The Roadmap for the 21st Century Project is a collaboration of free-market experts nationwide reflecting their views on the major public policy choices facing the nation, particularly those affecting economic growth and prosperity.
This Roadmap paper, by the Working Group on Rightsizing Government, discusses the need to reduce spending and restore economic growth … by “rightsizing” the national government. The authors note:
Up to a point, every dollar spent … adds more than a dollar to the nation’s gross domestic product (GDP) by facilitating and protecting commerce and investment. … Government spending more than this optimal level detracts from economic growth and general prosperity. At today’s level of total government spending in the United States — 35 to 40 percent of GDP — the next dollar of taxation financing the next dollar of spending costs the economy $2.75 in lost GDP …
The Roadmap authors discuss economist Gerald Scully’s work on the optimal size of government; finding ways to restore economic growth in the United States (thereby maximizing GDP); and balancing the federal budget and paying off the national debt. They describe in particular how welfare reform and deregulation of the energy sector would contribute to balanced budgets and falling debt.