Author Archive

MUST READ: Cut the Federal Budget By Killing Republican Sacred Cows

It’s time (perhaps past time) for an “all of the above” look at spending, politics aside. Doug Bandow in his Op/Ed in Forbes notes the following fiscally scary facts.

The Congressional Budget Office warns that if Washington stays with its current policies—no new big spending programs, expiration of the Bush tax cuts in January—Uncle Sam will run another $3 trillion in red ink over the coming decade. But if Congress passes the president’s latest budget proposal, the combined deficit increase will be $6.4 trillion over the next ten years.

Even this estimate is too optimistic, however. Since when is there good news in Washington? The CBO offers an “alternative fiscal scenario” which assumes that Congress acts like, well, Congress. Then the added red ink over the next ten years will total $11 trillion.

Read More.

MUST READ: The Earmark Battle That Won’t Subside

It appears to be short memories in congress. Daniel Horowitz notes in his recent blog that:

It is clear that there is now a concerted effort within the House Republican Conference to slowly ebb away at the earmark ban.

Read more to understand how earmarks are not just “a drop in the bucket.” Then go to Take Action and let your congressman know what you think.

Good News: $36 Billion Savings from Government Workers

After reading day after day bad news like over-the-top conferences in Las Vegas or prostitutes in Colombia, it’s great to be able to shine a light on positive news. Joe Davidson did just that when he wrote an article in The Washington Post regarding the 54 recipients of the 2011 Presidential Distinguished Rank Awards.

“Their accomplishments are inevitably awe-inspiring, and you will be stunned to learn not only what they have accomplished, but that the savings and cost avoidance documented in their nominations total over $36 billion,” Bonosaro said. “If the American people only knew. Actually, if the Congress only knew.”

What the honorees do — from coordinating multi-agency relief efforts in Haiti to making mattresses much less fire prone, from protecting endangered wildlife to running a spinal cord injury center — is the everyday work of government employees.

“Your work changes lives and transforms communities,” Mills said. “Your actions may not always make headlines, but collectively, they make our government and our country a shining example around the world.”

Kudos to American ingenuity. Check out the complete list of award winners.

Opportunity Cost: You Choose…Hollywood?

Opportunity Cost – The cost of an alternative that must be forgone in order to pursue a certain action.

Throughout our lives, we as individuals have choices to make.  Both big and small. Whether we want yogurt or pancakes for breakfast?  Whether to study for the economics final or go out with our friends?  To live in Omaha or New York City?   To buy a house or rent?  With each decision one makes, one gives up some or multiple other opportunities.  Our decisions can be based on emotional or rational reasons…or both.

Washington faces the same choice everyday and must make difficult decisions regarding spending priorities. With a federal debt fast appraching $16 trillion, weak GDP growth, annual deficits exceeding $1 trillion for the past four years, and the last time we didn’t have an annual deficit being 2001, choices must be made.

Example: Hollywood Liaison Offices

Hollywood Liaison Offices: There are five federal departments and agencies which maintain offices and programs for the purpose of helping Hollywood produce movies and television programming, often with the goal of ensuring producers positively portray the federal government.  Taxpayers could save an estimated $34.4 million over the next ten years by eliminating these offices.   …Page 13, Back in Black

Does Hollywood really need the taxpayer’s help?  Would you have chosen a different use for the $34.4 million of the taxpayer’s money (the opportunity cost)?

Eliminating the Hollywood Liaison Office is just one of hundreds of specific spending reductions and cost savings recommendations consolidated in Senator Tom Coburn’s deficit reduction plan entitled “Back in Black”.  The plan’s 624 pages detail ways to reduce the deficit by $9 trillion. No sacred cows were allowed to be exempted including entitlements and defense.  The report highlights programs that are some of what makes up the giant government hairball.

In gathering their recommendations, Senator Coburn’s staff looked for ways government is not being effective or efficient…therefore wasting or not prioritizing OUR tax dollars.  It included programs identified as:

  • Not Needed Serves no vital or essential federal role or has outlived its intended purpose.
  • Not Meeting Any Need Little or no evidence to demonstrate results or effectiveness achieving stated goals.
  • WastefulSignificant amounts of silly or unjustifiable expenditures.
  • Duplicative Duplicates or overlaps existing government agencies or initiatives.
  • Not a Priority at this Time Mission cannot be justified within today‘s budgetary constraints.
  • Not Cost Efficient Benefits do not exceed the costs.
  • Parochial Serves a local or special interest with no overriding federal role and exceeds the limited powers granted to Congress enumerated in Article 1, Section 8 of the U.S. Constitution.
  • Mismanaged Significant amounts of erroneous, fraudulent and improper expenditures, excessive overhead and administrative costs, or otherwise poorly administered or implemented.

So is the Hollywood Liaison office really the highest and best use for your money? Instead of Washington setting the priorities, this time you choose.  We’ve posted the question on our Facebook page and hope you will take a moment to post your answer and share the question with your friends.

Is $34.4 million enough to make an impact when we are talking about trillions in federal spending?  The question instead should be if we can’t trust our elected officials to make the smaller decisions, how can we expect them to make the tougher, more critical ones.

Keep an eye out for more “Opportunity Costs: You choose?” ideas where we highlight more programs and options for you to share your views.

 

 

 

Double counting and another $540 billion to the deficit

Only in Washington can 2+2=7.

A new study being released by Charles Blahous, Republican member of the board that oversees Medicare financing, finds that the new health-care law will add anywhere from $340-$540 billion to the deficit instead of controling costs as it was sold to do.

How can that happen?  Federal government budgeting rules…or more simply, “double counting”.

Blahous, senior research fellow at George Mason University’s Mercatus Center explains the results from his study and notes in a Washington Post article:

“If one assets that this law extends the solvency of Medicare, then one is affirming that this law adds to the deficit.”

Rick Foster, Medicare actuary, also validated the findings last year noting:

“In practice, the improved trust fund financing cannot be simutaneously used to finance other federal outlays (such as the coverage expansions) AND to extend the trust fund despite the appearance of this results from “traditional budget rules”

This would be like someone getting a $1,000 bonus and saying they plan to use it to pay $1,000 down on their credit card AND put it in a 401(k) for retirement…the math just doesn’t add up.

 

 

 

 

How Is Our Federal Government like a Giant Hairball?

In his 2009 inauguration speech, President Obama noted the need to figure out whether the government is working and, as he stated, “Where the answer is no, “programs will end”.

I agree.

For an example as to whether current government programs are working, let’s look at the federal housing programs. The recently released GAO report noted that in 2010, the government spent roughly $170 billion on housing related programs. There are 20 different entities that administer 160 programs, tax expenditures, and other tools, that support homeowners and renters. There are 39 programs, tax expenditures, and other tools that provide assistance for buying, selling, or financing a home and eight programs and tax expenditures that provide assistance for rental property owners. There are 94 federal initiatives to encourage “green building” in the private sector, all run by 11 different federal agencies.

Now doesn’t that describe a giant hairball?  The complexity and sheer number of programs must make the navigation by those needing these services very difficult and a barrier to success, not to mention making it challenging for anyone trying to provide program oversight and accountability.

Check out the new GAO report for more examples of government waste, mismanagement, and duplication.  Sen. Tom Coburn in his testimony at the February 28th House Committee on Oversight and Government Reform hearing regarding the new GAO report posed the following logical question.

“How many more housing programs do we need before we have solved the homeless problem? How many food assistance programs do we need to ensure the hungry are fed? How many education programs do we need to improve our schools? Ten? Twenty? Hundreds? Just remember, next time someone in Congress proposes a bill to create a new program to address a problem, ask yourself, are we not addressing this problem already? Instead of creating a new program, we must demand results from the ones that already exist.”

Instead of  18 food for the hungry programs, how about one program that is effective, efficient, and held accountable for it’s results. According to the Forum for Child and Family Statistics report, “America’s Children: Key National Indications of Well-Being, 2011″, there are 17.2 million children living in households classified as “food insecure”.  One million of those kids live in households having “very low food security”.  That means that sometime during the year, one or more children in the household were hungry because the household could not afford enough food.

Read more from Sen. Coburn’s testimony for solutions…today and tomorrow.

Government Reorganization…Step One

On the heals of the President requesting a $1.2 trillion increase in the debt ceiling, Obama is proposing a merger of six agencies that focus on trade and commerce, estimated to save $3 billion over 10 years by getting rid of duplicative costs and programs.

During President Obama’s last State of the Union speech he noted the absurdity of government inefficiency.  In what he called his favorite example, Obama said: “The interior Department is in charge of salmon while they’re in fresh water, but the Commerce Department handles them when they’re in saltwater.  And I hear it gets even more complicated once they’re smoked.”

Now that is bureaucracy at it’s finest.

In asking Congress for the power to reorganize agencies, the White House noted that presidents held such reorganizational authority for about 50 years until it ran out during Reagan’s presidency in 1084. Under Obama’s proposal, Congress could not amend a proposal, only give it an up or down vote within 90 days. (WSJ)

The president’s first proposal would affect the following departments along with elevating the Small Business Administration to a Cabinet-level agency.

  • The Commerce Department’s core business and trade functions,
  • The Small Business Administration
  • The Office of the US Trade Representative
  • The Export-Import Bank
  • The overseas Private Investment Corporation
  • The Trade and Development Agency

To learn more, check out:

  • Obama wants export agency, closing of Commerce Department – Chicago Tribune
  • Obama seeks power to shrink the federal government – CBS News
  • President Obama to ask Congress for power to reorganize agencies – The Washington Post
  • Obama to Propose Merging Agencies – Wall Street Journal
  • Obama Will Seek Authority to Merge Agencies in Effort to Shrink Government – Bloomberg
  • President Obama to Congress: Give me power to consolidate 6 commerce agencies – New York Daily News
  • Obama seeks ‘consolidation authority’ to merge agencies – Fox News
  • Obama’s plans mean musical chairs for the Cabinet – The Washington Post

Approaching 86,400,000 Seconds on the Budget, or…

  • 1,440,000 Minutes
  • 24,000 Hours
  • 142 Weeks
  • 1000 Days
  • 2 yrs, 8 months, 26 days

Whichever metric one uses, it’s still astonishing that the Senate has not passed a budget since April 29, 2009.  January 23, 2011 will mark the 1,000-day.  No budget, and yet, a $4+ trillion increase in deficit for the same period.

What could be causing the delay? Is there a reason for the delay?  The cynic might deduce that if congress doesn’t have a budget, congress doesn’t have to be held accountable to that budget.  They don’t have to make tough decisions. They can still keep spending the taxpayer’s money as if the economic climate hadn’t changed.  It is so much easier to play Santa then CFO in Washington.

But is a budget even important?  If one looks at Merriam-Webster’s definition of a budget, it is A plan for the coordination of resources and expenditures.”

With trillions of dollars annually in receipts and outlays, our federal government must surely have a fiscally responsible plan and working processes for the effective and efficient handling and usage of taxpayer money.  There certainly must be ongoing discussions as to priorities and changes needed when receipts go down…and yet, no budget, no plan.

So if our elected officials are struggling with making the difficult decisions.  What can be done to help “nudge” them towards fiscally prudent vs. politically expedient decisions?

The House Budget Committee, led by Chairman Paul Ryan, recently rolled out a budget reform package which includes ten common sense pieces of legislation geared towards helping fix the broken federal budget process.

These bills include processes, many used by successful businesses, such as sunset reviews of all programs to ensure they still are doing what they said they were touted to do, are being done effectively and efficiently, and whether, based on the current economic climate, they should be re-prioritized, adjusted, or dropped.  Another bill includes removing the automatic inflation increases built into the current budget process, while a third one provides automatic funding at a slightly reduced rate if Congress fails to enact appropriations bills by the beginning of the fiscal year.  These could help eliminate the seemingly unending last minute threats of government shutdowns, many times (cynic speaking) used just for political purposes.

Common sense, logical, best practices…what is the challenge?  The challenge is that the same group of individuals who haven’t passed a budget in 1,000 days would have to pass these bills to help/encourage/incent/force them do their job.  These would put constraints on them, not something they have shown an inclination to do historically.

The House Budget Committee’s Budget Reform Package includes the following:

Spending Control

  1. HR 3575: The Legally Binding Budget Act: Gives the budget the force of law by converting it from a concurrent to a joint resolution, which requires the President’s signature. Upon a presidential veto, the joint resolution automatically reverts to a concurrent resolution.
  2. HR 3576: The Spending Control Act: Establishes binding limitations on federal spending and deficits – all enforced by a sequester of no more than 4 percent of programs – within each category if the program is growing faster than inflation.
  3. HR 3521: The Expedited Line-Item Veto and Rescissions Act: Provides for the expedited consideration by Congress of specific requests by the President to reduce discretionary spending in appropriations legislation. (ten Dems co-sponsors)

Enhanced Oversight

  1. HR 3577: The Biennial Budgeting and Enhanced Oversight Act: Establishes a biennial budgeting cycle where Congress adopts a budget resolution in the first session of Congress (i.e., odd-numbered years) and considers authorization legislation in the second session, providing greater opportunities for review of government spending. (one Dem co-sponsor)
  2. HR 3578: The Baseline Reform Act: Reforms the budget “baseline” to remove automatic inflation increases in discretionary accounts, and to require a comparison to the previous year’s spending levels.
  3. HR 3583: The Government Shutdown Prevention Act: If Congress fails to enact appropriations bills by the beginning of the fiscal year (Oct. 1), provides automatic authority to fund programs at a slightly reduced rate from the previous year’s level. (one Dem co-sponsor)
  4. HR 3579: The Review Every Dollar Act: Requires periodic sunset reviews and reauthorization of all federal programs to ensure the programs perform an appropriate role and are operating effectively.
    • Requires all transfers from the general fund to the Highway Trust Fund to be offset or counted as new spending.
    • Removes all direct spending provisions from Pell Grants and moves all funding to the discretionary spending category.
    • Requires any new rule or regulation promulgated by the administration that includes new spending to be explicitly funded by Congress before such regulations take effect.
    • Provides a mechanism through which Members can devote savings from spending bills to deficit reduction.

Full Transparency

  1. HR 3580: The Balancing our Obligations for the Long Term (BOLT) Act: Caps total spending over the long term to reduce the burden of government to no more than 20 percent of the economy by gradually reducing spending.
    • Requires Congress to review long-term budget trends every five years and provides a fast-track legislative process to put federal spending on a sustainable path.
    • Authorizes reconciliation of long-term savings (beyond the current limit of the budget resolution’s typical 10-year window, up to 75 years) in Social Security, Medicare, and Medicaid.
    • Requires CBO long-term estimates beyond the 10-year window.
    • Requires the President’s budget to extend beyond the 10-year window.
    • Strengthens the statutory requirement directing the President to submit legislation to save Medicare if the general fund subsidy to the program exceeds 45 percent of the program’s costs.
    • Requires GAO and OMB to report annually on the federal government’s unfunded obligations.
  2. HR 3581: The Budget and Accounting Transparency Act
    • Reforms the Credit Reform Act to incorporate Fair Value accounting principles.
    • Recognizes the budgetary impact of the GSEs by formally bringing the entities on-budget.
    • Brings the U.S. Postal Service on-budget.
    • Requires a CBO & OMB study on offsetting receipts/collections/revenues.
    • Requires all federal agencies make public the budgetary justification materials prepared in support of their requests for taxpayer dollars.
  3. HR 3582: The Pro-Growth Budgeting Act
    • Requires CBO to provide an assessment of the macroeconomic impact of major legislation.

The REINS Act Passed by House (Updated)

Whip Kevin McCarthy and Chief Deputy Whip Peter Roskam discussed in a recent National Review OpEd the cost of the overwhelming volume of proposed regulations coming out of Washington and why the bipartisan REINS Act, which passed today 241 to 184, is critical for jobs creation.

It’s not a question of whether to have regulations or not, but what are the necessary regulations? How closely have the proposed regulations been viewed through a filter of how they will impact jobs? Here is some of the rationale behind the legislation as noted by McCarthy & Roskam.

Appropriate and responsible regulations are important, helping to keep us safe and our environment clean. Yet Washington has become a red-tape factory stunting job creating with a dizzying amount of federally imposed regulations written by unaccountable bureaucrats with little or no regard for the jobs each will cost.

The sheer amount and breadth of the administration’s proposed regulations make it impossible to address each and every one. Yet we can take action to stop the most excessive and economically-devastating regulations. Right now, the Obama Administration has 4,257 new regulations in the works, 219 of which will cost over $100 million annually – 15 percent more than last year. At a time when job creators are fighting to survive in an already tough economy, thousands of additional regulations will only result in significantly fewer jobs – hitting small businesses particularly hard.

Check out more at National Review Online.

 

Is a biennial budget a change we should embrace?

With it now being over 900 days since a budget has been passed by the Senate, it is apparent there are issues with the current budgeting process in Washington.  So what can be done?

David Kendall lays out his thoughts about moving to a biennial budget process as a part of the solution in a recent statement to the Senate Budget Committee.  Specifically: how it would work, how it can help, and what is needed to implement it.

If one is still questioning the need for change.  Consider the following facts outlined in the statement.

• From 1975 to 2000, Congress met its statutory deadline for passing its annual budget resolution only five times.

• Over the last decade, Congress has failed two-thirds of the time to pass budget resolutions in both years of its two-year term.

• For appropriations, since 1996, Congress has been late an average of 86 days after the start of the fiscal year according the Congressional Research Service.

Taxpayers Connected:

Our national debt is  
$ 00 00 , 000 000 , 000 000 , 000 000 , 000 000
and each American Taxpayer owes $119,236 of it.