While there are many things that I believe the Republicans need to do to retake the majority, perhaps the most important issue in my mind is to retake the mantle as the party of fiscal discipline.  

I believe that people are fed up with the free spending irresponsible behavior of Congress. I would say that, that is why their approval numbers are lower than that of the President’s.

To do this:

• They must reestablish the principle of federalism and return powers to the States where the Constitution provides no support for federal actions.
• They must reign in an out of control federal budget and establish some sanity in federal spending
• They should commit to begin paying down the federal debt whatever it takes.
• They must commit to making difficult choices
• Their goal must be to reduce the total cost of living for the average citizen while providing only essential government services

The Principle of Federalism and Returning Power to the States.

“The powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the State governments are numerous and indefinite.  The former will be exercised principally on external objects, as war, peace, negotiation, and foreign commerce; with which last the power of taxation will, for the most part, be connected. The powers reserved to the several States will extend to all the objects which, in the ordinary course of affairs, concern the lives, liberties, and properties of the people, and the internal order, improvement, and prosperity of the State.” -- James Madison Federalist No. 45:

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people. – Tenth Amendment

Fiscal discipline is closely allied with the idea of adherence to the original intent of the Constitution i.e. Federalism.

Reducing Federal Spending

If we returned to adherence to the split between federal and state responsibilities we could not help but to reduce spending at the federal level because the federal government has no legitimate roll in so many of its current activities. This would of course leave the states with some big decisions to make, but since that is their constitutional responsibility anyway, I see no reason not to ask them to do so. At least then you would have fifty separate decisions about the proper role of government in our lives, making it more likely that someone would get that decision right.

One of the arguments against this would likely come from companies that operate through out the United States. They would argue that inconsistencies caused by state control of internal regulations will increase their cost of doing business. In the early stages of transition back to a more pure form of federal republic it is likely that such a situation will be true, but it is not a good argument to bypass the Constitution. 

There is nothing in the Constitution that inheritantly prevents the states from coordinating their domestic policies. The process of having the states negotiate these domestic policies, I believe would be healthy for the country.

According to the Constitution and the Federalist Papers, the primary focus of the federal government should be external. Therefore any federal taxes should primarily be dedicated for external purposes.

Paying Down the Federal Debt

The growing size of our federal debt has been a problem for decades. It is an issue that politicians on both sides of the fence have ignored. But the debt has grown to the point where now just the interest on the federal debt is crowding out other federal programs. At 8% of GDP in 2007, the interest is already more than double what we spend on defense. At the rate we are going the interest is predicted to rise to 12.4% of GDP by 2050[1]

National Defense is the primary responsibility of the federal government. Milton Friedman said that during World War II that spending on National Defense rose to close to 50% of GDP. Yet we were able to do that and survive.[2]  In his book The Tyranny of the Status Quo, Friedman showed that Federal spending outside of wars amounted to just 3% of national income. That began to change in 1930 when the Roosevelt began expanding the role and scope of government.

 But in the 1940’s many other domestic programs were only a small fraction of what they are today. Given the way we allocate our resources today we could not possibly have won World War II. I believe that we are mortgaging our future and the future of our children on current spending, most of which is not in the form of an investment that might be justified.

Therefore, along with reduced spending on other programs, Congress should allocate a substantial portion of tax revenues toward paying down the federal debt. I would allocate a minimum of 5% of revenues toward this goal.

Making Difficult Choices

All of the activities above lead to the conclusion that legislators need to be willing to make difficult decisions. That is after all what we pay them to do. I know that politicians are loath to do that sort of thing, because they fear that they will alienate their base and lose their office, but which is more important, their perks or the country? Where are the patriots that are wiling to shed their blood, and their fortune to save the country? If we could find some willing to stand up and tell people that this is necessary, I actually think that many people would respond positively. But the key is that you have to give up power at the federal level and let the people make more of their own decisions.

Pursuing the Goal

Every book on winning, or success, whether it be in the personal sphere or corporate sphere, emphasizes the importance of setting goals. The question should be, what are the proper goals for governments and political parties? I would argue that the goal of winning at all costs for the sake of power, is a misguided goal. From my perspective, that is what the Democrats seem to be aiming at. Their goal is to enlarge the size and scope of government. To what end? 

They tell us that they want to do this to help the poor and the average citizens, but aren’t they supposed to serve all citizens? Why is it that they choose to play the class warfare game? How does that help the country? Do they really think that they can keep milking the “rich” and not suffer bad consequences? As many of the so called “rich” are the owners of production it is not possible to tax them without a cascading affect on the economy. They will simply adjust, by raising prices, by passing on costs to customers and employees, or by reducing the total level of employment. Others will follow by demanding higher salaries to offset their increased costs. Only people without the market power to renegotiate their financial arrangements will be hurt in the end, and these are the very people the Democrats claim to want to help.

Governments are unlike corporations in that they cannot align their policies to one single goal or even just small subset of goals. This is because there are so many interest groups and so many opposing goals that to attempt to focus on a small set of specific goals will leave a large portion of the population highly unsatisfied. Therefore the focus of government should be on creating the conditions that allow people to seek their own goals. 

I am suggesting that we may do that by focusing on reducing the total cost of living. And as none of us knows all the factors that will cause that, that a return to the principles of federalism will create at least fifty separate laboratories in which we may pursue that goal.  In the book In Search of Excellence, author Tom Peters noted that the single most important factor in achieving success was the number of times at bat. It is by doing new things and trying new things that we find successful solutions to problems. We can’t do that by centralizing government programs and betting the farm on just a few solutions.

Conclusion

While this article’s title focused on fiscal discipline my approach has been that fiscal discipline does not exist in a vacuum. One way we can hope to achieve fiscal discipline is by realigning the responsibilities of government in a way that is more consistent with the Constitution. This will not be easy, but if it were easy then why should we be paying so much for our government? I believe that government should learn to live within its means and that includes paying down the burden of debt that we have built up over more than 75 years. If there are legislators that have the courage to pursue this goal I believe that the people of this country will respond positively. We are not babies that need coddling at every turn. We are the offspring of a hardy people that built this land through hard work, and individual reward, and a freedom of spirit that has been the envy of the world. If Republicans wish to win then they must rekindle that spirit.