One awful idea in vogue these days for public budgeting is the idea of a “spending cap.” It sounds fine from the outset — have the government spend about what it has spent as a percentage of GDP, somewhere between 20 and 25 percent.
Unfortunately, like many “smaller government” ideas, this won’t actually shrink the size of the burden on citizens nor will it lead to a more efficient government. Instead of “spending” money in subsidies, the government can simply offer tax credits to businesses and the like. Instead of providing Medicare, the government can provide much worse private vouchers.
Let’s use a small state-based example — a toll road. As it stands, the toll road earns $500 million in revenue (combined federal grants and tolls) and costs $400 million to maintain, staff, etc. If the state sells outsources the toll road, it all goes off the books and the state appears to “cut $400 million in spending.” And this is technically true. But this actually leads to the government losing money in the long run by about $100 million a year.
Now obviously, not all government programs have revenue. But the big programs that cost the most money — Social Security, Medicare, Medicaid, etc. — all have dedicated revenue streams. Simply putting them “off the books” doesn’t actually cut individual spending or the overall cost to society. All it does is move the problem off the government’s ledgers and onto individuals, particularly those in the most need.
But then, that’s what the right-wing anti-government screed is about — not so much fiscal responsibility as hosing the poor.