The Right Stuff to Cut | Citizens Against Government Waste

The Right Stuff to Cut

The WasteWatcher

Incoming Joint Economic Committee Chairman Kevin Brady's (R-Texas) National Review Online op-ed, "What Kind of Cuts Grow the Economy," makes it clear that the right kind of spending cuts will increase economic growth and create jobs.  The op-ed cites a report from Republicans on the Joint Economic Committee that showed how countries that reduce deficits through spending cuts, rather than tax increases, "can boost economic growth and job creation even in the short term."  He mentions how economists reviewed 21 times between 1970 and 2007 where 10 developed nations "reduced their debt-to-GDP ratio by 4.5 percentage points or more," mostly or totally by cutting spending. Rep. Brady cites four ways to cut spending that produced the highest levels of economic growth.  First, right-size the federal workforce; second, eliminate duplicative programs and agencies; third, terminate business subsidies; and, fourth, reform and reduce entitlements.  The spending cuts must be "large, credible and politically difficult to reverse once made." While Rep. Brady notes that sequestration will shrink the size of government and eliminate duplicative programs, it does nothing to cut transfer payments to either businesses or individuals.  In order to push real economic growth to 4 percent of more each year, Rep. Brady says "it's time to stop believing in the government-spending fairy." We at CAGW could not agree more with his assessment.  In fact, my testimony before the House Oversight and Government Reform Committee (OGR) on February 5, 2013, specifically addressed several of Rep. Brady's points.  For example, the annual Government Accountability Office reports on duplication and overlap from 2011 and 2012 were cited extensively in my remarks, along with a sunset commission proposal that Rep. Brady has included in his comprehensive legislation to reform the federal government, the Maximizing America's Prosperity Act (Section 7), which was H.R. 2319 in the 112th Congress and should be introduced soon in the 113th Congress. In regard to the GAO reports, as CAGW's Government Affairs Director Bill Christian noted in yesterday's blog post, Rep. John Culberson (R-Texas) has introduced a bill, H.R. 504, a bill “to save at least $10,000,000,000 by consolidating some duplicative and overlapping Government programs.”   As I noted in my OGR testimony, GAO's 2011 and 2012 reports identified hundreds of agencies, offices, and initiatives that provide similar or identical services to the same populations, including 53 programs across four departments that focus on supporting entrepreneurs and 14 programs across three departments for the administration of grants and loans to reduce diesel emissions. GAO also recommended 18 cost-saving measures that could save taxpayers billions, including consolidating federal offices, selling excess uranium at the Department of Energy, replacing the $1 bill with a $1 coin, and cutting improper payments by Medicare and Medicaid, which totaled an estimated $65 billion in fiscal year 2011. The 2012 report also cited 209 STEM programs costing $3.1 billion spread across 13 agencies in fiscal year (FY) 2010. More than one-third of these programs were first funded between FYs 2005 and 2010, yet the U.S. still does not have enough future workers in STEM fields and U.S. students "continue to lag behind students in other highly technological nations in mathematics and science achievement." GAO stated that 173 or 83 percent of the 209 programs "overlapped … with at least 1 other program in that they offered similar services to similar target groups in similar STEM fields to achieve similar objectives." This complicated and fragmented system was a result of efforts to "both create and expand programs across many agencies in an effort to improve STEM education and increase the number of students going into STEM fields." The proliferation of new programs in a short period of time "contributed to overlap and, ultimately, to inefficiencies in how STEM programs across the federal government are focused and delivered." GAO reported that there are 82 teacher quality programs in 10 agencies that cost $10 billion in FY 2009. "The proliferation of programs" and "fragmentation" has limited "the ability to determine which programs are most cost-effective, and ultimately increase program costs." There are 47 job training programs in nine agencies that cost $18 billion in FY 2009. Program analysis is virtually non-existent. Only five had an impact study completed since 2004 to determine whether or not participants secured a job as a result of the program itself rather than a separate cause, and about half have not had a single performance review since 2004. Therefore, "little is known about the effectiveness of most programs." Finally, and most absurdly, there 56 programs across 20 agencies to promote financial literacy, which are intended to improve the fiscal acumen of the American people. While it would be funny if it wasn’t so sad, there is no reliable financial data on the total cost of the financial literacy programs, and a government that itself is going broke is trying to teach others how to balance their checkbooks. CAGW's 2013 edition of Prime Cuts will be published next week, providing another source of spending cuts for taxpayers, the media, and elected officials.  The most recent version included 691 recommendations that would save $392 billion in one year and $1.8 trillion over five years. Rep. Brady's op-ed is logical and sensible, two qualities that are anathema to the free-spending, logic-free zone that exists inside the Beltway.  That means CAGW and other proponents of his ideas will have to continue to work particularly hard to overcome the inherent resistance from the big spenders in order to get them moving forward and eventually adopted by Congress.