Originally published on Substack. 

As state legislative sessions move deeper into spring, the contrast in fiscal policy is getting harder to ignore.

Some states are proving that disciplined budgeting can create room for lasting tax relief and stronger growth. Others are still trapped in the usual cycle of overspending, budget gimmicks, and late-session chaos.

That divide matters because sustainable budgets are not an accounting exercise. They are the difference between letting families and businesses keep more of what they earn or handing more of it over to government.

The best benchmark for a responsible budget is simple: keep government spending growth at or below the rate of population growth plus inflation. That is the most reasonable measure of the average taxpayer’s ability to pay for government spending without being taxed into poverty or priced out of prosperity.

When government grows faster than that, it is taking more resources than the private economy can comfortably support.
The ATR Sustainable Budget Project still offers one of the best ways to think about that framework, even though its full update is not yet complete and should be refreshed for each state soon.

The most recent available data still make the point clearly: from 2016 to 2025, aggregate state spending excluding federal transfers rose 65.8%, while the sustainable benchmark rose only 32.4%.

Had states held spending to that ceiling, they would have spent $419 billion less in 2025 alone and $1.8 trillion less cumulatively over the decade.

When state and federal overspending are combined, Americans lost more than $20.8 trillion in excess taxes and debt over that period.

That is the real story too many politicians still refuse to tell. We do not have a revenue problem. We have a spending problem.

The Benchmark Matters

A sustainable budget is not anti-government. It is anti-excess.

If spending grows only with population growth plus inflation, government can still do core functions while leaving more room for production, investment, hiring, and higher wages in the private sector.

Once spending outruns that benchmark, lawmakers are effectively choosing bureaucracy over prosperity.

As Bastiat taught, the biggest losses are often the unseen ones: the business not opened, the job not created, the home not purchased, the family budget quietly squeezed.

West Virginia Chose Relief

West Virginia offers one of the better examples of what fiscal discipline can produce. Governor Patrick Morrisey recently signed about $230 million in annual tax relief, including a 5% across-the-board personal income tax cut effective for the 2026 tax year.

The package also aligned West Virginia’s tax code more closely with permanent provisions of the federal Tax Cuts and Jobs Act, including bonus depreciation, larger child and dependent care benefits, and better treatment for research investment.

That is what happens when lawmakers create room to return money to the people who earned it instead of treating every extra dollar as government’s to keep.

New York Chose Drift

Then there is New York, where lawmakers passed their second one-week budget extender this April while fighting over a proposed budget of at least $263 billion.

Governor Hochul has not delivered a single on-time budget since taking office in 2021, and last year’s budget was not finished until May 8, the latest since 2010.

New York’s problem is not that it lacks revenue. Its problem is that without a real spending ceiling, every budget cycle becomes a feeding frenzy for special interests. When there are no guardrails, delay and dysfunction are not surprises. They are the predictable outcome.

Why Padding Matters

The most important long-run lesson is this: permanent tax relief requires budget padding.

When lawmakers keep actual spending growth meaningfully below the sustainable ceiling, they create a structural surplus.

That surplus is not “new money” for politicians to spend. It is tax revenue the government collected but did not need. The honest answer is to return it.

That is the logic behind frameworks like the South Carolina Responsible Budget, which lays out a path to permanent income-tax elimination through spending restraint and ratchet-down tax relief. That is how states move from temporary tax cuts to lasting reform.

Three Takeaways for Policymakers

1. Population growth plus inflation is the right ceiling for a fiscal rule at every level of government.

Any spending growth above that benchmark is government taking more than the average taxpayer can sustainably support.

2. Overspending is costly and measurable.

The latest available ATR budget data still show states overspending by $419 billion in 2025 alone relative to the sustainable benchmark, even as the full project update remains pending.

3. Discipline creates room for tax relief.

West Virginia and Georgia are showing how restraint can support real tax cuts, while New York keeps showing what happens when there are no spending guardrails.

The states that embrace sustainable budgeting now will be the ones attracting workers, investment, and families in the years ahead. The ones that do not will keep passing extenders, growing government, and wondering why prosperity keeps leaving.

Originally published on Substack. 

When even Washington starts admitting the math no longer works, you know the problem is serious.

That is why US House Budget Chairman Jodey Arrington’s recent remarks matter. He said plainly that the old fiscal playbook is broken. In 2017, he noted, the savings needed to balance the budget in 10 years were about $6 trillion. Now they are closer to $16 trillion.

He is right that the country is in dangerous territory. He is right that deficits and debt relative to GDP matter. And a 3 percent deficit-to-GDP framework is certainly better than the denial and drift we have now.

But let’s be honest about the deeper problem. Washington does not have a tax revenue problem. It has a spending problem. That is the whole ballgame.

Spending Comes First

As I have noted in my work on Responsible State Budgets Across the U.S., government spending is the problem because it comes first. Debt comes after. Inflation comes after. Pressure for higher taxes comes after.

Politicians spend too much, then act surprised when the bill shows up. And the bill is here.
​
Federal spending was $4.8 trillion in 2019. By fiscal year 2025, it had climbed to $7 trillion. That is not normal growth. That is a spending binge.

My broader budget work shows the same pattern over a longer stretch: from 2015 to 2024, federal spending rose 88.0 percent, while population growth plus inflation rose just 27.6 percent. Had Congress simply restrained spending to that sustainable benchmark, Washington would have spent $2.2 trillion less in 2024 alone.

Why the Rule Matters

That is why I recommend a strict spending limit rather than a deficit ratio.

A 3 percent deficit target can tell you something is wrong. It is a useful warning light. But it does not tell you how Washington gets there.

Politicians can chase a lower budget deficit through higher taxes, rosy assumptions, gimmicks, or inflation doing some of the work for them. That may improve a ratio on paper while leaving the federal government too large and the private economy too burdened.

A hard spending limit tied to population growth plus inflation is better because it goes straight at the source of the problem: overspending. It should also be treated as a ceiling, not a target. That distinction matters more than most people realize.

Friedman and Alesina
​
Milton Friedman understood it well. He warned that the true burden of government is what it spends, not merely how it is financed. Higher taxes do not solve the real problem if they simply make room for higher spending later.

That is exactly the danger with making a deficit ratio the main goal. You can lower the deficit and still lose the larger fight for limited government.

The evidence points the same direction. Alberto Alesina’s research found that when countries had to repair their finances, plans built more on spending cuts generally performed better than those built more on tax increases.

Tax-based consolidations tended to be more recessionary. Spending-based restraint was more effective at stabilizing debt and less damaging to growth.

That should not be surprising. If you are trying to restore prosperity, you do not do it by punishing more work, saving, and investment. You cut spending.

The Fiscal Gap

By this framework, federal spending today should be at most $5.5 trillion, not above $7 trillion. Washington is overspending by roughly $1.5 trillion every year relative to a sustainable budget path. That is my estimate based on the official spending totals and the population-plus-inflation benchmark, and the direction is unmistakable.

The federal government has grown far faster than the country’s ability to support it.

Families Pay the Price

Families have been paying for that through inflation. The latest Consumer Price Index shows prices up 2.4 percent over the year in February 2026, with food prices up 3.1 percent and food away from home up 3.9 percent.

The PCE price index, which the Fed prefers, was up 2.8 percent over the year in January, with core PCE up 3.1 percent. Inflation is off its peak, but that is not the same as saying the damage is gone.

Families still feel it every time they buy groceries, go out to eat, or try to stretch a paycheck.

Debt and Distortion

The debt story is uglier still. The latest Congressional Budget Office outlook projects a federal deficit of $1.9 trillion in 2026, rising to $3.1 trillion by 2036. Debt held by the public rises from about 101 percent of GDP to 120 percent over that period. Net interest costs alone rise from $1.0 trillion to $2.1 trillion.

More and more of the federal budget will go simply to financing yesterday’s excesses.
​
And then there is the Federal Reserve’s balance sheet. As of March 25, 2026, the Fed’s balance sheet of $6.7 trillion, including $4.4 trillion in Treasury securities and about $2. trillion in mortgage-backed securities.

The Fed’s own research shows that holdings like these put downward pressure on longer-term interest rates. In plain English, the central bank has helped make Washington’s borrowing binge look cheaper than it really is.
​
That error cannot last forever.

I do not know the exact form of the reckoning. It could come through higher long-term rates, weaker growth, renewed inflation pressure, or some ugly combination of all three.

But governments do not outrun arithmetic forever, and central banks do not permanently repeal market discipline.

Three Takeaways for Policymakers

1. A deficit target is better than drift, but it is not enough.
Use a 3 percent deficit-to-GDP goal as a warning light if you want. Use a spending limit as the steering wheel.

2. Spending is the real problem.
A hard cap tied to population growth plus inflation restrains government at its source and avoids the trap of trying to “fix” deficits with higher taxes.

3. Waiting is the dangerous choice.
With debt, inflation, and the Fed’s still-bloated balance sheet all pointing in the same direction, the prudent move is to shrink spending now before markets impose discipline later.

The Bottom Line

The federal government is too big. It spends too much. It borrows too much. And it has been shielded for too long by a central bank that softened the warning signs Washington should have been forced to confront years ago.

That cannot continue forever.

We should prepare now. Shrink government spending. Adopt a hard spending limit. Get our fiscal house in order while we still have a choice.

Originally published on Substack.

President Trump’s State of the Union speech of a record 108 minutes last night had something Washington too often forgets: confidence.
​
After years of Americans being told to lower expectations, it was refreshing to hear a president speak as if this country can still build big things, lead the world, and win the future.

That tone matters. Americans are tired of being scolded by technocrats while their bills climb. They want to hear that the country is capable again.

But here’s the hard truth: a confident tone is not a governing strategy.

If the goal is rising living standards, the next step has to be less government interference, not new versions of it.

Too much of what passes for “action” in Washington is still about pulling levers, picking winners, adding controls, and expanding federal “help” that quietly raises prices and limits choice.

Classical liberals, like me, have warned about this for a reason: the levers don’t make people freer. They make people dependent.

The best version of this presidency—and the best version of America—is a future-first agenda with one true north star: let people prosper.

If you want the whole framework in one place, start with my policy guide.

Keep America leading on innovation

The speech signaled that the United States should stay on offense in innovation, especially on AI.

That is the right instinct. America doesn’t win by copying Europe’s regulatory mindset.

We win by letting entrepreneurs scale, compete, and deliver products that make life better and cheaper. That consumer-driven approach is why I’ve pushed an innovation-first approach instead of politicized crackdowns on success.

Call out broken systems—but fix them the market way

It’s also good to acknowledge what voters already know: the economy isn’t “rigged by accident.”

Too many industries are distorted by government-created barriers and entrenched middlemen.

Calling problems out is useful. The danger is when the “fix” becomes another layer of bureaucracy that never goes away. Government rarely shrinks itself. It multiplies.

What was missing: the future-first, classical liberal playbook

1) Spending discipline should be the opening line, not an afterthought

Washington cannot keep running up massive tabs and pretend it isn’t part of the cost-of-living squeeze.

Excessive spending distorts markets, pushes up borrowing, raises interest costs, and entrenches inflation expectations. It also turns every other priority into a gimmick fight because lawmakers refuse to address the root.

This is why the real threat is not that Americans keep too much of their own money. The real threat is that government spends too much of everyone’s money.

That’s the core point behind spending-driven debt and why sustainable budgeting needs to be the baseline.

If you want a practical model, look at how fiscal guardrails work in the states and why they matter for stability.

I’ve laid that out in sustainable budgeting and in the case for a serious federal reset like the responsible budget.

A future SOTU should say this plainly: we will cut and cap federal spending growth, eliminate budget gimmicks, and make prosperity possible again by letting the private economy breathe.

2) Tariffs are taxes—even when they sound tough

A future-first agenda doesn’t tax Americans through tariffs and call it strategy. Tariffs are taxes. Taxes raise prices. They hit families at checkout and hit producers through higher input costs. Then politicians act shocked when prices rise and growth slows.

If the goal is abundance, you don’t choke supply chains with border taxes. You cut domestic barriers to production. That’s why I keep hammering the simplest truth in economics: tariffs raise costs.

I’ve also warned how tariff escalations create uncertainty and squeeze working households in trade-war reality and why politicians keep failing the basics of Econ 101.

A pro-worker trade policy is not “tax the things you buy.” It’s “make it easier to produce here”—permitting reform, energy abundance, lower regulatory costs, and predictable rules.

3) Tax cuts should be broad, neutral, and sustainable—not swapped for hidden taxes

Broad-based income and corporate tax cuts can lift work, investment, and wages. The key is broad-based. Targeted carveouts and special breaks aren’t prosperity. They’re politics.

But even good tax cuts fail when spending restraint is absent.

If Washington refuses to control spending, tax cuts become temporary and debt becomes permanent. That’s why tax reform without restraint isn’t reform—it’s a short-lived headline.

And no, tax cuts should not be “paid for” with higher tariffs. That’s not relief.

A serious future SOTU would commit to a simple order of operations:

• cut and cap spending growth first,
• then deliver broad-based tax relief,
• and keep the base broad so everyone wins.

4) Healthcare reform should empower patients, not import price controls

Healthcare is expensive because patients aren’t treated like customers. Prices are hidden, incentives are distorted, and middlemen dominate the rails.

That’s why the continued attraction to “Most Favored Nation” drug pricing is a red flag.

MFN is price control—importing foreign government benchmarks into U.S. pricing.

Price controls may look like “savings” on paper, but the real cost shows up later as weaker incentives to innovate, slower launches, fewer trials, and less access over time.

I’ve been direct about the damage from MFN price-setting.

If the goal is to expand access and lower costs, we should push competition, transparency, faster approvals, and direct purchasing models that increase consumer choice—not bureaucratic formulas that reduce the incentive to develop tomorrow’s cures.

The same principle applies to PBMs: the middleman problem is real, but bans and mandates can backfire if incentives stay broken.

That’s why I’ve argued that PBM bans backfire and why reforms should focus on restoring market pressure, not replacing one distortion with another.

5) Housing needs supply—not scapegoats, caps, or punishment taxes

Housing may be the clearest example of the difference between serious policy and political theater.

Housing is expensive because we didn’t build enough for decades. Zoning limits, permitting delays, and process abuse restrict supply. Then politicians look for villains instead of looking in the mirror.

Restricting institutional investors won’t build a single home. Punitive taxes and ownership caps shrink rental options, discourage rehab, and risk rushed sell-offs that displace renters and destabilize neighborhoods.

The real solution is to build, build, build: streamline permitting, reduce zoning barriers, speed up approvals, and stop turning housing into a legal obstacle course.

My market-first framework is in expanding supply.

And the truly “future” housing reform Washington avoids is unwinding federal distortions that socialize risk and politicize credit.

That includes finally privatizing the mortgage giants so housing finance is driven by market signals rather than permanent federal dominance.

6) Sound money means respecting price signals—including interest rates

Interest rates are prices. Artificially forcing them down is how you set up the next bust.

When policymakers manipulate the price of credit, they create malinvestment, bubbles, and painful corrections later.

I’ve written about the Fed’s role in boom-and-bust dynamics and the distortions created by monetary manipulation—how easy money changes investment patterns before reality catches up.

If you want the clearest articulation of the mechanism, see the argument about the Fed’s boom-bust cycles and why inflation pessimism is driven by policy failure, not public “misunderstanding,” in my work on inflation and rate hikes.

A future SOTU should commit to sound money principles and fiscal restraint so rates are not constantly being used as a political pressure valve.

7) Family policy should build independence, not dependency

Washington loves programs that sound pro-family and end up being pro-bureaucracy. “Accounts,” credits, subsidies, and new federal benefit pipelines might poll well, but they often expand dependency and deepen the tax-and-transfer state.
A better family agenda is pro-growth: higher real wages through productivity, lower prices through competition, and more opportunity through less red tape.

That’s why I’ve pushed back on federal social engineering through the tax code and gimmicks that avoid the spending problem.

My conversation on the risk of Washington-designed “Trump accounts” is captured in fiscal reality.

The next SOTU I want to hear: a true north star “Let People Prosper” address

If I could write next year’s State of the Union for a president who wants a booming America, it would be a forward-looking abundance agenda—not a nostalgia tour, not a grievance list, not a government expansion dressed up as toughness.

Here is what I would want to hear—policy by policy—built around a simple principle: the federal government should stop making life harder and start getting out of the way.

1) A binding commitment to spending cuts and limits

Not “we’ll find savings.” Not “we’ll cut waste.”

A real commitment to spending cuts and future growth limits that keep government from growing faster than average taxpayer’s ability to fund it.

A pledge to end budget gimmicks, stop treating “emergencies” as permanent, and set a path to fiscal sustainability. The blueprint is in the policy guide and the spending logic is in the case for fiscal sanity.

2) Broad-based tax relief that lasts because spending falls

I want a president to say: we will cut tax rates broadly and keep the base broad.

But we will not fund tax relief with hidden tax hikes like tariffs. We will fund it by shrinking the growth of government itself.

That’s how you deliver lasting relief rather than a temporary sugar high. The warnings are already clear in spending-first reform and durable tax reform.

3) A real abundance plan: deregulate production across the economy

A future SOTU should treat regulation like what it often is: a hidden tax that raises prices, blocks competitors, and protects incumbents.

That includes:

• permitting reform so energy, housing, and infrastructure can be built,
• faster approvals for innovation,
• and rolling back rules that restrict supply.

This is what pro-growth leadership looks like: not micromanaging prices, but freeing the economy to produce more.

4) A clean break from tariff-tax politics

I would want to hear a simple pledge: we will not raise tariffs to “solve” domestic problems.

We will compete through productivity, innovation, and free exchange. We will stop using emergency powers to raise taxes without accountability.

That’s the principle behind my argument that ending tariffs is pro-worker and why policymakers must stop failing basic economics.

5) Healthcare reform that makes patients the customers again

The future SOTU should reject price controls outright—MFN included—and instead commit to reforms that expand competition:

• transparent pricing,
• portable, consumer-driven options,
• direct purchasing,
• and faster, cheaper pathways for innovation.

If you want the cautionary tale, see price-control harm. If you want the middleman warning, see why bans fail.

6) Housing reform focused on supply—and federal distortions

I want a SOTU that says: we will stop blaming investors and start building homes.

Federal policy should encourage supply, not choke it. States and localities should streamline permitting and stop weaponizing zoning.

And Washington should stop doubling down on a government-directed mortgage system that distorts incentives. That means ending permanent federal dominance and restoring market pricing in housing finance.

7) Sound money and a Fed that stops fueling cycles

A future SOTU should acknowledge a reality too many leaders avoid: boom-and-bust cycles aren’t acts of God. They’re often policy-driven.

A better economy requires predictable rules, fiscal restraint, and monetary sanity.

That includes getting serious about how credit manipulation fuels cycles—see the case for limiting the Fed’s monetary weapon.

8) A freedom-first governance pledge

Finally, I want to hear the simplest promise a leader can make to restore trust: government will serve the people by doing less—protecting rights, enforcing the rule of law, and leaving voluntary exchange alone.

That’s the only sustainable path to prosperity, the only path compatible with a free society, and the only path that keeps the American experiment worth inheriting.

Call to action

If you want policy that is serious about prosperity and honest about tradeoffs, subscribe and follow my work at Ginn Economic Consulting at vanceginn.com.

I’ll keep offering the true north star Washington rarely does: let people prosper—with more competition, more supply, and less government in the way.

​Five-point review for lawmakers

• Cap federal spending growth and adopt sustainable budgets that make reforms last.
• Reject tariff hikes and other hidden taxes that raise prices for families and producers.
• Cut tax rates broadly only alongside spending restraint, not tax swaps.
• Stop healthcare price controls like MFN and push competition and transparency.
• Fix housing by building and expanding supply, not scapegoating investors.

Thank you for reading. Subscribe today.

​Affordability may be the defining word of 2026. After years of elevated inflation, a housing affordability crisis, and signs of softness in the labor market, many Americans are feeling squeezed—and looking for answers. You can expect this issue to loom large at the polls in November. That’s why state and federal lawmakers should confront one of the central drivers of this “unaffordable” economy: fiscal irresponsibility. Persistent overspending helps fuel inflation and adds uncertainty that holds back growth. It’s time to get serious about sustainable budgeting and pro-growth policies that expand opportunity—so Americans can find well-paid jobs, secure affordable housing, and afford daily life again.

In today’s This Week’s Economy, I take an honest look at the latest economic data—even where it challenges media narratives. We’ll also examine the risks of a rising push for social media bans and why energy abundance is essential to powering our technological future.

Let’s dive in! Catch the full episode on YouTube, Apple Podcast, or Spotify, and visit my website for more information.