Why America Is in So Much Trouble

        Shortly before Milton Friedman's death in 2006, I had the privilege of
interviewing him over dinner in San Francisco. The last question I asked
him was: What are the three things we have to do to make America more
prosperous?

        His answer I have never forgotten: "First, allow universal school choice;
second, expand free trade; third and most importantly, cut government
spending." That was long before Barack Obama and Joe Biden came along.

        There aren't too many problems in America that can't be traced back to the
growth of big and incompetent government.

        It is notable that the two big bursts of inflation during modern times
both occurred when government spending exploded. The first was the gigantic
expansion of the Lyndon B. Johnson "war on poverty" welfare state in the
1970s with prices nearly doubling. Second was the post-COVID-19 spending
blitz in the last year of Donald Trump's first term, followed by the Biden
$6 trillion spending spree, with the Consumer Price Index sprinting from
1.5% to 9.1%.

        Coincidence? Maybe. But I doubt it.

        The connection between government flab and the decline in the purchasing
power of the dollar is obvious. In both cases the Washington spending blitz
was funded by Federal Reserve money printing. The helicopter money caused
prices to surge. (I still find it laughable that 11 Nobel Prize-winning
economists wrote in the New York Times in 2021 that the Biden
multitrillion-dollar spending spree wouldn't cause inflation. Were they on
hallucinogenic drugs?)

        The avalanche of federal spending hasn't stopped even though the COVID-19
pandemic ended over a year ago. We are three months into the 2025 fiscal
year and on pace to spend an all-time-high $7 trillion and borrow $2
trillion. If we stay on this course, the federal budget could reach $10
trillion over the next decade.

        This road to financial perdition cannot stand. It risks blowing up the
Trump presidency.

        Upon entering office, Trump should on day one call for a package of up to
$500 billion of rescissions -- money the last Congress appropriated but has
not been spent yet. Canceling the green energy subsidies alone could save
nearly $100 billion. Why are we still spending money on COVID-19?

        We could save tens of billions of dollars by ending corporate welfare
programs -- such as the wheelbarrows full of tax dollars thrown at
companies like Intel in the CHIPS Act. The Elon Musk Department of
Government Efficiency is already identifying low-hanging fruit that needs
to be cut from the tree.

        Along with extending the Trump tax cut of 2017, this erasure of bloated
federal spending is critical for economic revival and for reversing the
income losses to the middle class under Biden.

        This is especially urgent because the curse of inflation is NOT over.
Since the Fed started cutting interest rates in October, commodity prices
are up nearly 5%, and mortgage rates have again hit 7%, in part because the
combination of cheap money and government expansion is a toxic economic
brew -- as history teaches us.

        Nothing could suck the oxygen and excitement out of the new Trump
presidency more than a resumption of inflation at the grocery store and the
gas pump. Trump's record-high approval rating will sink overnight if the
cost of everything starts rising again.

        Cutting spending won't be easy. The resistance won't just come from Bernie
Sanders Democrats. He will have to convince lawmakers in his own party --
many of whom are already defending Green New Deal pork projects in their
districts.

        Trump should borrow a line from Nancy Reagan: Just say no -- to runaway
government spending. Say yes to what Friedman titled his famous book:
"Capitalism and Freedom."

        Stephen Moore is a visiting fellow at the Heritage Foundation. He is also
an economic advisor to the Trump campaign. His new book, coauthored with
Arthur Laffer, is "The Trump Economic Miracle."

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