Alexander Hamilton and Thomas Jefferson, who disagreed on almost every aspect of the Constitution, stood shoulder to shoulder in support of a federal government whose expenditures were limited by our “fiscal constitution.” When our Constitution was ratified, it was universally accepted that in times of peace, no federal expenditures could be made unless a source of revenue other than debt could be identified to pay for them.
For 142 years, from the establishment of the republic in 1789 until 1931, our political leaders honored this unwritten promise. In peacetime, federal expenditures never exceeded 4% of the GDP . Politicians of that era were no more noble than today’s, but their natural tendency to pander was constrained by the universally accepted notion that the federal government’s budget—except during times of war—was no different than the individual family’s budget.
Herbert Hoover was the first to break that tradition in 1931, when he embraced massive spending on public works in a futile attempt to “fix” the Depression. By the end of the Hoover Administration, federal expenditures doubled to 8% of the GDP.
Franklin Roosevelt, who railed against Hoover’s profligacy during the election of 1932, abandoned his campaign rhetoric as President, and dramatically increased peacetime spending to 10% of GDP.
The end of World War II saw this spending trend accelerate. From LBJ to Barack Obama, our political leaders have latched on to the deficit spending of Keynesianism, not because it’s an economic philosophy of any merit, but because it provides political cover for their natural pandering instincts.
By the end of George W. Bush’s Administration, federal spending stood at 20% of GDP. In just three years, the spendthrift Obama Administration has driven up spending to 24% of GDP.
Democrats are pushing hard to increase spending even more. Unchecked, they will soon drive us to European levels of government spending that have led to the economic crises of Greece, Italy, and Spain. Under future Democratic administrations, today’s 24% of GDP will soon be 36%.
Incredibly, despite the historic takeover of the House by the "fiscally responsible" Republicans, federal spending increased in FY 2011 over FY 2010!
A recent Gallup poll found that Americans believe over 50 cents of every dollar the federal government spends is wasted, and that amount is growing. This belief cuts across all age groups, education levels, and political parties.
Americans know what we must do. We must cut spending; dramatically and decisively. Government’s natural instinct to grow cannot be stopped by tepid measures.
We should follow Jefferson and Hamilton's example and cut federal expenditures in half - from the current level of 24% to 12% of GDP.
12% is consistent with 142 years of fiscal traditions from our founding to 1931. To the 4% allocated for non-defense spending during times of peace, add 6% for the defense spending needed to protect the republic in this permanently dangerous world, and 2% to service and reduce our debt.
If federal expenditures in FY 2013 are cut in half from FY 2011’s level of $3.8 trillion, they will shrink to $1.9 trillion. Since 2010 federal revenues were only $2.1 trillion, the difference of $1.7 trillion was paid for by increasing the national debt.
Current spending levels are so out of control that cutting expenditures in half would merely stop our increase in debt. We could balance the budget, but tax revenues would only be cut by 10%. Our high levels of debt are funding current consumption by politically privileged groups, not defense spending, which dropped from 49% in 1962 to 20% in 2010.
In 1774, Jefferson wrote that the tyranny of a single monarch had been replaced by the tyranny of 160,000 electors in England over 4 million colonial Americans. He could just as easily have been writing about the tyranny of today's special interest groups—the unions, crony capitalists, and permanent dependent class who want taxpayers to fund their consumption.
When we keep more of our own money, our unfettered ambitions will create renewed abundance. In turn, our natural charity will aid our fellow citizens who need a helping hand. By cutting federal spending in half, we will shed our modern tyrants, thereby restoring our unalienable right to pursue happiness.
Michael Patrick Leahy is the co-founder of Top Conservatives on Twitter and ElectionDayTeaParty.com. His new book, "Covenant of Liberty: The Ideological Origins of the Tea Party Movement," will be published by Broadside Books on March 20, 2012. He can be reached on Twitter at @michaelpleahy.