Throughout this week, the Washington Examiner’s Restoring America project will feature its latest series titled “Reforming the Deep State: Reining in the Federal Bureaucracy.” We invited some of the best policy minds in the conservative movement to speak to the issues of what waste, fraud, abuse, and unaccountability exist throughout the federal government and what still needs to be done. To learn more about the series, click here.
Republicans on Capitol Hill are starting to debate a second budget bill, following the One Big Beautiful Bill signed into law by President Donald Trump on the Fourth of July. That law extends and expands the first Trump tax cuts, which overall increase already large deficits projected ahead. Meanwhile, news accounts suggest Republicans are having trouble agreeing on “a grand, unifying goal” for a second bill.
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One focus should be obvious: reducing growing deficits by cutting federal spending that remains significantly above pre-pandemic levels.
That’s naturally easier said than done, for various reasons. Many of the biggest spending drivers are beyond the reach of budget legislation. And finding common ground on available spending cuts is always harder than increasing deficits through popular tax cuts or spending hikes. In fact, legislation that increases the deficit is one of the few things both parties agree on. Meanwhile, Republicans are already getting hammered for OBBB savings policies that haven’t even taken effect yet.
But those dynamics mask a dangerous and unsustainable budgetary status quo. Interest on the current debt already exceeds all spending on children, crowding out important needs. Without action, within a decade, interest costs in dollar terms will nearly double to almost $2 trillion annually. Meanwhile, Wall Street experts foresee a potential debt crisis, with JPMorgan Chase CEO Jaime Dimon warning in May “I don’t know if it’s going to be a crisis in six months or six years.” Even longtime Democratic stimulus advocates now advise “greater fiscal austerity.”
The reality is both parties for decades have overpromised the federal benefits the US can afford to deliver. Now nearly 70% of Americans “believe the American dream—that if you work hard, you will get ahead—no longer holds true or never did.” Exploding deficits will require working families to sacrifice even more income to taxes or inflation in the years ahead. That certainly won’t bolster confidence in the American dream.
FOIA FOLLIES: HOW THE DEEP STATE AVOIDS TRANSPARENCY
A second budget bill is a good time to turn that around by starting to bring deficits down. To do so, lawmakers should follow three principles: set a firm goal of cutting deficits, repeat what works, and avoid future budget-busting spending.
First, lawmakers should set an ambitious goal for cutting deficits. Past “pay as you go” policies sought to match new spending with equal savings, which is at best a formula for maintaining an unsustainable status quo. It’s too late for that. America needs to start reducing deficits, instead of maintaining them at unaffordable levels. Lawmakers should require a budget bill to save twice as much as it spends, ensuring it actually cuts deficits overall. Even a modest bill that achieves that standard is worth doing, because it will demonstrate that progress is possible.
Second, for specifics, they should start with targeted policies House Speaker Mike Johnson (R-LA) says were “left on the cutting room floor” in the OBBB. For example, just as that law ended child tax credit payments to illegal alien parents, a second bill could pursue the same goal with other federal benefits. Tens of billions of dollars in savings could be achieved by extending current restrictions on Medicaid and other welfare benefits for noncitizens, including those who vowed not to collect them as a condition of entering the US. And states can be expected to contribute more to welfare costs.
Third, if the economy weakens, Congress should commit to rejecting the unprecedented emergency spending it adopted during the last two recessions. The pandemic was especially perverse, with lawmakers designing temporary programs riddled with hundreds of billions of dollars in fraud, while also paying most recipients more not to work than they made on the job. Better and more affordable policies are available.
CLICK HERE TO READ MORE FROM THE “REFORMING THE DEEP STATE” SERIES
Generations of lawmakers in both parties have left today’s youth an unaffordable legacy of benefit promises that current tax revenues can’t support. Broad entitlement reforms are needed to alter that broader course.
But even interim steps can create confidence that Congress is trying to make things better. Some critics, like Kimberly Strassel of the Wall Street Journal, justifiably fear a second budget bill could become a “grab-bag of new spending and bad policy.” Republican lawmakers should dispel such fears by using a second budget bill to demonstrate that the conservative vision they often promise — of lower spending and shrinking deficits — is possible. Taxpayers, including those who increasingly doubt the American dream is possible, stand to gain the most.
Matt Weidinger is a senior fellow and Rowe Scholar in opportunity and mobility studies at the American Enterprise Institute