I am desperately alarmed about the condition and direction of the American republic. What recently seemed a secure, ever more prosperous, internationally dominant nation is now endangered in a way it never has been before. As a people, we have discovered
the ability to vote ourselves largesse from the federal treasury in such vast sums that we are destroying our own chances at prosperity.
The level of government spending we are engaging in may soon leave us with a defunct, bankrupt, destitute economy.
If we don't find a way to restore the goose to good health, we will soon run out of golden eggs.
The risk is even higher than lost jobs, income, or hope for a better future and higher living standards. Our position of world leadership could be eclipsed
and with it the power of our free political system as a model for other countries. It's not out of the question that the American republic could undergo a full economic and social collapse, with consequences beyond our ability to imagine.
Halfway through my second term [as Indiana governor], a reporter asked me how we had turned things around. "Prepare to be dazzled," I said, "We spent less money than we took in." Total state spending had been held almost flat, growing at about 1% per yea
for 6 years, 1/3 the rate of inflation, while revenue caught up & surpassed it."
One tool that I had at my disposal was the power not to spend money budgeted by the General Assembly. On the federal level, this tool is called the power of "impoundment"
or "rescission." It is a powerful tool because it enables the chief executive to react to changing budget circumstances and stop agencies from spending money the government doesn't have. Unfortunately, Congress effectively stripped the president of this
power along with others, in the post-Watergate period. I appreciated the power to save unspent funds--which in Indiana is called the power of "reversion"--because it not only made budgetary sense, but also changed the politics of government spending.
Downsize federal employment: freeze hiring & freeze pay
Major reductions in federal spending are likely to cause far less discomfort to the general public than is commonly claimed. Every newspaper story about even the most modest cut includes the word PAIN. That is usually nonsense. If massive government
spending prevented pain, we wouldn't have had so much of it in the past few years. Today's grossly oversized and overly expensive federal government is itself a major source of pain in America, through the jobs and opportunity it stifles.
Left in its present shape, it promises to bring far worse pain than anything we have recently endured.
An obvious starting point is a major downsizing of federal employment. This should be accompanied by a hiring freeze, which should last for years.
Reductions in head count should be coupled with a federal pay cut, followed by a long-term pay freeze. This is only secondarily a matter of debt reduction; it is even more about reasserting the principle that the private sector comes first.
Reinstate impoundment: spend less than appropriated
When a pro-solvency Congress and president are elected, they would be well advised to reinstate the power of impoundment, to spend less money than Congress has made available through appropriations. Stop and think: In what other context in life does an
enterprise lock itself into spending money it does not have?
In the hands of an administration willing to use it aggressively, some version of impoundment authority would produce billions in savings immediately. Impoundment ought to be part of an urgen
strategy to bring the beast back to a size the nation can afford.
Impoundment can be limited--for example, by providing opportunity for a prompt congressional disapproval vote before each reduction took effect. Or the authority could be granted on an
emergency basis; our current debt condition certainly qualifies as one. But the degree of surgery required to bring the federal budget back within even hailing distance of balance more than justifies the use of this tool.
Automatic taxpayer refund when reserves exceed 10%
I ask you to vote for lasting spending discipline by enacting an automatic taxpayer refund. When the day comes again when state reserves exceed 10% of annual needs, it will be time to stop collecting taxes and leave them with the people they belong to.
Remember what the Hoosier philosopher said: "It's tainted money. 'Taint yours, and 'taint mine." Beyond some point, it is far better to leave dollars in the pockets of those who earned them than to let them burn a hole in the pockets of government.
Source: 2011 Indiana State of the State Address
, Jan 11, 2011
The top priority for Governor Mitch Daniels is to begin to reverse Indiana’s economic decline, because future success in every other area depends upon it. During Governor Daniels first year in office, Indiana became a much more growth-friendly place.
Taxes on research and development and small business were reduced. The Daniels Administration reordered state government to become an ally and not an obstacle to growth. And, a new public-private job-seeking agency replaced a failed state bureaucracy.
Source: Gubernatorial website, www.in.gov/gov, “Issues”
, Nov 11, 2006
