....
To tame runaway government spending, the president should of course embrace the usual measures: freeze government employment; freeze growth in discretionary spending; veto every spending bill chocked with earmarks; work to regain an effective line-item veto; extinguish ineffective, wasteful programs. But these are just the start.
If the president is to become serious about spending, borrowing and deficits, he must subject government to the two budgeting rules employed by every well-run business and home.
Rule One: Start with the total, don’t end up with it. Decide from the outset the amount that the government will spend for the year. Don’t add up all the program requirements, departmental requests and political wish lists to calculate the total – that’s surrendering, not budgeting. The nation’s 50-year average annual tax burden has been 18 percent of GDP. That’s the right figure for total spending; it may take several years to rein in spending to that level, but it should be the target.
Rule Two: Go where the money is. With entitlement spending about half of all federal spending, the president has no choice but to address Social Security, Medicare and Medicaid. He should propose less costly progressive indexing for future Social Security beneficiaries – using the consumer price index inflator rather than the wage index for higher-income retirees. Medicaid should be granted in block to the states, giving them flexibility to meet the needs of poor residents in their own ways. Medicare will require reform of health care, making it more like a consumer market and less like a regulated utility. Medicare recipients should also be given better options for private coverage. Regardless of the reforms chosen, the entitlements budget should be subject to Rule One – set a total first and conform the programs to that level. Advocates of this course include the Brookings Institution on the left and the Heritage Foundation on the right.
....
