By Kevin Hassett - Businessweek
Jan. 10 (Bloomberg) -- 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 its easier to throw out a number than it is to support it" David Axelrod President Barack Obamas 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 lets 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."
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 didnt 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 were 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 Foundations Brian Riedl came up with an ambitious plan for cutting $343 billion in spending. Ill 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.
Heres how to do it.
First its 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 doesnt mean Americas 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 Departments 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 Ive 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 arent 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 its high time to strike a blow for federalism: local law enforcement is by definition a local concern. Thats $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. Ill 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.
Were two-thirds of the way to $100 billion.
Just because were all tired of hearing about alleged waste fraud and abuse" doesnt mean there isnt 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 theres still the matter of my bill.
(Kevin Hassett director of economic-policy studies at the American Enterprise Institute is a Bloomberg News columnist. He was an adviser to Republican Senator John McCain in the 2008 presidential election. The opinions expressed are his own.)
