A Weekly Dose of Hazlitt: Cut to $60 Billion Now

Cut to $60 Billion Now” is the title of Henry Hazlitt’s Newsweek column from February 18, 1957. Here, Hazlitt shows how regardless of political rhetoric in favor of cutting government spending, such spending continues to increase.

Sen. Margaret Chase Smith has called the Federal budget
for 1958 “fantastic.” To appreciate just how fantastic
it is, we may begin by comparing once more its
proposed record-breaking peacetime “visible” spending
of $71.8 billion with the $4.1 billion annual average
in the Hoover Administration, the $7.4 billion
annual average in the first Roosevelt Administration,
the $55.8 billion annual average in the second Truman
Administration, and the $66.6 billion annual average
in the first Eisenhower Administration.

But this is just a beginning. As Raymond Moley
pointed out in Newsweek of Feb. 4, the government is
spending huge sums which do not appear in the regular
budget. In 1958, for example, it will be paying out
$14.4 billion from various trust funds, compared with
$9.4 billion in 1956 and only $5.3 billion four years ago.
And there are other “hidden” expenditures of billions.

Nondefense Spending

One favorite excuse for all this is that defense costs
money. Let’s disregard defense expenditures for the last
ten years entirely, therefore, and compare nondefense
expenditures alone (in billions).

1948  $21.1    1953  24.0
1949  26.3     1954  20.9
1950  26.4     1955  24.0
1951  21.4      1956  25.9
1952  20.9     1957  27.9

The President proposes nondefense spending for the fiscal
year 1958 of $28.5 billion. This is $7.6 billion, or 36
percent, more than in 1954. It is, in short, the biggest
paternalistic “welfare” spending in any country in the
history of the world.

Administration officials have an uneasy conscience
about all this. So at the same time as they recommend
this immensely overgrown spending program they also
recommend that it should be cut. But even under pressure
from Congressional committees they decline to
name any specific place where a cut can be made. Until
they are ready not merely to generalize but to specify,
their commendation of economy must be set down as
merely lip service.

There will be no real economy until the government
is ready to slash drastically or to halt entirely whole
categories of spending. And it is not hard to point out
what some of these categories are. We may begin with
expenditures that the Federal government should avoid
on principle—e.g., the proposal of Federal aid for local
school construction. (The economic fallacies and political
dangers of this program were discussed in this column
of Dec. 26, 1955.)

Where to Cut

Next we come to expenditures which, even if we admit
that there is a case for the Federal government getting
into them at all, are completely contraindicated in the
midst of an inflationary boom like the present one. They
can only increase inflationary pressures. These would
include Federal aid for the grandiose interstate highway
system, and mounting subsidies and other artificial
stimulants for “low-cost” housing.

Next, we come to the proposal to spend a total of
$4.4 billion on foreign aid in 1958. Probably three-quarters
of this amount could with advantage be stopped at
once. Most of the net proposed expenditures of nearly
$5 billion for agricultural subsidies (mainly for supporting
food prices above the market or rewarding farmers
for not producing) represents huge and inexcusable
waste. Veterans’ benefits for 1958 are scheduled at more
than $5 billion—$570 million higher even than in 1955.

Clearly it is not a problem of knowing where cuts
in the budget can be made, but of daring to say. It has
been customary for years to treat our mounting military
budget as sacrosanct; yet Congressional investigations,
and the Hoover report, have exposed profligate waste.

When Mr. Eisenhower announced his $72 billion
budget for 1958, a few newspapers wistfully recalled
his 1952 campaign promise to reduce spending to $60
billion a year by 1955. But this $60 billion goal, far
from having become chimerical, could be achieved in
the new fiscal year, to the great economic benefit of the
nation. All that is needed is the political courage and
will to achieve it.

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