Fiscal Discipline: Reduce Spending and Empower People

The federal government’s $36 trillion debt isn’t just a fiscal issue—it’s a direct threat to economic freedom and prosperity. Every dollar borrowed is taken from us and future generations, limiting opportunities for growth and innovation. But there are more poor policies at the federal, state, and local levels stifling opportunity, which should be addressed in 2025.

My economic foundation, rooted in the works of Milton Friedman, Friedrich Hayek, Thomas Sowell, James Buchanan, Douglass North, and others, demonstrates a clear path forward: reduce spending, limit government overreach, and empower individuals over bureaucracies.

Milton Friedman taught that economic freedom is fundamental to prosperity, emphasizing lower taxes, restrained spending, and free-market solutions. Friedrich Hayek warned against centralized planning, which replaces individual decision-making with bureaucratic mandates. Thomas Sowell highlighted how market-based solutions like school choice can address systemic failures. James Buchanan noted how politicians and rent-seekers are rational but misguided and distort market activity. Douglass North explained the importance of institutions for people to prosper. 

These lessons remind us that when the government grows, freedom shrinks. We should remember this again; policymakers at every level should abide by these lessons.

Cut Spending, Restore Freedom

Excessive government spending fuels debt and inflation, harming individuals and businesses. Programs grow unchecked, often delivering diminishing returns. James Buchanan’s public choice theory explains this dynamic: politicians prioritize short-term gains over long-term solutions, leading to bloated budgets and waste. Fiscal discipline is the necessary path forward.

Colorado offers a proven model. Its Taxpayer’s Bill of Rights (TABOR) limits government spending growth to population increases plus inflation and requires voter approval for tax hikes. TABOR has kept spending in check even as the state turned blue, refunded surpluses to taxpayers, and strengthened the state’s economy. Applying the TABOR’s principled approach–while strengthening it to cover all spending and using surpluses to reduce tax rates rather than send refunds–at federal, state, and local levels would rein in spending and give power back to taxpayers.

Spending restraint must also target “entitlement” programs or sacred budget cows like Social Security, Medicare, Medicaid, defense, education, and transportation. Transitioning to personal accounts, implementing means-testing, raising age limits, and eliminating costly programs can ensure resources for the most vulnerable while reducing taxpayer burdens. Cutting unnecessary programs and laws like the Export-Import Bank, Jones Act, and many occupational licenses would further reduce waste and cronyism.

Simplify Taxes, Let People Prosper

Friedman’s vision of lower, flatter taxes is critical to restoring economic freedom. A simpler tax code eliminates distortions, encourages investment, and allows individuals to keep more of what they earn. High taxes discourage productivity and innovation, disproportionately hurting small businesses and entrepreneurs.

A lower, flatter tax system would ensure fairness and efficiency. By reducing corporate and individual tax rates to zero and eliminating special-interest loopholes, we can promote growth and reduce the economic drag caused by the current tax system.

Education Savings Accounts: Funding Students, Not Systems

Education is a prime example of government inefficiency. Billions of dollars are spent annually on “public” schools, yet outcomes remain stagnant, leaving students and taxpayers shortchanged. Education Savings Accounts (ESAs) offer a transformative solution.

With ESAs, education funding follows students, not systems. Families can use these funds for tuition, tutoring, or other educational needs. States like Arizona and Florida have implemented universal ESA programs, improving outcomes while reducing costs. Expanding ESAs should be done at the state level while getting the federal government out of schooling to empower parents, promote competition, and drive innovation in education.

Thomas Sowell’s insights on choice and accountability reinforce this approach. By introducing market forces into education, we can break free from the bureaucratic systems that have failed students for decades.

Deregulation: Unleashing Innovation

Overregulation stifles economic growth and innovation, particularly in emerging fields like artificial intelligence. Friedrich Hayek’s warnings against centralized control are particularly relevant here. Heavy-handed government rules slow progress and reduce competition, while deregulation allows markets to flourish.

Regulatory sandboxes provide a solution. These controlled environments let innovators develop and test technologies without burdensome restrictions. By fostering a culture of innovation, we empower entrepreneurs to solve challenges in healthcare, education, and beyond—where bureaucracies have repeatedly failed. However, these regulatory sandboxes are helpful only if they contribute to unleashing or keeping away harmful regulations. If they pick winners and losers, this is another barrier. 

Artificial intelligence and emerging technologies can potentially transform industries and improve lives. To fully realize their potential, the government must take a light-touch approach, prioritizing transparency and accountability without stifling creativity.

The Path Forward

To tackle overspending by politicians and overfunding by taxpayers to support more prosperity, bold reforms are necessary:

1. Adopt Strict Rules: Implement rules like TABOR to align federal spending with population growth and inflation and return surpluses through lower tax rates.
2. Reform Entitlements: Transition programs like Social Security and Medicare to personal accounts.
3. Simplify Taxes: Create a lower, flatter tax code to promote growth and reduce distortions.
4. Expand School Choice: Use ESAs to empower families and improve education outcomes.
5. Encourage Innovation: Deregulate emerging technologies and foster environments that reward creativity.

Freedom to Prosper

Excessive debt and government overreach are not inevitable—they result from policy choices. Choosing freedom means reducing spending, cutting taxes, and unleashing innovation. It means trusting individuals, not bureaucracies, to make the best decisions for themselves and their families.

As Friedman observed, “The government solution to a problem is usually as bad as the problem.” By adopting policies prioritizing fiscal discipline, deregulation, and individual empowerment, we can reclaim economic freedom and build a society where people thrive.

The path forward in 2025 is clear: let’s commit to policies that limit government, reduce spending, and ensure every individual has the opportunity to prosper.

Vance Ginn, Ph.D., is president of Ginn Economic Consulting, host of the Let People Prosper Show, and previously chief economist of the Trump White House’s OMB. Follow him on X.com at @VanceGinn.