- The Washington Times - Sunday, June 8, 2008

ANALYSIS/OPINION:

ANALYSIS/OPINION:

total spending must be less than total revenue. Of course, just because this model is simple doesn’t mean it is easy to achieve. However, it is possible.

I know because from 1995 to 1997, John Kasich, Budget Committee Chairman; Bill Archer, Ways and Means Committee Chairman; Bob Livingston, Appropriations Committee Chairman; Majority Leader Dick Armey and I worked to balance the federal budget. We applied a set of common-sense principles that worked, leading to budget surpluses from 1997 to 2000.

First, we were prepared to reduce discretionary spending, eliminate waste, challenge traditional inefficiencies and take on fraud. We also were ready to tell stubborn bureaucracies they had to achieve more with less, just like the private sector had been doing for years.

Second, we were prepared to think boldly of fundamental entitlement reform. in particular, we reformed welfare, leading to 65 percent of those in welfare moving to the productive economy. we also reformed medicare and saved $200 billion.

Finally, we took a long-term view that allowed us to distinguish between short-term budget fixes and changes that would lead to our goal of a sustainable balanced budget. Instead of trying to raise taxes to increase revenue, we were convinced that cutting the right taxes (in particular, the capital-gains and death taxes) would ultimately lead to more investment, more economic growth and, ultimately, higher tax revenues. We also knew that spending had to be increased in some areas of high priority. For example, we doubled the budget of the National Institutes of Health to increase research, which we believed would save lives and, in the long run, money.

Unfortunately, this budget discipline has unraveled in Congress, leading to today’s deficits. However, any Congress that is serious about returning to balance the budget can still apply these same principles to today’s budget realities.

This would mean several fundamental changes:

First, the appropriations process must be reformed. the current earmark system has run wild and gives the members of the appropriations committee far too much power. They can literally buy the purchase of almost any bill by simply giving away more of the taxpayer’s money to individual members until they aggregate a majority. This makes it impossible to gain control over discretionary spending. A good first step would be a one-year moratorium on earmarks while fundamental reforms are made to reduce the power of the committee members.

Second, the Budget Committee must be directed to produce a four- to seven-year plan toward a sustainable balanced budget. No excuses should be accepted. Any amendments should be required to pay for themselves. Enough pressure on the Budget Committee will achieve amazing things. Paul Ryan, the ranking Republican on the House Budget Committee is fully capable of leading that kind of effort if his colleagues will support him in establishing that kind of visionary goal.

Third, there has to be a relentless focus on waste, fraud and abuse. The New York Times recently reported in a four-part series that 10 percent of all New York state Medicaid spending is pure fraud. That’s $4.4 billion a year, but nothing has been done about it. Until Congress is willing to aggressively pursue these abuses, there will never be a balanced budget.

Fourth, the federal government must allow greater energy production in the United States as part of a strategy to lower energy costs. The high cost of energy directly affects the federal budget for two reasons. First, the federal government is the largest single purchaser of energy. Lower energy prices would lower federal spending dramatically. Second, selling energy production rights and receiving royalties from energy production is a huge potential source of income for the federal as well as state governments.

Fifth, entitlements have to be reformed to get to a long-term balanced budget. From retirement plans to health plans, the current range of entitlements is unsustainable. The long-term damage to our economy from this future spending makes any short-term effort toward a balanced budget futile.

Finally, Congress must pursue reforms that will allow for the sustained economic health of the United States. This is a much more complex problem today than it was a generation ago. In the 1980s, the United States’ role in the world economy was so powerful that marginal tax-cut rates (the heart of supply-side economics) was adequate to launch a quarter-century of economic growth. Today, in a global economy in which China and India are major players, a serious strategy of economic growth requires fundamental changes in litigation, regulation, taxation, education, energy, health and infrastructure. Any serious balanced-budget strategy will have at its heart a profound commitment to maximum, long-term economic growth in a competitive world economy.

This combination of frugality, aggressive pursuit of abuse and fraud, as well as a long-term view of our economic and budgetary health will both control spending and generate the revenue needed to once again balance the budget.

We did it before.

We can do it again.

Newt Gingrich was Speaker of the House of Representatives from 1995 until 1998 and is the author of Real Change: From the World That Fails to the World That Works.”

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