How to Overcome Government Reliance: Simplification & Lowering Government Spending

In my last blog post, we explored how key events like the New Deal, the G.I. Bill, and the Great Society expanded federal programs and increased Americans' reliance on government support. While these initiatives addressed societal challenges, they also shifted the nation from independence to long-term government dependence, funded by taxpayer dollars. Today, we'll tackle the next big question: How can we overcome government reliance?

The Initial Vision: A Country Without Income or Payroll Taxes

The Founding Fathers likely never envisioned a federal income tax, introduced with the 16th Amendment in 1913, let alone additional payroll taxes like those funding Social Security and Medicare. Their preference was for a limited government primarily financed through indirect taxation. They believed directly taxing citizens could become oppressive and lead to government overreach. Even during the mid-19th century, politicians like James F. Simmons saw taxing everyone as an extreme measure, as his reaction to a proposed land tax shows:

“Let us tax property in the last resort, when we have to reach the poor as well as the rich, people of small means as well as those with large; but I do not believe this country has come to pass to be driven to a resource [the land tax] of such extreme measures.”

— James F. Simmons

Returning to this vision would require monumental changes, but it's not entirely out of reach. Here are some steps that could align us more closely with the original ideal:

Simplify Government Operations: Shrinking Federal, State, and Local Governments for Efficiency and Taxpayer Relief

One of the most direct ways to benefit taxpayers is by simplifying government operations and reducing the size of federal, state, and local governments. According to the Employment Projection Program from the U.S. Bureau of Labor Statistics, in 2023, 2.92 million people in the U.S. were employed by the federal government, while state and local governments employed 19.86 million, with an estimated taxpayer-funded expenditure covering salaries and benefits for those employees equaling approximately $2.6 trillion annually, based on available data from Reuters (via Congressional Budget Office; 2022) and the Bureau of Labor Statistics (2024). Combined, government employees make up 13.6% of those employed in the non-agricultural field. Only the professional and business services sector has slightly more employees.

By focusing on core responsibilities such as national defense, infrastructure development, and providing essential services, government operations could achieve significantly greater efficiency while simultaneously reducing taxpayer-funded spending. Consequently, taxpayers would benefit from the ability to keep more of their hard-earned income, leading to an increase in purchase power.

Limiting government responsibilities would lead to a necessary reduction of the workforce in governmental roles within non-essential functions. For this, it's crucial to reallocate those functions to the private sector, presenting an opportunity to enhance service quality while simultaneously driving economic growth. As history has shown, the private sector's competitive nature often leads to innovation, improved efficiency, and job creation, which can help to stimulate the economy further. By collaborating with private enterprises, the government could ensure that resources are used more effectively, allowing for a more dynamic and responsive economic environment that ultimately benefits all citizens.

Limit Spending: Enacting Balanced Budgets and Fiscal Responsibility for Taxpayer Relief

Of course, it's not just about changing the government's focus to essential services and shifting the workforce from governmental roles to the private sector. Another key strategy for reducing the overall tax burden on citizens is limiting government spending through balanced budgets and strong fiscal responsibility measures. This strategy requires a focus on ensuring that governments spend within their means while maintaining essential services. Implementing such strategies can provide long-term benefits, including:

• Reduce Deficits and National Debt:
  Balanced budgets prevent excessive borrowing by requiring governments to avoid spending more than they collect in revenue. This helps control the growth of the national debt and reduces long-term interest payments, which often consume a significant portion of government budgets. Lower debt levels free up resources for public services rather than debt servicing.

• Lower Taxes Over Time:
  When government keeps spending in check, the need for frequent tax hikes diminishes. Fiscal discipline allows governments to cover their obligations without constantly seeking additional revenue, providing relief to taxpayers while encouraging economic growth.

• Efficient Resource Allocation:
  A fiscally responsible approach prioritizes essential services such as infrastructure, public safety, and education while curbing wasteful or non-essential spending. This ensures taxpayer money is used effectively, with funds directed where they have the most significant public benefit.

• Promote Accountability and Transparency:
  Balanced budget requirements promote greater transparency in how funds are allocated and spent. Public access to budget reports and spending plans enables citizens to understand better where their tax dollars go and hold elected officials accountable for financial decisions.

While most U.S. states have some form of requirement to pass balanced budgets each fiscal year, not all are equally defined. Some states only require a balanced budget at the proposal stage. In contrast, others allow deficits through borrowing or using reserve funds, effectively bypassing strict balance requirements.

However, some states take balanced budgeting seriously, such as Florida, which has constitutional requirements (Article VII, Section 1) mandating that their legislature pass balanced budgets each fiscal year. This forces lawmakers to plan spending carefully within available revenues. Other states, such as Colorado, through its Taxpayer Bill of Rights (TABOR), limit the growth of government spending based on inflation and population increases, automatically refunding excess revenue to taxpayers, also reflected in Colorado's constitution (Section 20).

Empower States: Shift Responsibilities for Social Programs, Healthcare, and Welfare

Limiting spending, however, is only one item on the laundry list of reducing the need for ever-increasing taxes. Another item requires shifting social programs, healthcare, and welfare from federal to state governments, aligned with the initial vision of a small federal government. This shift could reduce federal involvement, streamline operations, and promote localized decision-making. By decentralizing these responsibilities, states would have greater autonomy to tailor services to their populations' specific needs and economic realities. However, this approach requires careful planning to prevent the unintended consequence of simply shifting the tax burden from federal to state levels without achieving real taxpayer relief.

For such a transition to be effective, states must adopt efficient management practices and accountability measures to prevent substantial increases in state-level taxes. The goal should be to maximize resource use and minimize administrative overhead while ensuring essential services remain accessible to all residents. Key strategies to support this shift include:

• Interstate Collaboration:
  Encourage regional coalitions where neighboring states collaborate to share resources, infrastructure, and best practices. This cooperative model could reduce redundancies, expand service coverage, and allow smaller states to benefit from pooled resources without requiring direct federal intervention. The New England Compact for Higher Education is a notable example, where states share educational resources to reduce costs and expand access, for instance, through the Tuition Break Program, also known as the New England Regional Student Program (RSP) that allows New England residents to enroll in out-of-state public colleges and universities within the region at discounted tuition rates for approved programs. While such collaborations exist, they are not yet widespread across all policy areas.

• Equity Mechanisms:
  Implement safeguards to prevent disparities in service quality between wealthier and less affluent states. A balanced system could include funding formulas adjusted for cost of living and poverty rates, ensuring all citizens have access to essential services regardless of their state's economic condition. For example, California's Local Control Funding Formula (LCFF) provides additional state-level funding to school districts serving low-income students, English learners, and foster youth. Safeguards, such as performance reviews and continuous assessment of service delivery metrics, should be in place to ensure the funding achieves its intended goals. While equity mechanisms like LCFF are effective in education, their application in other social service areas is less consistent.

• Performance-Based Accountability:
  While I already wove this information into the above, it's crucial to tie funding to measurable outcomes and performance benchmarks rather than blanket allocations. This ensures states remain focused on results-driven policies and avoid inefficiencies or misuse of funds. Clear reporting standards and public transparency can further enhance accountability.

• Administrative Streamlining and Technology Integration:
  Support states in modernizing their administrative systems to reduce bureaucratic inefficiencies. Investment in technology, such as centralized data platforms and digital service portals, can help states manage programs more effectively while reducing operational costs. Additionally, these improvements should aim to provide greater transparency for a state's residents by providing easier access to program information and performance metrics.

• Block Grants with Flexibility:
  Provide states with block grants as a primary funding mechanism for social programs. These grants would allocate federal resources but allow states the flexibility to design and implement services based on their local demographics and priorities. Flexibility can foster innovation and more effective service delivery. However, safeguards, including the requirement for output metrics, would be necessary to ensure funds are used for their intended purposes and demonstrate measurable results. Block grants are already in use, with the Social Services Block Grant (SSBG) serving as a prominent example. However, their use remains somewhat limited compared to other funding models.

This approach could foster innovation, reduce federal overreach, and better address the diverse needs of American communities by empowering states with both responsibility and the tools for effective governance. Remember, in my post "Maine’s 2024 State Election: From Legislative Seats to Judicial Roles," we learned that a state congress allows for a reflection of local interests and needs. However, success hinges on balancing local autonomy and nationwide fairness to prevent a fragmented system where access to essential services depends on one's state of residence.

However, to lower costs by empowering states, it's crucial that citizens monitor how their tax money is spent and become active if programs fail to deliver. When state-funded programs fall short of expectations or seem overburdened, citizens have several ways to hold decision-makers accountable and demand better results, for example, by attending public meetings, such as school board or public agency meetings, obtaining official reports that outline spending and performance metrics to assess program effectiveness, requesting financial and performance audits if misuse or inefficiencies are expected, engaging with community groups, contacting state representatives, advocating for policy changes, and raising public awareness.

Optimize State and Local Governments: Reduce Spending through Innovative Strategies

In addition to shifting power back to the states, it's also crucial for state and local governments to explore innovative strategies at the state and local levels to identify additional pathways to reduce government spending. Across the United States, some state and local governments have already begun exploring such measures to streamline operations and minimize costs. However, not all jurisdictions have embraced these strategies. Reflecting on these approaches and bringing them up in town halls, city council meetings, and community forums can encourage broader adoption and drive positive change.

• Consolidation of Redundant Services:
  Many local governments operate independently, often resulting in overlapping services and unnecessary administrative costs. By consolidating services across municipalities or counties, governments can pool resources, reduce duplication, and lower costs while maintaining or even improving service quality.

  Some counties and townships have already begun work on this, such as Oneida and Herkimer counties in New York, which are exploring consolidating their emergency 911 services into a single dispatch system to improve efficiency and reduce cost. Previously, Oneida absorbed the 911 systems of the City of Rome in 1997, the Town of New Hartford in 2010, and the City of Utica in 2012. Another example comes from Michigan, where projected annual savings from collaboration to deliver improved fire protection and EMS services across rural communities reached savings of up to $1.48 million, depending on the number of townships participating.

• Data-Driven Resource Allocation:
  Use technology and data analytics to allocate infrastructure, education, and public health resources better. By analyzing data trends, governments can identify areas where interventions will have the most impact, ensuring taxpayer dollars are spent more effectively.

  Baltimore has already embraced this concept within its CitiStat program, which utilizes data analytics to reduce overtime costs, streamline garbage collection, and identify operational inefficiencies across multiple agencies, including the Baltimore City Police Department. Similarly, Boston's StreetBump app collects data from vehicle movement to help prioritize road repairs based on real-time conditions rather than public complaints alone.

• Increased Public-Private Partnerships (PPPs):
  Utilize partnerships with private entities for infrastructure projects and other large-scale initiatives to reduce direct government expenditure and improve service delivery. These partnerships can ease the financial burden on governments while maintaining public oversight. However, it's important to remember that while PPPs offer significant benefits, they require careful contract management and transparency to prevent cost overruns or reduced service quality.

  One state that used a PPP model is Virginia. The Virginia Department of Transportation expanded its I-495 express lanes using a PPP model, allowing a private company, Transurban, to own 50% of the lanes and manage toll collections while minimizing the state's financial involvement.

• Performance-Based Budgeting:
  Implement a system where state and local funding ties to measurable outcomes. This approach prioritizes successful programs, phases out ineffective ones, and ensures taxpayer money is spent on programs that deliver results, discouraging waste and rewarding efficiency.

  One of the states that implemented this approach is Washington State. Through the Results Washington initiative it uses performance metrics to evaluate agency performance across areas like education and healthcare.

A leaner government reduces spending, lowering the need for high taxes while enabling state and local authorities to tailor programs to their communities' specific needs. Smaller, more focused governments also promote greater accountability and transparency, making it easier for taxpayers to track spending and hold officials responsible.

It's important to understand that implementing these optimizations is challenging. Partisan divides, resistance to change, and logistical hurdles often impede progress, especially when entrenched interests are at stake. However, as more counties and towns successfully adopt these approaches, the case for broader implementation grows stronger. Achieving such reforms requires collaboration across political lines, a willingness to innovate and modernize, and – most importantly – a commitment to serving the public efficiently and effectively.

But the best: Everyone can contribute to such meaningful reforms by researching regional successes and sharing them with a broader community, even across town- and state borders, and everyone can play a key role by advocating for these reforms in public forums and holding their representatives accountable for responsible governance.

This concludes the first part of exploring how to overcome government dependence, focusing on reducing spending, empowering local solutions, and increasing accountability. But there’s more to come! In Part II, I’ll dive deeper into encouraging economic freedom through private sector growth, promoting financial literacy, and strengthening family and community support systems. Expect insights on how education, cultural shifts, and nonprofit roles can shape a self-reliant society while reducing the need for government intervention.

Stay tuned!