Morning Bell: How To Cut Federal Spending

Conn Carroll / October 29, 2010

Earlier this month, the Obama administration reported that the federal deficit hit a near-record $1.3 trillion for fiscal year 2010. That means the government had to borrow 37 cents out of every dollar it spent. If Congress continues existing taxing and spending policies, federal deficits will reach a projected $2 trillion deficit in just 10 years. America cannot survive such sustained deficits, and Americans know it. According to a poll conducted last week by The Hill, 52% of independent voters surveyed cited debt reduction as a priority, compared with only 39 percent who said additional federal spending to create jobs is more important.

Our nation’s deficits are, in reality, a spending problem. Even if the 2001 and 2003 tax cuts are made permanent, revenues are set to return to their post-World War II average of 18% by 2020. Spending, on the other hand, continues to explode. After averaging 20% since World War II, federal spending is set to soar to 26% of the gross domestic product (GDP) by 2020. If Congress is to have any chance of cutting the deficit, spending must be cut. But how? (more…)