Dan Mitchell’s post Javier Milei and the Fourth Theorem of Government (May 19, 2025) might seem like a post for the Stoa Central/South America topic. But Dan is as much making the case that the US Congress should follow Milei’s lead and dramatically cut federal spending.
Spending cuts raise immediate protests from the people and organizations receiving Congressional funding, and from the media reporting on the challenges they face with funding cuts.
But there are two things to keep in mind. One is that spending cuts and fiscally sound federal policies are very popular among the majority of voters. Most voters are on the paying side of programs (taxes) rather than the receiving side: subsidies and government services.
Back in 2017, I created my Fourth Theorem of Government in hopes of convincing timid Republicans that it would be politically beneficial to reduce the burden of government.
However, those were among the policies that triggered an economic renaissance and Reagan then enjoyed a 49-state landslide when he ran for reelection in 1984 (even bigger than his 1980 landslide).
I emailed Dan about the NCFCA topic and he quickly replied suggesting spending caps for Congress. He also shared this video:
Congress could cut far more spending, which would at first challenge those dependent on federal money, But private US foundations have $1.6 trillion in assets (up 11% in 2024). They distribute some $105 billion in grants each year. That’s a lot of available support for those in need. Overall charitable giving in the U.S. was $557 billion in 2024.
A balanced budget amendment would be one path, but Congress could also return to long-held fiscal traditions (budget surplus except during recessions and wars. All other years to pay down those debts).
“The power to control and direct the appropriations constitutes a most useful and salutary check upon profusion and extravagance, as well as upon corrupt influence and public speculation,” Story said. “[A]nd to make their responsibility complete and perfect, a regular account of the receipts and expenditures is required to be published, that the people may know, what money is expended, for what purposes, and by what authority.” Commentaries on the Constitution, Joseph Story
In our nation’s early years, Congress controlled the budget process. According to historical data from the Office of Management and Budget, the federal budget was in a state of surplus until 1850. For the next 50 years, there was a national deficit related to costs incurred by the Civil War and Spanish-American War, and the 1890s recession. Then, until the World War I era, the budget was mostly balanced, but debt related to the war and the addition of the national income tax as a budget source made the budgeting process more problematic.
Among the Jefferson administration’s enduring achievements was to contain the federal government by restraining its fiscal power. That was Albert Gallatin’s work. He abolished internal revenue taxes in peacetime, slashed federal spending, and repaid half of the national debt and had a plan to retire the debt (before the War of 1812 intervened). Heavy spending during the War of 1812 severely tested Gallatin’s system, but his basic reforms created a culture of fiscal restraint that survived for over 120 years. (Source)
Every man in this House knows it is not a debt. We cannot, without the grossest corruption, appropriate this money as the payment of a debt. We have not the semblance of authority to appropriate it as a charity. Mr. Speaker, I have said we have the right to give as much money of our own as we please. I am the poorest man on this floor. I cannot vote for this bill, but I will give one week’s pay to the object, and if every member of Congress will do the same, it will amount to more than the bill asks.”
