The WasteWatcher: The Staff Blog of Citizens Against Government Waste

CAGW's Prime Cuts Hones in On Programmatic Waste

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


Every year, Citizens Against Government Waste produces Prime Cuts, a comprehensive list of spending cuts that could be used by Congress to reduce spending and keep the budget under the Budget Control Act spending caps.  Here are just a few of the programs CAGW includes in its Prime Cuts report.

Eliminate the Rural Utilities Service

1-Year Savings: $9.6 billion

5-Year Savings: $48.1 billion

One big example of a government program that has outlived its usefulness is the Rural Electrification Administration (REA) that was established in 1935.  The program’s purpose, created during the New Deal, was to bring electricity to America’s rural communities.  In the 1930s, approx 90 percent of urban dwellers has electricity but only 10 percent of farmers did.  Back then, it may have served a purpose. But it is pretty hard to find anywhere in America where basic utilities do not exist.  But like many government programs, the REA never died.

One way to give a government program is to give it a new name.  In 1994, it was relabeled the Rural Utilities Service (RUS).  In typical corporate welfare fashion, its new purpose is to update and expand utility services in rural areas, such as with the Broadband Access Program (BAP) that was created by Congress in the 2002 Farm Bill.  BAP’s purpose is to provide loans to bring internet service to underserved and un-served communities, which is defined at communities with less than 20,000 citizens.

Many of their programs are extremely wasteful and considering how far we have come with internet service, this could easily be done by the private sector without government subsidies.

The Office of the Inspector General at the Department of Agriculture (USDA) has raised concerns in audits and investigations about the amount of money being spent on broadband by the RUS.  Here are some examples mentioned in testimony before Congress.

RUS made loans to broadband providers serving 148 communities within 30 miles of cities with 200,000 or more inhabitants, including Chicago and Las Vegas.

RUS approved 34 of 37 applications for providers in areas where one or more private broadband operators already offered service.

RUS approved only three applications to areas that were completely without preexisting broadband service.

To make matters worse, in 2009 stimulus package, the American Recovery and Reinvestment Act, RUS received $2.5 billion to further expand broadband, a 700 percent increase in the program’s annual budget and created the Broadband Imitative Program (BIP).  The IG expressed concern in their 2011 testimony about the sizable increase in funding considering the problems they have found at RUS in prior audits.

This April, the IG released another report entitled, “American Recovery and Reinvestment Act of 2009 (ARRA) – Broadband Initiatives Program – Pre-Approval Controls.”  They found the following:

RUS approved BIP projects that overlap preexisting RUS-subsidized projects.

RUS approved BIP projects that did not comply with published project completion timeframes.

While RUS followed ARRA’s language, rural America could receive additional benefit from an increased focus of funds on rural residents lacking access to broadband.

If I was to guess sounds like the same thing is happening as before, only with more money.  Perhaps it is time to save taxpayers $9.6 billion.  Sequester that!

Eliminate the Export-Import Bank (Ex-Im Bank) and the

Overseas Private Investment Corporation (OPIC)

1-Year Savings: $70 billion

2-Year Savings: $140 billion

Another example of corporate welfare is the Ex-Im Bank.  It is an independent government agency that was founded in 1934 to encourage U.S. exports.  According to a CRS Report, the Ex-Im Bank has supported more than $400 billion in U.S. Exports.  In 2012, the Ex-Im Bank provided a record $35.8 billion in taxpayer-backed loans, guarantees, and export-credit insurance to private firms and governments.  This was a nine percent increase over the previous year’s record level of $32.7 billion.  This money is loaned to large corporations such as Caterpillar, Chevron, and Halliburton.  In 2010, the bulk of the money went to Boeing, which received 65 percent of the financing.  All of these companies have access to private funding and shouldn’t come to the taxpayer for their borrowing requirements.

In May 2012, the president reauthorized the Ex-Im bank’s lending authority to $140 billion by 2014.  This was the exact opposite of what he promised in his 2008 campaign, which was to eliminate the bank.  A quick look at the Export-Import Bank press-releases shows the billions of dollars it sends out its door every year.

 Boeing, helping Ex-Im Bank living up to its reputation as Boeing’s Bank, received more than $190 million in financing support for the export of Boeing 737-900ER aircraft to El Al Israel Airlines, Ltd. and $130 Million for long-range aircraft and installed GE-90 engines to Ethiopian Airlines.

OPIC augments the Ex-Im Bank’s import insurance program by providing financing and insurance against political risk in countries where American firms invest.  As a result, taxpayers are subsidizing major corporations’ investments in unstable areas of the world where their investment may not succeed.

There are many critics of OPIC’s corporate welfare role from the across the political spectrum.  Certainly this is an area where valuable tax dollars can be saved.

 

 

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