How Serious Are the
GOP Budget Cuts?

The proposal does what Republicans have been talking about for two years — “repeal” of remaining stimulus funds (now $45 billion), privatizing Fannie and Freddie ($30 billion), repealing Medicaid’ FMAP increase ($16.1 billion), and what they estimate at $330 billion in discretionary spending cuts. Highlights of these projected annual savings:

- Cutting the federal workforce by 15 percent through attrition, and do this by allowing only one new federal worker for every two who quit.

- Killing the “fund for Obamacare administrative costs” for $900 million

- Ending Amtrak subsidies for $1.565 billion

- Ending intercity and high speed rail grants for $2.5 billion

- Repealing Davis-Bacon for $1 billion

- Cutting annual general assistance to the District of Columbia by $210 million, and cutting the subsidy for DC’s transit authority by $150 million.

Reforms that go after their own perks:

- Cutting the Federal Travel Budget in half, for $7.5 billion

- Cutting the Federal Vehicle Budget by 1/5, for $600 million

- Halve funding for congressional printing – $47 million annual savings

- Ending the death gratuity for members of Congress

FrumForum asked some of its contributors to weigh in on this: how serious and necessary are the proposed Republican cuts?

Eli Lehrer, Vice President of Washington D.C. operations for the Heartland Institute:

I’m a railfan. I love train rides almost as much as my three year old son does. When I visit a new city, I try to ride whatever train system it has. If the Republican proposed mass transit cuts happen, I’ll be sad at some level. As the D.C. area–home to both the most subsidized mass transit system and the second busiest Amtrak station–will probably see the deepest per capita cuts, its overwhelmingly likely that my local taxes will rise if the proposed budget reductions become law. All that said, I still think the cuts are a necessary part of getting the country into decent financial shape. Let’s take the three major cuts–D.C.’s metrorail system, capital improvements for local mass transit (“New Starts”) for mass transit systems around the country, and subsidies for Amtrak and intercity rail–in order:

Washington, like every other city with a major transit system, needs a dedicated, regional funding mechanism for mass transit. Because of federal subsidies, it has avoided creating one and instead sucked at the federal teat. This isn’t very fair to the rest of the country. Eliminating the federal subsidy won’t really cut the size of government overall (taxes will go up) but at least it will mean that people who use the D.C. metro will pay for it.

The New Starts program can also be scrapped. The 1980s, 1990s, and 2000s saw billions of federal and local dollars go to build at least the beginnings of a light or heavy rail system in every major city that didn’t already have one. Today, only two large American cities–Columbus, Ohio and San Antonio, Texas–lack any sort of rail transit system. Whatever the merits of doing these subsidies–and they’re very debatable–the federal government has helped seed mass transit just about everywhere. If localities want to expand these systems, they should do so with their own money: local mass transit systems can do a lot of good but they should be paid for locally.

Support for intercity trains is a more complicated matter. Since such travel does cross state lines and facilitates interstate commerce, it’s not, on its face, an inherently bad idea for the federal government to run it. But Amtrak is awful at running trains and wastes billions of dollars. The most important two train routes–the Northeast corridor between Boston and Washington, D.C. and the route between Los Angeles and San Diego’s downtowns–both come pretty close to breaking even on operations already and, with the right management from the private sector or truly competent public agencies, could probably pay their own operating costs. (Local governments or the feds would still have to pitch in for capital expenses somehow; getting rid of these routes isn’t a good idea.) Most other Amtrak routes, including all long haul routes, are simply uneconomical and unnecessary: they’re slow, pricey (even with big subsidies) and produce little economic spin off effect. Getting rid of them would be a good savings of taxpayer money. A national high speed rail network does look pretty appealing but, frankly, in a rather difficult fiscal situation, there isn’t much point in building a multi-billion network that, mostly would just give people another way to make trips they would undertake anyway.

I like rail transit. I wish the United States had more and better trains. But the proposed rail transit cuts are a necessary part of getting the country into decent fiscal shape.

Steve Bell, Visiting Scholar at the Bipartisan Policy Center:

First, Republican candidates for office last November pledged $100 billion cuts off currently projected spending for this fiscal year, FY2011.

Cooler heads, and objective reality, prevailed and the GOP scaled back to a $50m billion cut.

That step backwards was challenged vigorously by pledges of even larger cuts by various GOP House members–Michele Bachmann’s $450 billion; the House Republican Policy Committee’s $2.5 trillion reduction recommendations;  the declaration by House Appropriations Committee Chairman Hal Rogers’ that his committee will find “the largest series of spending cuts in the history of Congress;” and other statements equally as bold.

Note my use of the word “statements.”  As political statements, the verbiage passes the rhetorical test.  As policy recommendations, the ideas fail the reality test.

Most interesting, the most detailed real policy initiative remains that of House Budget Committee Chairman Paul Ryan.  Almost none of his colleagues have supported Ryan just because, in large part, it is specific and meets the debt/fiscal reality test.

Republicans risk over-promising and drastically under-achieving.  Simple arithmetic condemns most of the $100 billion and “back to FY08″ ideas.

Without wanting to be a curmudgeon on the subject, I still fall back on simple numbers.

The United States will spend approximately $450 billion on “non-security” discretionary spending programs in the fiscal we now occupy–FY11.  We are about 4 months into the fiscal year.  In the 8 months remaining, then, a linear approach gives us about $300 billion remaining to be spent from already appropriated funds for these discretionary domestic programs.

Thus, the pledge to find $100 billion in cuts, or to return to FY08 levels, means a reduction of one-third of all remaining spending in the targeted programs.

To find $100 billion in outlays (after all, it is outlays compared to revenues that gives us deficits), I estimate that one would have to really cut about 50 per cent of all remaining monies.  This begins to be technical, so you have to trust me here–most members of the House and Senate have no idea that outlays (spending) by agencies in any given fiscal year varies dramatically from new appropriations annually. That is a problem of immense proportions.

When I tried to explain this to my friend–a graduate of Brown University with his Ph.D. from Cambridge–he asked me to stop after about 10 minutes.  It made his head hurt and it made no sense.

Bottom line–if you want to cut $100 billion from spending in FY11, you will have to start with immediate furloughs of hundreds of thousands of government workers, stop paying the government’s share of the TSP savings programs, close down most government funded operations, and stop most of the research grants the U.S. funds.

It can be done.  But if it is done, President Obama and the Democratic Party will have been given one of the great electoral gifts of all time.

Just imagine the head of a local hospital, funded in part by federal monies, who headed up the finance team for one of the new House Republicans, calling that Member and saying, “Holy Cow, do you know that you have just closed down part of the cancer wing here.”

All of this rhetoric, perfectly unnecessary if the GOP would endorse the Ryan Plan or a sub-set of it and move ahead with it.

But, that, too presents political dangers.

Welcome of Washington, fellas.