal Fumbles, which chronicles some of the wasteful spending by the federal government. Senator Lankford credits President Trump’s efforts to unshackle the economy from excessive regulations, but more needs to be done to address spending: As Senator Lankford wrote:
While we made tremendous progress in alleviating the regulatory burden on the American economy, we have work to do in reforming how the federal government utilizes your tax dollars. In FY16, the federal government collected $3.267 trillion in taxes. That includes income taxes, corporate taxes, Social Security, and unemployment. Unfortunately, it spent $3.852 trillion, a deficit of $584 billion. Since FY09, the federal government spent $7.2 trillion more than it has taken in. Congress has yet to agree on how to stop overspending, which is why the federal government is almost $20 trillion in debt today. As Congress and the Administration turn to a new year, it is incumbent upon both to display the courage and the willingness to make the difficult decisions that will rein in our out-of-control federal spending. It is unacceptable that a child born in the US today will become a citizen of a country in which his or her share of the national debt is more than $165,000. Without a major change in the way Congress operates, that amount will only go up in the years ahead.
Republicans in Congress such as Senator Lankford, Senator Rand Paul (R-KY), Representative Walter Jones (R-NC), among others are leading the charge to reduce spending, but it will take a renewed effort by the Republican Party to fight to achieve the policy goal of limiting the size and scope of government.