Avoid Debt Ceiling: Use Proven Way to Budget Surplus

Speaker McCarthy? President Biden?

Balancing the federal budget is just too easy. Up your game!

Shoot for a Bill Clintonesque massive federal surplus!

Clinton was singing from Reagan’s supply-side hymnal. The left wing base of the Democratic Party still has not forgiven him for that.

But Mr. Biden? The ire of the Bernie bros is a small price to pay for federal solvency.

Alas, nobody in D.C. is presenting the well proven, practical steps to conjure a budget surplus. Both sides are reverting to their party dogmas.

The pachyderms, led by the admirable Speaker McCarthy, are fighting to cut the Democrats’ favorite spending programs. The donks, led by the admirable Joe Biden, are fighting to raise taxes on the pachyderms’ donor base, “the rich.”

Honest liberals such as the Washington Post’s Catherine Rampell freely admit that there just aren’t enough rich people, or big profitable corporations, to raise enough dough to sustain, much less expand, the “safety net.” Democratic Party posturing for taxing the rich can only be the camel’s nose for a whopping tax increase on us.

Including you and me, dear reader! Meanwhile ...

Speaker McCarthy is looking to deprive millions of poor people of food and bare-bones government-funded health insurance, Medicaid.

I get the politics of this. But not the economics.

Politically, poor people vote for Democrats. Depriving them of food and health care may be the most fiendishly brilliant form of voter suppression ever devised!

However, killing off your opposition party’s voters really isn’t a good look. Might not play well with the soccer moms on whose votes Republicans depend.

So much for the politics. The economics, however, truly are hideous. As several Nobel Prize winning (respectably conservative!) economists, such as Paul Romer, and the late Gary Becker and Ted Schultz ... as well as the late supply-side icon Julian Simon, have said, people are the ultimate resource.

The current leading public intellectuals on the subject of what Adam Smith called “universal opulence,” the Cato-affiliated Marian Tupy and Gale Pooley, authors of Superabundance (foreword by George Gilder) have proven beyond the shadow of a doubt that people are the source of wealth!

Sacrificing people on the altar of a balanced budget not only makes all of us poorer. It also makes the Mayan practice of human sacrifice look comparatively civilized.

What to do? Follow Mitchell’s Golden Rule.

Dan Mitchell, who somehow has managed to fuse the dismal science with stand-up comedy, is, together with AFPI’s Jim Carter, one of the last few living real supply-side economists.

He has formulated a Golden Rule of fiscal policy. What’s that?

“Good fiscal policy exists when the private sector grows faster than the public sector, while fiscal ruin is inevitable if government spending grows faster than the productive part of the economy.”

My main quibble with Dan is that he stubbornly refuses to understand that the classical gold standard is an essential foundation for general prosperity. Call it Benko’s Rival Golden Rule, a quibble for another day.

Hey, as a Reaganite conservative I’m all for smaller government. That said, “small” is relative. A fraction has two components: numerator and denominator.

It’s politically hard, possibly impossible (as the fragmentation of the House Republican majority is demonstrating) to cut, rather than restrain, the numerator of government spending.

It’s easy to grow the denominator of the private economy. How? William Raymond Collier, Jr. and I laid it out in our critically acclaimed book, The Capitalist Manifesto.

I elaborate these further in my collection of Newsmax columns, The Ten Commandments of Capitalism. Ten proven ways to increase real economic growth and equitable prosperity.

Some of these ways were embraced even more aggressively by Democrats than Republicans back in the Reagan and Clinton eras. To marvelous effect.

Alas, the Republicans, including not a few self-proclaimed supply-siders, have formed a cargo cult around tax (rather than across-the-board tax rate) cuts. The core formula for the next great wave of growth may be found in Paul Romer’s endogenous growth theory.

Which begs for a catchier name to hook Congressional attention.

The federal budget surplus from robust growth (and spending restraint, for which the hard left base of the Democratic Party still has not forgiven Bill Clinton) led to massive federal budget surpluses. How massive?

Then-Fed Chairman Alan, “the Maestro,” Greenspan gave a series of public statements proclaiming that we might pay off the national debt by the end of the decade! Alas, the post-Clinton presidents instead took America in the wrong direction.

Speaker McCarthy? Stop playing Ahab to the great white whale of the federal deficit. Didn’t end well for Ahab, or the Pequod. Won’t end well for you, or America.

Instead, embrace the great equitable prosperity policies available to gun up economic growth. And restrain, don’t cut, spending.

Then ... onward to an American economic miracle and a new golden age!