How to Cut $343 Billion from the Federal Budget
by Brian Riedl
Heritage.org
Abstract : Federal spending is on an
unsustainable path that risks disaster for America.
Runaway spending has increased annual federal budget
deficits to unprecedented levels, adding $2.7
trillion to the national debt in the past two years
alone. Each year’s huge federal deficit increases
the mountain of national debt borrowed from future
generations of Americans. Congress needs to cut
federal spending sharply and quickly. This paper
sets forth $343 billion in available spending cuts.
Over the past two years,
Congress has added $2.7 trillion to the national
debt, including a record $1.4 trillion deficit for
fiscal year (FY) 2009 and a $1.3 trillion deficit
for FY 2010.[1]
If Congress does nothing and simply continues
existing taxing and spending policies, federal
deficits will grow, reaching a projected $2 trillion
deficit in just 10 years—and even that assumes a
return to peace and prosperity.[2]
America cannot live with
such deficits interminably. Deficits mortgage the
livelihoods of future generations of Americans and
ultimately put U.S. economic growth, stability, and
reliability at risk.
Soaring spending drives
these dangerous deficits. By 2020, federal spending
is set to soar to 26 percent of the gross domestic
product (GDP), after having averaged 20 percent
after World War II. Revenues will likely return to
their post–World War II average of 18 percent of GDP
by 2020, even if the 2001 and 2003 tax cuts are made
permanent.[3]
Thus, given current spending and taxing policies,
spending is clearly the variable that drives up the
deficits.[4]
To reduce deficits, Congress must cut spending.
The costs of federal
entitlement programs—Social Security, Medicare, and
Medicaid—and interest on the national debt will
drive future deficits, and Congress must promptly
and carefully decide how best to reduce those costs.
However, entitlement reforms will take time, and
spending cuts cannot wait. Congress needs to start
cutting spending now.
Table 1 sets forth $343
billion in available spending cuts for the new
Congress to consider when it takes up the federal
budget for FY 2012. Many of the cuts fall into six
areas:
-
Empowering state and local governments. Congress should focus the federal government
on performing a few duties well and allow the
state and local governments, which are closer to
the people, to creatively address local needs in
areas such as transportation, justice, job
training, and economic development.
-
Consolidating duplicative programs. Past Congresses have repeatedly piled
duplicative programs on top of preexisting
programs, increasing administrative costs and
creating a bureaucratic maze that confuses
people seeking assistance.
-
Privatization.
Many current government functions could be
performed more efficiently by the private
sector.
-
Targeting programs more precisely. Corporate welfare programs benefit those who
do not need assistance in the American free
enterprise system. Other programs often fail to
enforce their own eligibility requirements.
-
Eliminating outdated and ineffective programs. Congress often allows the federal government
to run the same programs for decades, despite
many studies showing their ineffectiveness.
-
Eliminating waste, fraud, and abuse. Taxpayers will never trust the federal
government to reform major entitlements if they
believe that the savings will go toward “bridges
to nowhere,” vacant government buildings, and
Grateful Dead archives.[5]
Table 1: Spending Cuts for FY 2012
(in millions of dollars)
Agriculture |
||
$15,000 |
Replace farm subsidies
with Farmer Savings Accounts and improved
crop insurance. |
|
$2,033 |
Eliminate the Foreign
Agriculture Service. |
|
$1,500 |
Merge all four
agriculture outreach and research agencies
and cut their budget in half. |
|
$1,000 |
Fund the Food Safety and
Inspection Service with user fees. |
|
Commerce |
||
$500 |
Eliminate business
subsidies from the National Institute of
Standards and Technology. |
|
Community Development |
||
$6,000 |
Eliminate the Community
Development Block Grant program. |
|
$598 |
Eliminate the Rural
Utilities Service. |
|
$523 |
Eliminate the Economic
Development Administration. |
|
$480 |
Eliminate NeighborWorks
America (formerly the Neighborhood
Reinvestment Corporation). |
|
$200 |
Consolidate the Rural
Housing and Development Programs and convert
them into block grants. |
|
$73 |
Eliminate the Appalachian
Regional Commission. |
|
$48 |
Eliminate the Denali
Commission. |
|
$31 |
Eliminate the Minority
Development Business Agency. |
|
$8 |
Eliminate the Delta
Regional Authority. |
|
Education |
||
$8,000 |
Return Pell Grants to
their 2009 funding level of $24 billion,
which is still double the 2007 level. |
|
$2,000 |
Trim Head Start by $2
billion and convert it into vouchers. |
|
$2,000 |
Scale back the Education
Department bureaucracy. |
|
$1,500 |
Eliminate dozens of small
and duplicative education grants. |
|
$298 |
Eliminate state grants
for Safe and Drug-Free Schools and
Communities. |
|
Energy and the
Environment |
||
$6,500 |
Reduce energy subsidies
for commercialization and some research
activities. |
|
$600 |
Block grant and devolve
Environmental Protection Agency grant
programs. |
|
$200 |
Restructure the Power
Marketing Administrations to charge
market-based rates. |
|
$63 |
Eliminate the Science to
Achieve Results Program. |
|
Government Reform |
||
$44,000 |
Halve federal program
payment errors by 2012, especially by
reducing Medicare errors and earned income
tax credit errors. |
|
$20,000 |
Rescind unobligated
balances after 36 months. |
|
$12,500 |
Halve the $25 billion
spent to maintain vacant federal properties. |
|
$10,000 |
Cut the federal employee
travel budget to $4 billion (half of FY 2000
spending). |
|
$3,000 |
Freeze federal pay until
it can be reformed. |
|
$1,000 |
Suspend acquisition of
federal office space. |
|
$600 |
Trim the federal vehicle
fleet by 20 percent (a reduction of 100,000
vehicles). |
|
$300 |
Cut the House and Senate
budgets back to the 2008 level of $2.2
billion. |
|
$215 |
Eliminate the
Presidential Election Campaign Fund. |
|
$100 |
Tighten controls on
federal employee credit cards and cut down
on delinquencies. |
|
$70 |
Require federal employees
to fly coach on domestic flights. |
|
Health Care |
||
$6,200 |
Reform Medigap. |
|
$5,000 |
Repeal Obamacare (larger
savings in later years). |
|
$3,700 |
Require Medicare home
health co-payments. |
|
$673 |
Eliminate the Maternal
and Child Health Block Grant. |
|
$414 |
Eliminate Health
Professions grants. |
|
$327 |
Eliminate Title X Family
Planning. |
|
$150 |
Eliminate the National
Health Service Corps. |
|
$98 |
Repeal Rural Health
Outreach and Flexibility grants. |
|
Homeland Security |
||
$2,700 |
Eliminate most homeland
security grants to states and allow states
to finance their own programs. |
|
Income Security |
||
$500 |
Better enforce
eligibility requirements for food stamps. |
|
Interior |
||
$1,500 |
Open the coastal plain of
the Arctic National Wildlife Refuge to
leasing. |
|
$200 |
Suspend federal land
purchases. |
|
International |
||
$2,636 |
Eliminate the Development
Assistance Program. |
|
$625 |
Eliminate the State
Department’s education and cultural exchange
programs. |
|
$321 |
Eliminate the
International Trade Administration’s trade
promotion activities or charge the
beneficiaries. |
|
$183 |
Eliminate the Democracy
Fund. |
|
$68 |
Eliminate the
International Trade Commission and transfer
oversight of intellectual property rights to
the Treasury Department. |
|
$56 |
Eliminate the Trade and
Development Agency. |
|
$29 |
Eliminate the Overseas
Private Investment Corporation. |
|
$19 |
Eliminate the East–West
Center. |
|
$17 |
Eliminate the United
States Institute of Peace. |
|
$2 |
Eliminate the
Japan–United States Friendship Commission. |
|
Justice |
||
$7,334 |
Eliminate all Justice
Department grants except those from the
Bureau of Justice Statistics and the
National Institute of Justice, |
|
$398 |
Eliminate the Legal
Services Corporation. |
|
$32 |
Eliminate the Justice
Department’s Community Relations Service. |
|
$30 |
Eliminate the duplicative
Office of National Drug Control Policy. |
|
$26 |
Reduce funding for the
Justice Department’s Civil Rights Division
by 20 percent |
|
$4 |
Eliminate the State
Justice Institute. |
|
Labor |
||
$4,300 |
Eliminate failed federal
job training programs. |
|
$2,000 |
Eliminate the ineffective
Job Corps. |
|
$576 |
Eliminate the Senior
Community Service Employment Program. |
|
National Science
Foundation
|
||
$1,700 |
Reduce National Science
Foundation funding to 2008 levels. |
|
$86 |
Eliminate National
Science Foundation spending on elementary
and secondary education. |
|
Transportation |
||
$45,000 |
Devolve the federal
highway program and most transit spending to
the states. |
|
$1,900 |
Privatize Amtrak. |
|
$1,009 |
Eliminate grants to large
and medium-sized hub airports. |
|
$554 |
Eliminate the Maritime
Administration. |
|
$125 |
Eliminate the Essential
Air Service Program. |
|
Treasury |
||
$26,646 |
Eliminate the additional
child refundable credit. |
|
$103 |
Eliminate the Community
Development Financial Institutions Fund. |
|
Veterans |
||
$2,500 |
Cap increases in
Department of Veterans Affairs health care
spending. |
|
$1,930 |
Reduce Veterans’
Disability Compensation to account for
Social Security Disability Insurance
payments. |
|
Cross-Agency and Other |
||
$60,000 |
Repeal unspent stimulus
spending. |
|
$8,000 |
Switch to using the
“Superlative CPI” in funding calculations. |
|
$6,000 |
Repeal the Davis–Bacon
Act. |
|
$2,250 |
Eliminate Federal
Communications Commission funding for school
Internet service. |
|
$2,000 |
Ban project labor
agreements on all federally funded
construction projects. |
|
$1,000 |
Eliminate the Small
Business Administration, which unnecessarily
intervenes in free markets. |
|
$736 |
Eliminate the National
Community Service programs, such as
AmeriCorps. |
|
$253 |
Eliminate the Institute
of Museum Services and Library Services. |
|
$140 |
Eliminate the National
Endowment for the Humanities. |
|
$133 |
Eliminate the National
Endowment for the Arts. |
|
$61 |
Eliminate Army Corps of
Engineers funding for beach replenishment
projects. |
|
$10 |
Eliminate the Commission
of Fine Arts. |
|
$8 |
Eliminate the National
Capital Planning Commission. |
|
$5 |
Eliminate the Advisory
Council on Historic Preservation. |
|
Total |
||
$343,207 million |
Implementing the $343
billion in recommended cuts listed in Table 1 would
reduce the deficit by somewhat less than $343
billion because some recommendations would also
reduce tax revenues. For example, devolving the
federal highway program to states would also mean
devolving the gas tax, and repealing the Patient
Protection and Affordable Care Act (Obamacare)[6]
would repeal its tax increases.
Conclusion
Almost all of the proposed
cuts in federal spending will provoke strong
objections from constituencies that benefit from
having Members of Congress give them taxpayer money
taken from someone else. Yet the difficulties caused
by each of these cuts should be measured against the
status quo option of doubling the national debt over
the next decade, risking an economic crisis, and
drowning future generations in taxes.
Governing involves
difficult choices, and Congress simply cannot
continue to court long-term disaster for all merely
to avoid short-term difficulties for some.
—Brian M. Riedl is Grover
M. Hermann Research Fellow in Federal Budgetary
Affairs in the Thomas A. Roe Institute for Economic
Policy Studies at The Heritage Foundation.
Appendix
Additional Reading on Spending Recommendations
1. Congressional Budget
Office, Budget Options, Vol. 1, Health
Care, December 2008, at
http://www.cbo.gov/doc.cfm?index=9925
(October 19, 2010).
2. Congressional Budget
Office, Budget Options, Vol. 2, August 2009,
at
http://www.cbo.gov/doc.cfm?index=10294
(October 19, 2010).
3.
Brian M. Riedl,
“50 Examples of Government Waste,” Heritage
Foundation WebMemo No. 2642, October 6, 2009,
at
http://www.heritage.org/Research/Reports/2009/10/50-Examples-of-Government-Waste.
4. Republican Study
Committee, “A Balanced Budget for America,” May
2010, at
http://rsc.tomprice.house.gov/UploadedFiles/RSC_FY11_BUDGET_BOOKLET—FINAL.pdf
(October 19, 2010).
5. Paul Weinstein Jr. and
Katie McMinn Campbell, “Return to Fiscal
Responsibility II,” Progressive Policy Institute
Policy Report, April 2007, at
http://www.ppionline.org/documents/Fiscal_Responsibility_04302007.pdf
(October 19, 2010).
6. Scott A. Hodge, ed.,
Balancing America’s Budget (Washington, D.C.:
The Heritage Foundation, 1997).
7. Brian M. Riedl, “How to
Get Federal Spending Under Control,” Heritage
Foundation Backgrounder No. 1733, March 10,
2004, at
http://www.heritage.org/Research/Reports/2004/03/How-to-Get-Federal-Spending-Under-Control.
8. David B. Muhlhausen,
“Why Would COPS 2.0 Succeed When COPS 1.0 Failed?”
Heritage Foundation WebMemo No. 1903, April
28, 2008, at
http://www.heritage.org/Research/Reports/2008/04/Why-Would-COPS-20-Succeed-When-COPS-10-Failed.
9. David B. Muhlhausen,
“Congress Spends Billions on Ineffective
Job-Training Programs,” Heritage Foundation
Backgrounder No. 1597, October 1, 2002,
at
http://www.heritage.org/Research/Reports/2002/10/Congress-Spends-Billions-on-Ineffective-Job-Training-Programs.
10.
Robert E. Moffit, “The Prospects for Ending
Obamacare: Learning from Health Policy History,”
Heritage Foundation Backgrounder No. 2424,
June 21, 2010, at
http://www.heritage.org/Research/Reports/2010/06/The-Prospects-for-Ending-Obamacare-Learning-from-Health-Policy-History.
11. Matt A. Mayer, “An
Analysis of Federal, State, and Local Homeland
Security Budgets,” Heritage Foundation Center for
Data Analysis Report No. CDA09–01, March 9,
2009, at
http://www.heritage.org/Research/Reports/2009/03/An-Analysis-of-Federal-State-and-Local-Homeland-Security-Budgets.
12. Ronald Utt, “Will a
Bigger Role for States Improve Transportation Policy
Performance?” in Wendell Cox, Alan Pisarski, and
Ronald D. Utt, eds., 21st Century Highways
(Washington, D.C.: The Heritage Foundation, 2005).