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Balance the federal budget by freeing job-creators to grow the economy, reforming entitlements, and implementing productivity improvement systems, such as Lean Six Sigma, to eliminate waste and fraud. Pass a balanced budget amendment to keep it balanced.
If, however, there is a commitment to balancing the budget, then each agency has to find better ways to do things and more innovative ways to get things done. If you want innovation, better outcomes at lower costs, greater productivity, and a spirit of entrepreneurial public management, the balanced budget creates much more pressure for real innovation. Getting to a balanced budget is absolutely vital. When there is a permanent budget deficit there is no reason for any politician to say no to any interest group. That is, in fact, how we ended up with the current, absurdly bloated, undisciplined federal government. If deficits do not matter and spending is open-ended, the most rational strategy for every bureaucracy is simply to ask for more money.
Over time, the requirement to balance the budget leads to smaller government. Politicians who have to face the voters because they are raising taxes have a much harder sell to make than politicians who can bring home "free" goodies with only some distant deficit to explain.
Two months after I became Speaker in 1995, we came within one vote in the Senate of passing a constitutional amendment that would have required a balanced federal budget.
Even though we didn’t win the vote, the House Republican leadership decided to act as though the Balanced Budget Amendment had become law.
We had pledged to balance the budget within seven years of getting elected, and experts laughed at us – but we ended up doing it in three. And we balanced it for four straight years for the first time since the 1920s.
The financial impact of achieving balanced budgets was startling. When I was sworn in as Speaker of the House in January 1995, the Congressional Budget Office projected that over the next decade the cumulative federal budget deficits would total $2.7 trillion.
Shortly after I left office in January 1999, CBO projected that over the next decade federal surpluses would total over $2.2 trillion– a four-year turnaround in the fiscal outlook of the United States of nearly $5 trillion. A comparable four-year improvement in the U.S fiscal outlook today would total over $8 trillion (as a percentage of GDP).
Today we find ourselves in a situation similar to 1994: Deficits projected as far as the eye can see and an urgent need to return to balanced budgets.
But Americans should not have to accept a defeatist attitude from Washington: There is every reason to believe a comprehensive program of economic growth, government modernization, returning power to the citizens and states and dramatically expanding American energy production can lead to a balanced budget far faster than experts now predict.
The biggest key to reducing the deficit is robust economic growth. Elsewhere in this contract, I outline principles that would empower job-creators to hire millions more Americans by dramatically reducing tax and regulatory burdens, and a program to unleash our bountiful untapped sources of American energy. By creating more wealth and more taxpayers, and by developing billions of dollars worth of new American energy resources, we will dramatically increase federal, state and local revenues and decrease budget deficits.
More revenue can also come through American energy development and through better development of federally owned land including the 69% of Alaska and 85% of Nevada that we the people own through our government.
We can have higher revenues without having higher taxes.
More revenue through economic growth may be the surest method of reducing the deficit, but the federal government must also commit to spend no more of Americans’ money than is needed. That is why this legislation will strive above all to corral the reckless growth of federal spending.
Finally, the bureaucratic rules and procedures that are commonplace in the federal government have no place in the twenty-first century. This legislation must dramatically overhaul the entire structure of the federal civil service, and make it clear that Americans will only tolerate a government that aggressively targets and eliminates waste and fraud, and incorporates private-sector best practices.
Strong America Now, an organization dedicated to bringing modern management to government at every level, estimates that we can save $500 billion a year in spending through proven waste-cutting and value-enhancing techniques from the private sector, such as Lean Six Sigma. The Defense Department has already used Lean Six Sigma to save more than $22 billion, increasing productivity 1,000 percent in some facilities.
IBM’s Business of Government consultancy makes a more conservative estimate, suggesting that the federal government could save $100 billion annually by implementing commercial best practices.
Using fraud detection techniques similar to those employed by credit card companies, we could save between $70 and $120 billion a year in Medicaid and Medicare fraud, according to the Center for Health Transformation.
The opportunities for improvement and waste reduction are endless, and I look forward to hearing Americans’ ideas about other ways to make the federal government more efficient.