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5 Cato J. 325 (1985-1986)
Privatization: A Strategy to Cute the Budget

handle is hein.journals/catoj5 and id is 327 raw text is: PRIVATIZATION: A STRATEGY TO CUT THE BUDGET Stuart Butler Introduction Even the most die-hard supporters of Ronald Reagan are waking up to a very unpleasant fact: He has not cut the federal budget-in real or nominal terms-and there is little reason to suppose that he will do so in the remaining years of his tenure at the White House. As a proportion of GNP, spending surged in the first three years of Reagan's initial term, ending any hope of even bringing spending down to the proportion of output consumed by Washington during the Carter big spending years, let alone achieving Reagan's origi- nal objective of a dramatic rollback of the federal sector. And even though the step-up in military outlays was clearly an element in the growth of government, that was factored into the original White House spending projections. The real problem has been a failure to win congressional approval for significant cuts in domestic social programs. Some social programs have certainly been cut. To judge from the media coverage, one might suppose that these cuts have been dra- conian. Far from it. Means-tested welfare spending actually increased over 7 percent between 1980 and 1984. More important, the entitle- ment programs benefiting middle-class Americans, including Social Security, Medicare, and federal retirement, expanded by more than 17 percent in real terms during Reagan's first term. This inability to turn the spending tide slowly transformed David Stockman from a can-do wunderkind into a frustrated and embittered cynic. Those who still urged a determined attack on entitlement Cato journal, Vol. 5, No. 1 (Spring/Summer 1985). Copyright @ Cato Institute. All rights reserved. The author is Director of Domestic Policy Studies at The Heritage Foundation. This paper is based on the author's recently published book Privatizing Federal Spending (New York: Universe Books, 1985). 325

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