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Milton Friedman on Government spending and deficits

But it’s not politically feasible. The pressures on Congress mean that it will be spent. Look at what’s been happening to the surplus so far. Congress has been getting rid of it as fast as it could—and under very difficult circumstances, because divided government up to now has meant that it’s been hard to get agreement on what to do. Even so, it has been able to put through a lot of government spending. History shows that over a long period of time government will spend whatever the tax system raises plus as much more as it can get away with. That’s why we’ve had universal deficits.

Context. Asked about the federal budget surplus. Peter Robinson put it to him that he had said he would be open to paying down the debt if it were politically feasible.

Friedman on the Surplus
Interview, 2001, Interview by Peter Robinson for Uncommon Knowledge, January 17, 2001; adapted in Hoover Digest 2001 No. 2
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Milton Friedman, “Friedman on the Surplus” (Interview by Peter Robinson for Uncommon Knowledge, January 17, 2001; adapted in Hoover Digest 2001 No. 2, 2001). https://miltonfriedman.org/quotes/government-spends-whatever-tax-system-raises-2001

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He also said

  1. I believe along with Parkinson that government will spend whatever the tax system will raise plus a good deal more. Every step we take to strengthen the tax system, whether by getting people to accept payroll taxes they otherwise would not accept, or by cooperating in enacting higher income taxes and excise taxes or whatnot, fosters a higher level of government spending. That's why I am in favor of cutting taxes under any circumstances, for whatever excuse, for whatever reason.

    Context. From a 1978 Policy Review article on the tax-limitation movement, written the day after California voters approved Proposition 13 (the Jarvis-Gann amendment). Its opening reworks his April 1978 Newsweek column “A Progress Report”; the passages quoted from it here are from the later, new part of the argument. Parkinson is C. Northcote Parkinson, the British historian known for “Parkinson’s Law”.

    The Limitations of Tax Limitation
    Journal article, 1978, Policy Review (The Heritage Foundation); reprinted in the Congressional Record, Extensions of Remarks, June 7, 1979, pp. 14069 to 14071, introduced by Representative Hamilton Fish, Jr. of New York as “an article by Dr. Friedman published in Policy Review, the quarterly journal of The Heritage Foundation”, Congressional Record, June 7, 1979, p. 14070
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  2. I favor it on economic grounds because it enables the ultimate consumer—the ultimate individual, you and me—to decide how the money should be used. You know, it makes no sense for me to send my money to Washington to have somebody in Washington decide how to use it. I’d rather decide how to use it myself—whether for charity or for welfare or for other purposes. So that’s the first and most important argument. But the political argument for it is that it’s the only way to keep Congress from spending it. … That’s why for a long time now I have been in favor of any tax cut, under any circumstances, in any way, in any form whatsoever.

    Context. Asked about the third option for handling the federal budget surplus, tax cuts, and whether he favors it above all. The ellipsis marks a question from Peter Robinson, “Only if Congress doesn’t have the money can it be prevented from spending it?”, and the word “Right.” with which his answer begins.

    Friedman on the Surplus
    Interview, 2001, Interview by Peter Robinson for Uncommon Knowledge, January 17, 2001; adapted in Hoover Digest 2001 No. 2
    Checked against the sourceRead the transcript
  3. It is my view that it is desirable for the people to limit their government's budget, to decide how much in total they are willing to pay for their government. Having done this, it is desirable for them to delegate to their elected representatives the difficult task of dividing that budget among competing good proposals.

    Context. From a 1978 Policy Review article on the tax-limitation movement, written the day after California voters approved Proposition 13 (the Jarvis-Gann amendment). Its opening reworks his April 1978 Newsweek column “A Progress Report”; the passages quoted from it here are from the later, new part of the argument.

    The Limitations of Tax Limitation
    Journal article, 1978, Policy Review (The Heritage Foundation); reprinted in the Congressional Record, Extensions of Remarks, June 7, 1979, pp. 14069 to 14071, introduced by Representative Hamilton Fish, Jr. of New York as “an article by Dr. Friedman published in Policy Review, the quarterly journal of The Heritage Foundation”, Congressional Record, June 7, 1979, p. 14069
    Checked against the sourceRead the original

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