Earlier today, New York Governor Andrew Cuomo proposed a $15 per hour minimum wage for his state; Vice-President Joe Biden joined the press conference.

Cato and other scholars have long argued against any minimum wage; see here. I will not re-hash those arguments today.

Instead, let’s ask the proponents of a minimum wage why, if a $15 per hour minimum is good, why isn’t a $150 per hour minimum better? 

The answer will presumably be, “Well, $150 per hour would kills job.” 

Exactly! 

So why is not the same true of $15 per hour, just to a milder degree? How can proponents seriously claim that minimum wages do not affect employment? Existing evidence does show small effects from most minimum wage hikes; but that is because those hikes have been modest. Were they ever large (as with Cuomo’s proposal), substantial disemployment and other distortions are inevitable. 

In my 2012 primer on fundamental tax reform, I highlighted the three biggest warts in the current system.

1. High tax rates that penalize productive behavior such as work and entrepreneurship.

2. Pervasive double taxation that undermines saving and investment.

3. Corrupt loopholes and cronyism that lure people into using resources inefficiently.

These problems all need to be addressed, along with additional problems with the internal revenue code, such as worldwide taxation and erosion of constitutional freedoms and civil liberties.

Based on these criteria, I’ve already reviewed the tax reform plan put forth by Marco Rubio. And I’ve analyzed the proposal introduced by Rand Paul.

Now let’s apply the same treatment to the “Reform and Growth Act of 2017″ that former Florida Governor Jeb Bush has unveiled in today’s Wall Street Journal.

Bush identifies three main goals, starting with lower tax rates.

First, I want to lower taxes and make the tax code simple, fair and clear. …We will cut individual rates from seven brackets to three: 28%, 25% and 10%. At 28%, the highest tax bracket would return to where it was when President Ronald Reagan signed into law his monumental and successful 1986 tax reform.

This is a positive step, effectively wiping out the tax-rate increases imposed by Presidents George H.W. Bush, Bill Clinton, and Barack Obama.

Then Governor Bush takes aim at tax loopholes.

Second, I want to eliminate the convoluted, lobbyist-created loopholes in the code. For years, wealthy individuals have deducted a much greater share of their income than everyone else. We will retain the deductibility of charitable contributions but cap the deductions used by the wealthy and Washington special interests, enabling tax-rate cuts across the board for everyone.

This also is a step in the right direction, though it’s unclear what Bush is proposing — if anything — for other big tax loopholes such as the mortgage interest deduction, the healthcare exclusion, the state and local tax deduction, and the municipal bond exemption.

The final big piece of Jeb’s plan deals with America’s punitive treatment of business income.

Third, I believe that the tax code should no longer be an impediment to the nation’s competitiveness with China, Europe and the rest of the world. …To stop American companies from moving out of the country, I will cut the corporate tax rate from 35%—the highest in the industrial world—to 20%, which is five percentage points below China’s. We will end the practice of world-wide taxation on U.S. businesses, which fosters the insidious tactic called corporate “inversions.” …We will also allow businesses to fully and immediately deduct new capital investments—a critical step to increase worker productivity and wages.

All of these reforms are very good for growth.

A lower corporate tax rate, particularly combined with territorial taxation and “expensing” of investment expenditures, will make American companies far more competitive.

More important, these reforms will fix flaws in the tax code that reduce capital formation. And that will mean more investment and higher wages for American workers.

There are other positive features mentioned in the column that are worth celebrating. Governor Bush’s plan eliminates the death tax, which is an especially punitive form of double taxation.

His proposal also gets rid of the alternative minimum tax (AMT), which is a convoluted part of the tax code seemingly designed to grab more money from taxpayers in a very complicated fashion.

Now let’s move to a part of Bush’s plan that seems bad, but arguably is good. He’s proposing to get rid of interest deductibility for companies, which will increase double taxation (remember, investors who buy corporate bonds pay tax on the interest payments they receive from firms).

…we will eliminate most corporate tax deductions—which is where favor-seeking and lobbying are most common—and remove the deduction for borrowing costs. That deduction encourages business models dependent on heavy debt.

So why is this feature arguably good when one of the key goals of tax reform is eliminating double taxation?

For two reasons. First, we already have double taxation of dividends (i.e., equity-financed investment), so imposing double taxation on borrowing (i.e., debt-financed investment) creates a level playing field and addresses the bias for debt in the tax code.

To be sure, it would be best to level the playing field by having no double taxation of any kind, but presumably the Bush team also was paying attention to revenue constraints.

And this is the second reason why this portion of the plan arguably is good. The revenue implications of this change are non-trivial, so one could argue that it is helping to finance pro-growth changes such as a lower corporate tax rate and immediate expensing of business investment.

Let’s close by highlighting some unambiguously worrisome features of the Bush plan.

According to his column, an additional 15 million Americans no longer will have any income tax liability, largely because the plan almost doubles the standard deduction. It’s good for people not to have to pay tax, of course, but we already have a system where almost half of all households are exempt from the income tax. So the concern is that we have a growing share of the population that perceives government as a no-cost dispenser of goodies.

And one of those goodies is the Earned Income Tax Credit, which is a form of income redistribution operated through the tax code. And Bush is proposing to expand the EITC, though there aren’t any details about this part of his plan.

Presumably Bush is including these provisions to somewhat fend off the class-warfare attack that his plan provides big tax cuts for the “rich” while not doing enough for the rest of the population. Yet upper-income taxpayers already pay the lion’s share of the income tax.

Even the IRS has acknowledged that the top 3 percent pay more than half the burden!

So a fair tax cut, by definition, will benefit the rich since they’re the ones who are carrying the load.

In any event, the purpose of good tax policy is to generate faster growth by improving incentives for work, saving, investment, and entrepreneurship, and that’s where you get the big benefits for lower- and middle-income taxpayers.

Simply stated, the close you get to a Hong Kong-style flat tax, the closer you get to robust Hong Kong-type growth rates.

The bottom line is that Bush’s tax plan isn’t a touchdown. Like the Rubio plan and Paul plan, it’s not a Hall-Rabushka flat tax, which is the gold standard for tax reform. But it’s a big step in that direction. Bush takes the ball from the wrong side of the field and puts it on the right side of the field.

If implemented (and accompanied by the spending restraint needed to make the plan sustainable), Bush’s proposal would be a significant boost for the American economy and American taxpayers.

“The godfather of inequality research,” is how The Economist describes septuagenarian British economist Anthony Atkinson. A frequent co-author with Thomas Piketty and Joe Stiglitz, Sir Atkinson has written a book about inequality which a New York Times reviewer described as a “flurry of largely recycled policy proposals.” Inequality: What can be done? is all about “unapologetic support for aggressive government intervention,” says The Economist, and “a throwback to the 1960s and 1970s.” 

There is no need to buy the book, because the following summary – “15 Proposals from Tony Atkinson’s book ‘Inequality: What can be done?’ – is more than enough. Each Proposal is in the author’s own words, but followed by my own view of Problems with those plans. [I skip Proposals 9–11, which are just inflated versions of policies similar to those in the U.S. – the earned income credit, estate & gift tax, and property tax.]

Proposal 1: The direction of technological change should be an explicit concern of policy-makers, encouraging innovation in a form that increases the employability of workers and emphasizes the human dimension of service provision.

Problem 1: To invite political officials to obstruct labor-saving technology or to encourage (subsidize) employment growth at the expense of output growth are plans to depress the growth of real output per worker (productivity) and therefore depress real income per worker.

Proposal 2: Public policy should aim at a proper balance of power among stakeholders, and to this end should

(a) introduce an explicitly distributional dimension into competition policy;

(b) ensure a legal framework that allows trade unions to represent workers on level terms; and

(c) establish, where it does not already exist, a Social and Economic Council involving the social partners and other nongovernmental bodies.

Problem 2: The first proposal (2a) hopes to turn antitrust lawsuits into a device for reducing profits, apparently based on a zero-sum notion that smaller profits ensure larger wages. The second proposal (2b) insinuates that current law is biased against unions in unspecified ways. The third (2c) endorses a Social and Economic Council composed of private interest groups. Such councils already exist at the Arab League and U.N., apparently as a pretext for conferences.

Proposal 3: The government should adopt an explicit target for preventing and reducing unemployment and underpin this ambition by offering guaranteed public employment at the minimum wage to those who seek it.

Problem 3:  Guaranteed public employment at the minimum wage would have to be financed by taxes, which reduce employment in the private sector. If the minimum wage were both high and binding, this could shift a large and growing share of employment away from production of marketable products into provision of “free” government services of unknown value to consumers. By creating a growing constituency for large increases in the minimum wages, guaranteed tax-financed public jobs could displace or “crowd out” more and more private employment. In the U.S., the legal minimum of $7.25 an hour is not binding; it applies only to certain formal and visible forms of employment. The U.S. Bureau of Labor Statistics reports that in 2014 there were only 550,000 people over the age of 25 earning the federal minimum wage of $7.25 an hour, but 999,000 earning less than that minimum wage. 

Proposal 4: There should be a national pay policy, consisting of two elements: a statutory minimum wage set at a living wage, and a code of practice for pay above the minimum, agreed as part of a “national conversation” involving the Social and Economic Council.

Problem 4: How could the proposed overturning of private labor contracts by an unelected “Council” be consistent with any concept of political or economic liberty? This comes frighteningly close to saying governments (e.g., Nixon’s wage controls) and/​or non-governmental interest groups (e.g., Medieval guilds) can and should dictate to workers how much they should charge for their work, and how much employers must offer. Yet inequality is famously low in countries with no minimum wage, such as Sweden, Austria, Denmark and (until 2015) Germany. And inequality is very high in U.S. cities with a high minimum wage, such as San Francisco. The concept of nationwide “living wage” is arbitrary gibberish, since such a goal cannot possibly be the same for an Alabama teen living with parents as it is for a single mother in Manhattan with four children. 

Proposal 5: The government should offer via national savings bonds a guaranteed positive real rate of interest on savings, with a maximum holding per person.

Problem 5: U.S. Treasury inflation-protected securities (TIPS) guarantee a positive real rate if held to maturity, as do similar bonds in Europe. There could be no maximum holding of such bonds unless savers were somehow prohibited from selling their securities (which would make them illiquid and undesirable). If Atkinson means to offer a higher real return than the market provides then the proposal would misallocate capital and increase government (taxpayer) debt.

Proposal 6: There should be a capital endowment (minimum inheritance) paid to all at adulthood.

Problem 6: This proposal would everyone a check for about $15,000 upon reaching adulthood, described as “capital” yet likely used for consumption. This indiscriminate transfer payment is to be financed by a 65% death tax. Higher tax rates on the capital accumulation of older savers to pay for large subsidies to the consumption of young consumers would, as Joe Stiglitz explained in 1978, reduce productivity and weal wages by reducing the ratio of capital to labor.

Proposal 7: A public Investment Authority should be created, operating a sovereign wealth fund with the aim of building up the net worth of the state by holding investments in companies and in property.

Problem 7: Atkinson is proposing to emulate Arabian princedoms, China and other autocratic states by investing taxpayer funds (like the U.S. Social Security trust fund) in private equites and real estate. Malaysia’s wealth fund, for example, is the majority shareholder in Malaysian Airlines, whose stock recently fell 90%. Governments with budget deficits would be investing borrowed funds in stock markets, which is as speculative as individuals buying stocks on margin. The authority to allocate taxpayer capital by political favoritism could not safely be entrusted to even the most saintly and omniscient bureaucrats and politicians, and they would bear none of the losses from bad investments.

Proposal 8: We should return to a more progressive rate structure for the personal income tax, with marginal rates of tax increasing by ranges of taxable income, up to a top rate of 65 per cent, accompanied by a broadening of the tax base.

Problem 8: If a top tax rate of 65% would be harmless to the economy and raise more revenue, then why is no country in the world adopting this advice? All of the fastest-growing economies in Asia and Eastern Europe have very low and sometimes flat marginal tax rates, particularly on capital. All countries with very high and/​or rising marginal tax rates (France, Greece, Japan, etc.) have performed quite poorly. U.S. tax revenues were a larger share of GDP when the top tax rate was 28% than when it was 70% or 91%.

Proposal 12: Child Benefit should be paid for all children at a substantial rate and should be taxed as income.

Problem 12: Atkinson views his “Child Basic Income” (CBI) plan as an intermediate stepping stone toward his comprehensive Basic Income plan because he thinks it easier to peddle to intransigent voters than his actual Basic Income goal for everyone. Basic Income is essentially the 1967 “credit income tax” plan designed by James Tobin of Yale and converted into a $1000 “demogrant” for Sen. McGovern’s 1972 Presidential campaign. What McGovern missed is that a flat tax was the other key element of Tobin’s plan, as was confirmed by later work by Atkinson and Stiglitz on optimum taxation.

Proposal 13: A participation income should be introduced at a national level, complementing existing social protection, with the prospect of an EU-wide child basic income.

Problem 13: Participation income  is another rhetorical device (like CBI) for moving toward a Basic Income on a piecemeal basis. The pretense is to make guaranteed income conditional on “participation in the society” by residents (not just citizens). In addition to all children and seniors, checks go out to those participating in approved training, taking approved care of children; doing approved volunteer work, etc. Caseworkers empowered to decide which activities get approved would have treacherous authority to promote politically-favored nonprofits and thwart others. If he can’t sell this idea, Atkinson’s alternative Proposal 14 is to simply to spend more on “social insurance, raising the level of benefits and extending their coverage.”

Proposal 15: Rich countries should raise their target for Official Development Assistance to 1 per cent of Gross National Income.

Problem 15: Foreign aid has often been used to prop-up bad policies and authoritarian politicians, and has never helped those economies in Asia and elsewhere which lifted themselves from chronic poverty to rapid economic growth – after reducing tax rates, tariffs and regulations. Besides, no academic has any right to tell taxpayers of sovereign nations how their elected representatives “should” spend their money

After his 15 Proposals, Atkinson also mentions even stranger “Ideas to pursue.” The zaniest, borrowed from Thomas Piketty, is “a global tax regime for personal taxpayers, based on total wealth.” Try to imagine the size and power of the required global army of tax collectors attempting to assess every wealthy individual in every country and collect a tax based on such inevitably arbitrary assessments. If such a tax could be enforced on a global scale, there would clearly be no democracy anywhere.

Sir Atkinson’s old-fashioned “policy polemic,” as the New York Times’ reviewer described it, is surprisingly disappointing. He wrote a much bolder and better book back in 1995: Public Economics in Action: The Basic Income/​Flat Tax Proposal. In it, he suggested replacing all means-tested and social insurance benefits (such as unemployment or disability benefits) with a guaranteed annual income (refundable tax credit). This would, he wrote, “do away with the present complicated means-tested benefits” and shrink unemployment. A key second part of the plan required replacing the progressive income tax with an optimal flat tax of 16–31%. The combination of a flat tax and basic income, he concluded, “should definitely be on the agenda for public discussion.” What Atkinson now proposes, unfortunately, is the exact opposite – numerous lavish political gifts ostensibly financed with destructive tax rates on capital and entrepreneurship. These proposals would soon leave any country that adopted them in ruins. 

My recent Wall Street Journal op-ed, “Hillary Parties Like It’s 1938,” is not just about FDR’s self-defeating “tax increases” in 1936–37. It is also about the particularly huge across-the-board increase in marginal tax rates the Herbert Hoover pushed for and enacted retroactively in 1932. The primary motive in 1932, as in 1936, was to raise more revenue. Federal spending under President Hoover doubled from 3.4% of GDP in 1930 to 6.8% in 1932, and he believed that unprecedented spending spree required that tax rates be even more than doubled to “restore confidence.”

Unfortunately, things did not quite work out as planned. Total federal revenues fell dramatically to less than $2 billion in 1932 and 1933 — after all tax rates had been at least doubled and the top rate raised from 25% to 63%. That was a sharp decline from revenues of $3.1 billion in 1931 and more than $4 billion in 1930, when the top tax was just 25%. 

Some may object that this is unfair, arguing that revenues should be expressed as a share of GDP because GDP fell so sharply in 1932 and 1933. But that begs a key question. Comparing the drop in revenues to the even deeper drop in GDP would make sense only if the depth and duration of the 1932–33 drop in GDP had absolutely nothing to do with higher tax rates (including Smoot-Hawley tariffs). Yet neither Keynesian nor supply-side economics would consider huge tax hikes are so harmless (though Keynesians, seeing no revenue gain, might come to the paradoxical conclusion the Hoover actually cut taxes). 

In any case, dividing weak revenues by even weaker GDP doesn’t help support the conventional wisdom that higher tax rates always bring higher revenues. Revenues fell even as a share of falling GDP – from 4.1% in 1930 and 3.7% in 1931 to 2.8% in 1932 (the first year of the Hoover tax increase) and 3.4% in 1933. That illusory 1932–33 “increase” was entirely due to less GDP, not more revenue. 

The 15 highest tax rates were increased again in 1936, dividends were made fully taxable at those higher rates, and both corporate and capital gains tax rates were also increased as explained in my Journal piece. Yet all of those massive “tax increases” imposed by Presidents Hoover and Roosevelt failed to bring as much revenue in 1936 as was collected with much lower tax rates in 1930.

If the goal is to shrink GDP, the 1932–37 experience suggests that steeply progressive tax rates certainly accomplish that, particularly when they’re aimed at business and investors.

If the goal is to raise more revenue, on the other hand, the fact is that a top tax of 28% brought in more revenue than we ever did with top tax rates of 70% or 91%. 

I have a very straightforward rule when assessing politicians. Simply stated, if they are open to tax hikes, then it’s quite likely that they have no desire to control the size, cost, and power of the federal government.

Based on that rule, I’m skeptical about Donald Trump.

To understand my doubts, here are some passages from a story on the topic in the New York Times.

For years, Republicans have run for office on promises of cutting taxes… But this election cycle, the Republican presidential candidate who currently leads in most polls is taking a different approach… Mr. Trump has…suggested he would increase taxes on the compensation of hedge fund managers. And he has vowed to change laws that allow American companies to benefit from cheaper tax rates by using mergers to base their operations outside the United States.

These policy positions are raising a lot of eyebrows.

“All of those are anti-growth policies,” said David McIntosh, the president of the Club for Growth… “Those aren’t the types of things a typical Republican candidate would say,” said Michael R. Strain, a scholar at the conservative American Enterprise Institute, referring to the candidate’s comments on hedge funds, support for entitlement spending and the imposing of trade tariffs.

And Trump’s failure to sign the no-tax-hike pledge exacerbates the concerns, particularly when combined with his inconsistent statements on tax reform.

Mr. Trump and former Gov. Jeb Bush of Florida are the only leading Republican candidates who have not signed a pledge to not raise taxes. …In an interview with Fox News last week, Mr. Trump said a flat tax would be a viable improvement to America’s tax system. Moments later, he suggested that a flat tax would be unfair because the rich would be taxed at the same rate as the poor.

Byron York of the Washington Examiner writes about Trump’s fiscal policy in the context of traditional Republican orthodoxy.

Trump is preparing a tax proposal that will again set him far apart from the party’s powers-that-be. …Trump has been sending signals that his tax proposal, which he says will be “comprehensive,” will include higher rates for some of the richest Americans, a position generally at odds with Republican orthodoxy. “I want to see lower taxes,” Trump said at an appearance in Norwood, Mass., on Friday night. “But on some people, they’re not doing their fair share.”

And if his campaign manager is accurately channeling Trump’s views, the candidate even equates higher taxes with making America great.

Trump campaign manager Corey Lewandowski would say little about Trump’s intentions, but noted that “Mr. Trump has said that he does not mind paying what is required to make our country great again.” Raising taxes on anyone, even the super rich, has generally been anathema to Republicans for a generation.

Wow, what’s next, a Biden-esque assertion that higher tax payments are patriotic?!?

Though, to be fair, it’s unclear whether Trump actually wants the federal government to have more money.

Perhaps the tax increases that he supports would be offset by tax cuts elsewhere, which is what would happen with major tax reform proposals such as the flat tax.

Though the fact that Trump so far has refused to sign the no-tax-hike pledge obviously makes that a risky assumption.

In his column for the New York Times, Ross Douthat also wonders whether Trump will upend existing GOP thinking.

In movement conservatism, there’s an ongoing, interesting tension between starve-the-leviathan theories and the supply-side vision, exemplified by the Wall Street Journal editorial page among other sources, in which low taxes on high incomes and investment can allegedly make the public coffers fuller. …my own (modest) faction, the reform conservatives, whose preferred tax vision (in its varying forms) basically seeks a rebalancing of conservative tax policy, an approach that’s still responsive to supply-side and pro-growth ideas but also addresses both the anxieties of middle class families… The Republican Party is the limited-government, anti-tax party, and the weird rise of Trumpism isn’t going to change that basic fact. But the way anti-tax sentiment manifests itself, and the policies associated with those sentiments, can alter with time and circumstances, and for the G.O.P.’s sake they need to change right now.

I’m mostly in the starve-the-beast camp, though I like the supply-side approach (perfectly captured in this image) because of the recognition of how good tax policy boosts growth.

And I see the “reform conservatives” as allies even if their ideal version of tax reform has a few warts.

So I’m willing to have a “big tent”…but I want the tax-increase crowd on the outside because they would enable bigger government.

I guess it remains to be seen whether Trump’s in that distasteful group.

P.S. Speaking of distasteful tax increases, keep in mind that when Trump says favorable things about trade protectionism, he’s really saying that he wants higher taxes on American consumers.

P.P.S. One of the reasons Trump may be weak on taxes is because he has no desire to control spending. You don’t have to believe me. These are his own words.

“I’m not going to cut Social Security like every other Republican and I’m not going to cut Medicare or Medicaid,” Trump told The Daily Signal. “Every other Republican is going to cut, and even if they wouldn’t, they don’t know what to do because they don’t know where the money is. I do.”

Huh?!?

Let’s take a look at “where the money is.”

If “The Donald” doesn’t think we need genuine entitlement reform, there are only a few possible explanations.

• He doesn’t know what he’s talking about.
• He’s dishonest.
• Or he wants the status quo and that’s why he’s leaving the door open for massive tax hikes.

If it’s the final option, he’s the GOP version of Bernie Sanders.

Back in 2011 I wrote several times about the failure of Solyndra, the solar panel company that was well connected to the Obama administration. Then, as with so many stories, the topic passed out of the headlines and I lost touch with it. Today, the Washington Post and other papers bring news of a newly released federal investigative report:

Top leaders of a troubled solar panel company that cost taxpayers a half-billion dollars repeatedly misled federal officials and omitted information about the firm’s financial prospects as they sought to win a major government loan, according to a newly-released federal investigative report.

Solyndra’s leaders engaged in a “pattern of false and misleading assertions” that drew a rosy picture of their company enjoying robust sales while they lobbied to win the first clean energy loan the new administration awarded in 2009, a lengthy investigation uncovered. The Silicon Valley start-up’s dramatic rise and then collapse into bankruptcy two years later became a rallying cry for critics of President Obama’s signature program to create jobs by injecting billions of dollars into clean energy firms.

And why would it become such a rallying cry for critics? Well, consider the hyperlink the Post inserted at that point in the article: “[Past coverage: Solyndra: Politics infused Obama energy programs]” And what did that article report?

Meant to create jobs and cut reliance on foreign oil, Obama’s green-technology program was infused with politics at every level, The Washington Post found in an analysis of thousands of memos, company records and internal ­e‑mails. Political considerations were raised repeatedly by company investors, Energy Department bureaucrats and White House officials. 

The records, some previously unreported, show that when warned that financial disaster might lie ahead, the administration remained steadfast in its support for Solyndra.

The federal investigators “didn’t try to determine if political favoritism fueled the decision to award Solyndra a loan” — that was accommodating of them — “but heard some concerns about political pressure, the report said.”

“Employees acknowledged that they felt tremendous pressure, in general, to process loan guarantee applications,” the report said. “They suggested the pressure was based on the significant interest in the program from Department leadership, the Administration, Congress, and the applicants.”

As I wrote at the time, this story has all the hallmarks of government decision making:

• officials spending other people’s money with little incentive to spend it prudently,
• political pressure to make decisions without proper vetting,
• the substitution of political judgment for the judgments of millions of investors,
• the enthusiastic embrace of fads like “green energy,”
• political officials ignoring warnings from civil servants,
• crony capitalism,
• close connections between politicians and the companies that benefit from government allocation of capital,
• the appearance—at least—of favors for political supporters,
• and the kind of promiscuous spending that has delivered us $18 trillion in national debt.

It may end up being a case study in political economy. And if you want government to guide the economy, to pick winners, to override market investments, then this is what you want. 

Earlier this month, Americans for Prosperity held a “Road to Reform” event in Las Vegas.

I got to be the warm-up speaker and made two simple points.

First, we made a lot of fiscal progress between 2009 and 2014 because various battles

over debt limits, shutdowns, and sequestration actually did result in real spending discipline.

Second, I used January’s 10-year forecast from the Congressional Budget Office to explain how easy it would be to balance the budget with a modest amount of future spending restraint.

Here’s my speech:

I realize I sound uncharacteristically optimistic in these remarks, but it is amazing how easy it is to make progress with even semi-effective limits on the growth of government.

Genuine spending cuts would be very desirable, of course, but we move in the right direction so long as government spending grows slower than the private sector.

The challenge, needless to say, is convincing politicians to limit spending.

Well, we now have some new data in that battle. The CBO released its Update this morning, which means the numbers I shared in Nevada are now slightly out of date and that I need to re-do all my calculations based on the new 10-year forecast.

But it doesn’t really make a difference. As you can see from the chart, we can balance the budget by 2021 if spending is capped so that it grows by 2 percent annually. And even if spending is allowed to grow by 3 percent per year (about 50 percent faster than projected inflation), the budget is balanced by 2024.

At this point, I feel compelled to point out that the goal should be smaller government, not fiscal balance.

But since fiscal policy debates tend to focus on how to eliminate red ink and balance the budget, I may as well take advantage of this misplaced focus to push a policy (spending restraint) that would be desirable even if we had a budget surplus.

And that’s the purpose of this video I narrated for the Center for Freedom and Prosperity back in 2010. The numbers obviously have changed over the past five years, but the underlying argument about the merits and efficacy of spending restraint are exactly the same today.

For more information on the merits of smaller government, here’s my tutorial on government spending.