Here’s a new video from the Cato Institute that looks at the “Cut, Cap, and Balance” proposal, and analyzes that budget reform in the broader context of the debt-limit fight and America’s looming fiscal crisis.
The video features my commentary, along with the sage analysis of my Cato colleague Chris Edwards. We make two simple points. First, fiscal reforms are necessary because America faces a Greek-style fiscal crisis if we leave the federal budget on autopilot.
Actually, America’s collapse will be worse since we won’t get a bailout from the IMF. Yet this doesn’t seem to bother President Obama, who apparently views the debt-limit fight as an opportunity for class-warfare demogaguery and transparent efforts to seduce the GOP into a suicidal tax-hike deal.
Second, the fiscal reforms that are necessary should be very feasible since they actually involve relatively modest spending restraint. Genuine spending cuts would be preferable, of course, but merely slowing the growth of spending can put America on a sustainable path.
As I explained earlier this year, both the Ryan budget and the Republican Study Committee budget would allow spending to grow at about the projected rate of inflation. But in the upside-down world of Washington, where basic math becomes an elastic concept, increasing the budget by an average of 2 percent each year is characterized as “trillions of dollars of heartless and draconian cuts.”
The good news is that other nations have shown that capping the growth of federal spending is a very successful strategy. This short video from the Center for Freedom and Prosperity gives four examples.