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This post continues our themed week, "Budget Cutting For Dummies... And Washington Politicians" where, as a public service, we help our struggling political class in Washington learn how to cut out unnecessary government spending and save the country from financial destruction. On Monday, I offered my humble opinions and research and saved the American taxpayer between $100 billion and $140 billion a year with little, if any pain, for ordinary Americans.
Yesterday we summarized the outstanding work of Nicole Tichon and Andrew Moylan and their analysis, "Toward Common Ground: Bridging the Political Divide To Reduce Spending." Their work uncovered almost $600 billion in spending cuts that could be done by 2015, again with little or no impact on the ordinary American citizen. Their focus was on government efficiency and waste so that many of their recommendations save money through better processes and management.
Thus, as a rough average, their $600 billion savings within four years comes out to a,bout $150 billion a year on average. Combine their findings with Monday's findings and so far we have cut a quarter of TRILLION dollars out of the Federal government's annual budget without hurting any animals, curtailing any safety nets, or making any American poorer, sicker, or less wealthy.
Today we will summarize the work coming out of the Cato Institute. Their "Downsizing Government" effort is identifying many, many ways to effectively and efficiently reign in government spending. They are going through the Federal budget and government, line by line and organization by organization, to ferret out waste, redundancy, and incompetence. They are still in the process of completing their analysis but what they have done so far is first rate. Consider what they have found so far:
* Department Of Education
The Department of Education is about thirty years old. During that time frame, the United States has probably spent more on education than any other country in the world. In fact, the Baltimore Sun reported in August, 2009 that the United States spends twice as much of its GDP on education than the next closest country.
What has that gotten us? According to an article in the December 26, 2010 issue of the St. Petersburg Times, the United States ranks 30th in the percentage of students that perform at advanced proficiency level in mathematics. We trail such countries as Iceland, Liechtenstein, and Slovenia. An international testing study found that in math, science and language skills, dozens of countries' students do better than U.S. kids.
Obviously, something is wrong with education in this country and after more than thirty years, the Federal government, through its Department of Education, has done nothing to help the United States be a leader in education standards and performance relative to the rest of the world. And for this pathetic performance the American taxpayer pays about $107 billion a year.
Cato's solution: terminate the whole department and leave the process of education to the states. Think about the math for a minute. At $107 billion a year, you could purchase 267 million IPads at Best Buy and give two IPads to probably school kid in the country. Obviously, you would not do this but what if you gave the states $107 billion. Imagine how much good they could do technology wise, facilities wise, reward wise, training wise, etc. for education in their respective states.
And this is with only one year's worth of Department of Education funding. Given the horrendous performance of public education in this country and the wasting of over $100 billion a year at the Federal government level, we need to do something else. I would terminate the Department immediately but phase out the funding expense over three years. In the first year, the states and local school boards would share in $107 billion dollars. In the second year, they would get one third less, in the third year they would get two thirds less and in the fourth year they would receive nothing. At that point, the American taxpayer and the Federal government has $107 billion less to worry about.
The only condition I would put on the funding is that it cannot be used to increase salaries or benefits for teachers or administrators. It has to be used to improve the curriculum, the facilities, the technology or the training. This gives the states and local governments a three year funding plan to finally fix what ails our schools. It is obvious that the Department of Education will not be able to or they would have done it already.
Annual savings: $107 billion.
* Department Of Energy
In 1973, President Richard Nixon ordered the Federal government to make the United States energy independent by 1980. To help in that goal, the Federal government shortly after that declaration created the Department of Energy.
Thirty eight years later we are no closer to that goal than when Nixon was in the White House. the Department of Energy has grown and grown so that today it eats up almost $40 billion a year in budget. And we have nothing to show for their efforts. We still import and use much to much of carbon based fuels. We are at the mercy of foreign governments and forces that do not always have our best interests in mind. There has been no strategic or earth shattering energy breakthroughs by the Federal government via the Energy Department despite spending hundreds of billions of dollars to do so.
The Department spends almost $6 billion a year on "general research," research that has turned up nothing of consequence in its history. Thus, Cato recommend that this department also be terminated and that some of its responsibilities for environmental cleanup be given to the EPA and Department of Defense.
Annual Savings : $18.4 billion
* Defense Department
Cato makes a compelling case that the role of our armed forces has to be narrowed to only one objective: defending the United States. It should not be used as a diplomatic option, it should not be used to interfere in the internal workings of another country unless that country poses an imminent danger to our safety, it is not meant to garrison troops all over the world in places that are not an imminent threat to our safety, it is not meant to have high technology weaponry only for the sake of having high technology weaponry. If you narrow the focus to militarily address only our safety, you can cut the Defense Department budget significantly.
Obviously, the first and easiest place to cut is to get our forces out of Iraq and Afghanistan. Obama promised to get us out of Iraq during his election campaign but we still have thousands of troops there at a cost of tens of billions of dollars a year. In Afghanistan, I have no idea what the final answer is but it does not appear that the current strategy is working. If it is working, the Obama administration is keeping this success a well guarded. Cato estimates that if we get out of Iraq and Afghanistan, we would save $159 billion annually.
They have also come up with additional savings of $1.224 TRILLION over ten years or an annual average savings of $124 billion. They agree with the analysis done yesterday to kill some of the Defense Department's expensive and unneeded programs such as the Expeditionary Fighting Vehicle. This represents a about a 17% reduction in overall defense spending without undermining our national security.
Annual Savings (After getting out of Iraq and Afghanistan): $283 billion.
* Commerce Department - cut subsidies to private businesses and save the taxpayer $2.1 billion a year.
* Agricultural Department - cut subsidies to the farming industry and save the taxpayers $30 billion a year annually.
The above cuts to just these five Federal departments would save the budget and the country about $440 billion a year. If you consider the cuts and savings that Cato recommends in Health and Human Services, Housing and Urban Development, and other Agricultural Department areas, you come up with another $244 billion in reductions. However, these cuts are likely to be harder sells to the established Federal political class since they would involve privatizing government services or in most cases, transferring the funding and the responsibility to the state and local government levels. The Federal political class is much more likely to fight to keep some of these functions within their realms of power.
Keeping these cuts separate does not detract from the need to make the changes Cato recommends. However, I do not have the time or space to go through the details and logical reasoning that they go through at their web site, http://www.downsizinggovernment.org/. I recommend that readers do this for themselves and decide whether or not the extensive work done by Cato should be implemented in these areas, worth $244 billion in spending.
For today, let's keep it conservative and give Cato credit for identifying $440 billion in additional spending savings and cuts. Remember, there are some departments that we have not included above and other departments that Cato is still busy analyzing and have not yet published their findings.
If you take this $440 billion and combine it with the $250 billion we came up with the past two days, we are approaching $700 billion in annual cuts. If you assume there is some double counting in the three analyses, we can safely assume that we already have about $650 billion or so in savings.
Thus, these judicial and intelligent budget cuts are similar to Monday's and Tuesday's cuts since:
- No animals were killed or harmed in the development of the budget cut list.
- No Americans went hungrier, sicker, or poorer as a result of any of the identified cuts.
- Corporate welfare was cut back, personal welfare or aid to the poor was unaffected.
- Americans' freedom was unaffected but the freedom of politicians to use taxpayer money to fund their re-election campaigns via earmarks, defense contractor and lobbyist donations, and corporate welfare donations was negatively affected.
The sad part of the three analyses is that the $650 billion still would not close the annual, and now recurring, $1 TRILLION plus budget gap that the Obama administration has incurred over the past few years. To close that gap, there is no way to avoid curtailing the budget lines known as Social Security, Medicare, and Medicaid. We will take a shot at these lines on Friday.
Tomorrow, we will examine the poor performance of President Obama and the rest of the Washington political class. Their lack of leadership, courage, guts, and creativity are just as dangerous to the future of this country as is the devastating deficit they encourage and/or ignore. Any dummy can see that.
Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at http://www.loathemygovernment.com/. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.
Please visit the following sites for freedom:
http://www.cato.org/
http://www.robertringer.com
http://realpolichick.blogspot.com
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment
This is a second part of our themed week on how and why the political class needs to reign in its spending as soon as possible to avoid a financial disaster and suggest ways to accomplish the task. Yesterday's post identified anywhere from $100 billion to $140 billion worth annual savings that could be wrung out of government with relatively no pain except for corporate welfare recipients and incumbent politicans' re-election finances.
Today's focus is on making government more efficient, either by doing things better and smarter or just plain eliminating wasteful spending that benefits relatively few Americans. The basis for the following budget cuts is a comprehensive analysis jointly done by Nicole Tichon, Federal Tax And Budget Reform Advocate in the U.S. Public Interest Research Group and Andrew Moylan, Director of Government Affairs, in the National Taxpayers Union. Although I will not review all of their excellent work below, understand that it appears to be relevant, analytically sound, well researched, based on solid, underlying financial and government statistics and best of all, nonpartisan. Their recommendations cross many government functions.
Their work concentrated on four specific areas of government spending that could be reduced significantly or eliminated:
- Ending Wasteful Subsidies - Budget savings by 2015 = $62 billion
- Improving Contracting and Asset Acquisition - Budget savings by 2015 = $353 billion
- Improving Program Execution and Government Operations - Budget savings by 2015 = $77 billion
- Addressing Outdated Or Ineffective Military Programs - Budget savings by 2015 = $107 billion
Thus, over the next four years, their recommendations could save taxpayers about $600 billion or about $150 billion a year on average. Combine these results with the savings we estimated yesterday from other areas that are not included above and in just two days, we have identified about $250 billion a year in wasteful government spending, or about about $2.5 TRILLION over ten years. Compare these savings with the meager ten year savings of President Obama's budget of $1 TRILLION. And we are not even done yet.
Below are some examples from each of the four categories above that Ms. Tichon and Mr. Moylan identified for savings:
* Ending Wasteful Subsidies
- Terminate the Federal government's Overseas Private Investment Corporation (OPIC) which uses taxpayer money to subsidize the foreign operations of many large multinational corporations via financing and insurance support. This is a blatant form of corporate welfare, let these large corporations support themselves overseas and save the taxpayers $154 million by 2015.
- Eliminate the Market Access Program which uses taxpayer dollars to fund advertising and promotions for private companies that sell agricultural products overseas. Given how well the U.S. farming industry is doing, let these companies fund their own advertising and promotions overseas. Drop this corporate welfare program and save $1 billion by 2015.
- Eliminate insurance subsidies for repeatedly flooded homes through the National Flood Insurance Program. One percent of these policies represent up to 30% of all insurance claims since they are repeatedly damaged by flooding. Eliminate the subsidies for these loser properties and save $891 million by 2015.
- Eliminate the program that subsidizes deepwater natural gas and petroleum research. With oil prices rapidly galloping to over $100 a barrel, eliminate this corporate welfare program and let the oil companies themselves decide whether or not they want to fund the research, saving the taxpayer $258 million by 2015.
- Reduce funding for public timber sales since the Forest Service has spent more on Federal timber sales in recent years than it has collected from the companies that harvest the timber. Save $279 million by 2015.
* Improving Contracting And Asset Acquisition
- If the government implemented the reforms of the bipartisan Defense Acquisition Panel which was passed last year by Congress in an attempt to address Department Of Defense acquisition processes, taxpayer savings by 2015 would be $135 billion.
- A recent audit by the Defense Contract Audit Agency found 32 existing Homeland Security contracts, collectively worth $34.3 billion, that have been plagued by waste, abuse, and/or mismanagement. Eliminate these poorly performing contracts and bank the $34.3 billion.
- The Government Accountability Office (GAO) investigated armed forces purchasing and inventory processes and results and found that our armed forces continually purchase products that are never used, never required, or are obsolete. Fix these purchasing problems, as identified by the GAO, and save $184.5 billion by 2015.
* Improve Program Execution and Government Operations
- Sell off 25% of the 55,500 buildings that the Federal government owns that are vacant or are underutilized, according to the Office of Management and Budget, netting the taxpayer $24 billion by 2015.
- According to the Congressional Budget Office (CBO), if Medicare better aligned its payments to cover actual costs for its graduate medical education program, the taxpayer would save over $20 billion by 2015.
- According to the GAO, the Federal government wastes large amounts of money through the Housing and Urban Development's programs due to a variety of overpayment errors. If corrected, the government would save more than $4.5 billion by 2015.
- The Troubled Asset Relief Program still has an unspent amount of $15 billion on its books. Given that the banks are much healthier and the economy is much healthier, return that money to the taxpayers and save $15 billion immediately.
- The GAO has investigated and concluded that the National Drug Intelligence Center's functions are duplicative and its scandals numerous. Terminate the program and save $223 million by 2015.
* End Wasteful or Outdated Military Programs and Systems
- Cancel the production of the overly expensive and under performing V-22 Osprey aircraft and save over $6 billion by 2015.
- According to the Sustainable Defense Task Force, the "F-35 Lightning may represent all that is wrong with our acquisition process." It is overly expensive, has serious cost overrun problems, and "would provide a capability that is not warranted, considering emerging threats." Drop the program and save $22.5 billion by 2015.
- Terminate spending for high risk satellites and replace them with low-cost alternatives since the Defense Department has already determined that ground based radars "not only provide a viable alternative to a space based system but also provide this capability at significantly lower risk and costs." Drop the expensive system, go with the less costly and less risky alternative and bank the $5 billion in savings by 2015.
- Align or right size the nation's nuclear arsenal and save $56.75 billion by 2015.
- Eliminate the outdated, unreliable, and unneeded Expeditionary Fighting Vehicle which even the Secretary of Defense does not need or want. Savings would exceed $16 billion by 2015.
Thus, these judicial and intelligent budget cuts are similar to yesterday's cuts since:
- No animals were killed or harmed in the development of the budget cut list.
- No Americans went hungrier, sicker, or poorer as a result of any of the identified cuts.
- Corporate welfare was cut back, personal welfare or aid to the poor was unaffected.
- Americans' freedom was unaffected but the freedom of politicians to use taxpayer money to fund their re-election campaigns via earmarks, defense contractor and lobbyist donations, and corporate welfare donations was negatively affected.
This is an outstanding piece of analytical work from these two Americans, each of them representing two different views of the world. The U.S. Public Interest Research Group usually comes at the world from a left leaning, Democratic party perspective while the National Taxpayers Union usually comes at the world from a right leaning, Republican party perspective.
However, on this issue they come to the same conclusion: "Our nation faces unprecedented fiscal challenges, as the commitments we've made now and into the future far outpace our fiscal capacity.... It will be critical to reach out across party lines and across ideological persuasions to achieve common-sense reforms that bring us closer to balance."
Now look at their statement relative to the petty actions and petty politics that the Washington political class have engaged in relative to this grave problem. Pretty pathetic performance from our politicians' perspective. It does not appear that they appreciate the "unprecedented fiscal challenges" the nation faces with their meager and petty attempts at budget reform.
A typical, non-political American found over $100 billion in annual budget cuts yesterday and these two smart people, Ms. Tichon and Mr. Moylan, from two widely different perspectives, have found about $600 billion in budget cuts within just a very small sample of government operations. It is not that difficult... any dummy can do it. Well, most any dummy.
Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at http://www.loathemygovernment.com/. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.
Please visit the following sites for freedom:
http://www.cato.org/
http://www.robertringer.com
http://realpolichick.blogspot.com
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment
