The 20 Percent Solution

March 3, 2010

House Republicans Jeb Hensarling and Mike Pence want a constitutional amendment to limit government spending to 20 percent of GDP, its rough historical average. In their Wall Street Journal op-ed, H&P admit, significantly, that America cannot grow its way out of its debt problem:

Can we tax our way out of this problem? No. In order to pay for what we are on track to spend under current law, taxes would have to double. This would crush our economy and condemn future generations to a far lower standard of living. That is not an option. Can we grow our way out? Unfortunately, no. Although pro-growth policies like simplifying the tax code and lowering rates are critical components of any solution, they alone are insufficient. Mr. Walker estimated it would take double-digit economic growth every year for the next 75 years in order to close the fiscal gap.

Me: They don’t say how the government should hit that 20 percent goal, given the expected rise in entitlement spending. But it does provide a marker. They aren’t arguing for small government as much as typical government, at least overall. But hitting that 20 percent would require a radical transformation of US domestic economic policies. Both Social Security and Medicare would be transformed, particularly the latter. Nothing typical about that.

3 comments

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In other words, it is not gonna happen. These guys could have saved the grandstanding for something more useful.

Posted by gotthardbahn | Report as abusive

You can cut the military budget by half and still be spending more than anyone in the world, that saves a half a trillion every year.

Why is it so hard to say that?

Posted by Joe Stafura | Report as abusive

At least it is now possible for politicians to talk about cutting entitlement programs and not get whacked at the polls for it. Pres. Bush did one good thing; he tried to sell changes to Soc. Sec. to the American people. He failed to sell but he didn’t get clobbered at the polls so that is progress.

We’ll see if Republicans can sustain the effort. The leadership distanced itself from Rep. Ryan’s “roadmap” but its still there.

Posted by Liberty Lover | Report as abusive