Balancing the Federal Budget: What to Cut?

Duncan Black and Kevin Drum call B.S. on Andrew Sullivan‘s statement that, “I’m in favor of Bush’s tax cuts, but want spending cuts to match them; I favor balanced budgets . . . .”

Black writes that, “It’s a nice little fantasy to fetishize ‘small government’ and imagine that liberals fetishize ‘big government’ but that just isn’t the reality. Put up or shut up – what would you cut out of this budget?” Drum adds, “So: if you support the tax cuts, and you don’t want to cut defense spending, and you want a balanced budget, you need to slice about $400 billion out of the $500 billion that’s left.”

Sullivan responds, in part,

I’d prefer experts like Brian Riedl or Veronique de Rugy to propose detailed cuts. But my back-of-the-envelope wish-list is that I’d repeal the Medicare drug entitlement, abolish ear-marks, institute a line-item veto, pass a balanced budget amendment, means-test social security benefits, index them to prices rather than wages, extend the retirement age to 72 (and have it regularly extended as life-spans lengthen), abolish agricultural subsidies, end corporate welfare, legalize marijuana and tax it, and eliminate all tax loopholes and deductions, including the mortgage deduction, (I’d keep the charitable deduction). For good measure, I’d get rid of the NEA and the Education Department.

Aside from the fact that virtually none of these things are politically feasible and some of them are probably unconstitutional, an interesting list. I would say this wouldn’t come close to achieving the necessary cuts but I haven’t the foggiest idea (no pun intended) of the effect of a marijuana tax.

From a sheer preferences point of view–leaving aside all political considerations–I agee in principle with most of Sullivan’s cuts. The major exception is raising the retirement age to 72, which would be fine for white collar types such as myself but unthinkable for people in physically demanding jobs. We don’t want 71-year-olds trying to make a living mining coal, fighting fires, or flying commercial airliners.

In a larger sense, though, I am in favor of low taxes and relatively little non-defense spending on part of the federal government but have no fetish whatsoever for balanced budgets. Borrowing to pay for long term investments in the infrastructure or to provide for the national security strikes me as perfectly sound, conservative policy. So long as other spending is constrained–and that includes taking a hard look at defense spending, especially on the procurement side–the business cycle will largely take care of the budget.

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James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.


  1. legion says:

    While that stuff absolutely ought to be cut, it still won’t come anywhere near to balancing the scales. The simple fact of the matter is that the tax cuts have to go. We’ve known for years now that supply-side economics doesn’t work – putting more money into the hands of the wealthy doesn’t ‘trickle-down’ to middle & lower classes, it just goes directly into wealthy folks’ overseas bank accounts.

    James is right that there will occasionally be good reasons to overspend the budget for investment purposes, but I can’t think of a good way to institutionalize that other than a Soviet-style ‘5-year plan’, and I don’t think anyone wants to go there… 🙂

  2. MrGone says:

    Here’s a nice start: 50B from the “war on drugs”. State and federal spending per year! This is another war we lost long ago.

  3. Brian says:

    I can understand occassionally running a debt for investment, but the current debt is at a ridiculous level. Right now the Republicans control all branches of government, and yet few spending cuts have made it through. Therefore, I agree it is politically infeasible to make the cuts Sullivan talks about. The choice seems to be large debt with tax cuts, or smaller debt without them. I’m inclined to say no tax cuts.

    I believe it’s possible to agree with tax cuts in principle, but to not support them because of the current situation. Isn’t that the most fiscally responsible action to take?

  4. Jonk says:

    The budget needs to be balanced, period. There is no excuse for this current situation. This, I feel, should be the number one priority of the ’06 and ’08 elections. If we don’t fix this mess now, our “investors” will fix it for us…

    I don’t want China calling the shots, especially if they invade Taiwan and at the same time economically choke us with our own debt. At this point, this is one war we *will* lose.

  5. James Joyner says:

    Jonk: If we’re at war with China, I suspect we’ll stop payments on our debts with them.

    We’re in the middle of a major war which followed a mild recession. It would have been foolish to try to do it on a pay as you go basis.

    There are plenty of cuts to be made and maybe even some areas for increasing revenue. But, frankly, there isn’t $400 billion worth of tax hikes/spending cuts out there.

  6. Jonk says:

    I understand that, James. But you know that it is a bit more complicated than that.

    Needless to say, and not to get sidetracked on China debts, the budget needs to be balanced asap. Our economy cannot continue like this forever…

  7. Jonk says:

    …I should have said Government, not economy. Bah. This one issue makes me steam up more than any other.

  8. ken says:

    James you are talking about things way above your pay grade when you say we can just not pay our debt obligations to China.

    China will just sell the debt on the open market driving down the prices and driving up the interest rates to a point that it can destroy our economy.

    Once China starts selling, especially if it is seen as selling to gain a strategic military advantage, others will sell as well. The Euro is an alternative save haven where this money will go.

    Beside the United States is the only country in the world who has never missed a single interest or principal payment on its debt. From the federal government assuming the states revolutionary war debts, through the Civil War and the depths of the depression America has never defaulted. This is why the American dollar is the reserve currency of the world and is the benchmark against which all risk is weighed.

    What you are suggesting would destroy the value of our currency.

    You of course, not being in touch with reality, would not know any of this.

  9. McGehee says:

    James you are talking about things way above your pay grade when you say we can just not pay our debt obligations to China.

    Ken, you’re apparently trying to read way above your own pay grade. What James said was this:

    If we�re at war with China, I suspect we�ll stop payments on our debts with them.

    What idiot would you vote for, Ken, who would continue making debt payments to an enemy in war during the war?

    You simply cannot be taken seriously.

  10. ken says:


    As usual you do not know what you are talking about.

    The United States cannot afford to default on its debt to any creditor. Default would destroy the value of our currency. Money is nothing but credit. It is the same thing as debt. Debt is freely traded on a global basis twenty four hours a day, seven days a week. Worldwide trading peaks during the New York session but continues overnight around the globe.

    All China would have to do is sell the US treasury debt it now owns into this market. They could time their sales to correspond to our Treasury auctions, driving down the prices to ridiculous levels and driving up the interest rates.

    Since the UST is the benchmark against with all risk is measured this would drive interest rates up on everything.

    China has enough clout to cause more pain than our economy could withstand.

    But if the US said it was going to default on this debt it would affect the value of all outstanding treasury debt. The UST debt is the most liquid fungible commodity in the world. A default on any of it would make all of it worth less.