Trump's move is a precursor to the upcoming budget battle, the defining issue of his first term. Expect a fear mongering campaign orchestrated by the media and Democrats to cast spending reductions as a threat to the poor, veterans, seniors, the unemployed and low income Americans.
However, ignoring the federal spending binge is no longer an option. The budget ballooned to $6.75 trillion for fiscal year 2024, resulting in a deficit of $1.933 trillion. For perspective, spending increased 45% in just a single year from 2019 to 2020, nearly 20 times the average of the previous four decades.
Deficit spending has hiked the nation's debt to more than $36.2 trillion. America's indebtedness is increasing $5.93 billion every day. The current budget contains $952 billion allotted to servicing the debt. Interest payments on debt amount to 13% of the federal budget, eclipsing defense spending.
No amount of Congressional caterwaul should deter the Trump Administration from surgically removing pork and waste from the federal budget. The president's Department of Government Efficiency (DOGE) is already serving up ideas to trim the fat, a lightning rod for Democrat resistance.
In its first move, the DOGE budget cleaver severed more than 104 diversity, equity and inclusion (DEI) related contracts at 25 federal agencies, saving taxpayers more than $1 billion. A total of 21 Treasury Department contracts were ended, saving $25 million in a single agency.
Democrat naysayers who huffed that shaving the federal budget was next to impossible were left red-faced. The irony is that the party of big government once championed slashing federal spending when Democrat Bill Clinton occupied the White House.
Clinton launched a National Performance Review, nicknamed REGO, beginning in 1993. During his first term, the effort yielded a 180,000 reduction in federal government employees through buyouts and staff eliminations. The push saved $136 billion and shrunk government to its smallest size in 30 years.
This Democrat led effort, supported by Republicans, closed superfluous government offices, cut 16,0000 pages of regulations, passed a major procurement reform bill and introduced the electronic filing of taxes, saving millions of dollars. The endeavor helped balance the federal budget.
Trump's effort will fail unless there is the same bipartisan offensive. However, little progress will be made if lawmakers refuse to touch so-called mandatory spending, which includes Social Security, Medicare, Medicaid, food stamps, unemployment compensation and other safety-net programs.
These programs comprise about 66% percent of the federal budget and run on automatic pilot. Each fiscal year the costs escalate as more people are added to the rolls of these programs. Elected officials fear reprisal from voters if they even hint at addressing these programs.
There can be no significant reduction in spending without snipping at these entitlement programs.
As just one example, the welfare roles have not shrunk one iota despite the jobless rate falling from 6.3% at the start of the Biden presidency to 4.1%. Some 84.6 million individuals are enrolled in Medicaid, about the same as 2020. Another 42.6 million Americans receive food stamps, same as 2021.
More Americans are working yet social programs haven't seen a decline. The explanation is that the Biden Administration allowed Democratic states, such as California, to ease eligibility requirements for Medicaid funds to pay for other social spending, such as homeless housing.
Biden bureaucrats also boosted food stamp allotments and waived work requirements for able-bodied adults. The Wall Street Journal calculated that by simply returning to pre-pandemic Medicaid spending levels (adjusted for inflation) it would generate more than $1.4 trillion in savings over a decade.
The Congressional Budget Office (CBO) provided a range of options in December for carving addressing the federal budget, including changing cost-sharing rules for Medicare, reducing Medicare's coverage of bad debt and instituting new work rules for Social Security disability applicants.
There are a plethora of ways to place the federal budget on a diet, if Congress will act with courage. For example, ending corporate welfare would save hundreds of billions of dollars that lawmakers regularly use to curry favor with big donors, lobbyists and industry special interest groups.
A 2022 bill known as the CHIPS and Science Act earmarked $53 billion for the country's semiconductor manufacturing industry. One of the chief beneficiaries was Intel, which raked in $7.865 billion in taxpayer funds. The money was supposed to create tens of thousands of jobs.
How well did that work out? Intel announced recently it would layoff 15,000 employees, about 15% of its workforce. A series of manufacturing missteps, the AI boom and a weak sales outlook was blamed for the layoffs. Government has a checkered track record of funding private sector ventures.
The so-called green energy bill, ballyhooed by the Biden Administration, shelled out $391 billion to invest in a variety of private businesses engaged in the manufacturing of solar panels and wind turbine components. Like most corporate largess, there is no accountability for results.
Another windfall for the green energy industry is tax subsidies. The original price tag for this corporate welfare was $271 billion over 10 years. The Biden Administration's last estimate projected a 170% jump in costs for the industry gift which was included in the laughably named Inflation Reduction Act.
Unless Congress reins in spending, the United States is hurtling towards the debt cliff. Mushrooming deficits and debt are unsustainable, approaching levels of third-world countries. Taxpayers should hold their elected representatives accountable for stopping the budget madness.
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