How to Cut $100 Billion Without Really Crying

To listen to Democrats, they have new Republican House Speaker John Boehner right where they want him.

"The reality of governing is different than the reality of campaigning, and it's easier to throw out a number than it is to support it," David Axelrod, President Barack Obama's outgoing senior strategist, said last week.

The number, of course, is the $100 billion in cuts to federal spending that House Republicans have been discussing since they unveiled their 2010 campaign platform last September. Republicans in the House barely had time to adjust to their majority status before facing questions and skepticism about whether and how they can pull that off.

Boehner is going to win this one. Government spending has surged so much in the past two years that cutting $100 billion is a piece of cake.

First, let's understand exactly what Boehner and his team promised.

In their "Pledge to America," congressional Republicans wrote:

"With common-sense exceptions for seniors, veterans, and our troops, we will roll back government spending to pre- stimulus, pre-bailout levels, saving us at least $100 billion in the first year alone and putting us on a path to balance the budget and pay down the debt."

Would Americans really suffer if taxpayer-funded travel by federal employees was slashed? I doubt it.

Note the operative phrase, "the first year." Those now predicting defeat for Boehner--dare I say, rooting for it--make his task tougher by implying that the word "fiscal" precedes "year."

Months Gone By

The 2011 U.S. fiscal year began on Oct. 1, 2010, without a budget in effect, and with Democrats in charge. Since that time, the government has been funded by passage of continuing resolutions, maintaining expenditures at 2010 levels. When the current one expires on March 4, Republicans will have just seven months to make their mark on the 2011 budget.

But since Boehner didn't specify "fiscal year," Republicans simply can say that the starting pistol went off only last week. House Budget Committee Chairman Paul Ryan said as much: "We will be cutting $100 billion plus over this calendar year. If you think we're stopping shy of $100 billion in cuts, you got another think coming."

The budget hawks have tied a hand behind their backs by vowing not to cut spending for seniors, national defense and veterans. Still, with 12 months to accomplish it, the lift is pretty easy.

No Tears

The Heritage Foundation's Brian Riedl came up with an ambitious plan for cutting $343 billion in spending. I'll shoot for one-third of that target, with the added goal of avoiding some of his proposals--such as reducing Pell Grants and eliminating homeland-security funding to states--that would be most likely to lead to wailing in the echoing halls of the Capitol complex.

Here's how to do it.

First, it's finally time to take on farm subsidies, which topped $15.4 billion in 2009, according to the Washington-based Environmental Working Group.

Farm-state lawmakers in both parties, using the Agriculture Committee as their base, have long beaten back efforts to slash direct payments to growers. So why might now be different? Because of the unprecedented power that Boehner is investing in Ryan and the Budget Committee.

This doesn't mean America's farmers have to be left to fend for themselves.

Farmer Savings

Canada has experimented with a program that provides government matching funds for farmers' deposits into savings accounts that help them buffer their incomes against the ups and downs of farm prices. Such a program in the U.S. could achieve the objective of helping family farmers survive while enabling policy makers to withdraw billions of subsidies to big agriculture.

These changes, plus closing the U.S. Agriculture Department's Foreign Agricultural Service, would save about $19.5 billion. Not a bad start.

Next, target energy subsidies, which might make us feel good but make little economic sense. As I've written before, if Congress wants to encourage innovation in energy, it should tax carbon, not subsidize politically favored approaches such as ethanol. Riedl says cutting energy subsidies would save about $6.5 billion. (We could go after the tax-credit subsidies too, which technically aren't spending.)

Justice Department block grants--annual sums given to state and local governments, which largely get to decide how to spend them to achieve a certain goal--have also been targeted for cuts, and then saved, again and again. Here, too, it's high time to strike a blow for federalism: local law enforcement is, by definition, a local concern. That's $7.3 billion in savings.

Grounded Bureaucrats

Would Americans really suffer if taxpayer-funded travel by federal employees was slashed? I doubt it. Riedl counts $22.5 billion in savings from that and from cutting in half the cost of maintaining vacant federal properties. (How about selling some of them?)

The easiest cuts are to money not yet spent. There are various competing estimates of how much remains unspent from the great stimulus of 2009. I'll take the most conservative estimate, $12 billion--the biggest chunk of which would go toward high-speed rail, something that we all covet when visiting Europe or Asia but that would require a wholesale transfiguring of the American landscape that the U.S. simply will never do.

We're two-thirds of the way to $100 billion.

Just because we're all tired of hearing about alleged "waste, fraud and abuse" doesn't mean there isn't a lot of it. Riedl estimates that a $5 billion investment in updated computer systems could halve errors in government payments, saving $44 billion. That lifts our spending cuts to $111.8 billion: target achieved, with wiggle room to boot.

Of course, there's still the matter of my bill.

Kevin A. Hassett is a senior fellow and director of economic policy studies at AEI.

 

Photo Credit: iStockphoto/cogal

Also Visit
AEIdeas Blog The American Magazine
About the Author

 

Kevin A.
Hassett

What's new on AEI

Love people, not pleasure
image Oval Office lacks resolve on Ukraine
image Middle East Morass: A public opinion rundown of Iraq, Iran, and more
image Verizon's Inspire Her Mind ad and the facts they didn't tell you
AEI on Facebook
Events Calendar
  • 21
    MON
  • 22
    TUE
  • 23
    WED
  • 24
    THU
  • 25
    FRI
Monday, July 21, 2014 | 9:15 a.m. – 11:30 a.m.
Closing the gaps in health outcomes: Alternative paths forward

Please join us for a broader exploration of targeted interventions that provide real promise for reducing health disparities, limiting or delaying the onset of chronic health conditions, and improving the performance of the US health care system.

Monday, July 21, 2014 | 4:00 p.m. – 5:30 p.m.
Comprehending comprehensive universities

Join us for a panel discussion that seeks to comprehend the comprehensives and to determine the role these schools play in the nation’s college completion agenda.

Event Registration is Closed
Tuesday, July 22, 2014 | 8:50 a.m. – 12:00 p.m.
Who governs the Internet? A conversation on securing the multistakeholder process

Please join AEI’s Center for Internet, Communications, and Technology Policy for a conference to address key steps we can take, as members of the global community, to maintain a free Internet.

Event Registration is Closed
Thursday, July 24, 2014 | 9:00 a.m. – 10:00 a.m.
Expanding opportunity in America: A conversation with House Budget Committee Chairman Paul Ryan

Please join us as House Budget Committee Chairman Paul Ryan (R-WI) unveils a new set of policy reforms aimed at reducing poverty and increasing upward mobility throughout America.

Thursday, July 24, 2014 | 6:00 p.m. – 7:15 p.m.
Is it time to end the Export-Import Bank?

We welcome you to join us at AEI as POLITICO’s Ben White moderates a lively debate between Tim Carney, one of the bank’s fiercest critics, and Tony Fratto, one of the agency’s staunchest defenders.

No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.