Jack Kemp

As people who know me well can attest, I have never worshiped at the shrine of balanced budgets. Rather, I define my fiscal goals as strong economic growth and full employment at a stable price level. That's why I have always been willing to tolerate reasonable temporary deficits if they result from tax rate reductions or the removal of distortions from the tax code that increase the economy's capacity to grow. The economy's very positive response to President Bush's tax rate reductions demonstrates how tax rate reductions and tax reforms can increase economic growth and raise revenues over the long run.

Neither have I ever been one to advocate cutting government programs simply for the sake of reducing the size of government. Government programs that don't deliver what they are supposed to should certainly be cut and, in many cases, eliminated. And there is no doubt that beyond a certain level, the cumulative burden of government spending, which diverts capital and labor away from productive uses in the private sector, becomes so great that the absolute size of government should be reduced. After a three-year spending binge that increased federal outlays nearly 25 percent, we are almost certainly at that point presently.

But even now, it would be ill-advised simply to start hacking away at government programs. Instead, I think we need to create long-run systemic control on the growth of spending so that as economic growth picks up and is sustained over the course of the recovery, the relative size of government shrinks relative to the private sector. "Growing the government smaller" in this way offers the best hope for political success, as well.

Many younger members of Congress won't recall how the first Bush administration approached spending control. It was a version of what I just described - Bush 41 called it the "flexible freeze." The freeze component capped the overall growth in spending at a rate something less than the rate of economic growth. The flexible component, however, allowed some programs to grow faster than the economy, some to grow slower and some to be eliminated altogether. It is time to revisit this approach to controlling the growth in government spending.

Under increasing criticism from both the left and the right, Bush pledged in his recent State of the Union address to "cut the deficit in half over the next five years." With all due respect, we don't need a deficit strategy; what we need is a strategy to control spending growth.

Jack Kemp

Jack Kemp is Founder and Chairman of Kemp Partners and a contributing columnist to Townhall.com.
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