November 7, 2005

November 7, 2005 | Commentary on Federal Budget

Government Spending: Some Cutting Remarks

Runaway spending is rapidly surging past $22,000 per household. Current projections show that unless spending is brought under control, within a decade taxes will need to be increased by $7,000 per household just to balance the budget.

The 2006 Transportation, Treasury and HUD appropriations bill is stuffed like a goose with pork projects. On Oct. 20, Sen. Tom Coburn, R-Okla., offered an amendment to strip funding for three of them:

$200,000 to build an animal shelter in Westerly, R.I.

$500,000 for a sculpture park in Seattle, Wash.

$950,000 to build a parking lot for an Omaha, Neb., museum.

Coburn holds no animus toward animals, art or autos. He does, however, ask the right questions: Do these parochial projects rise to the level of national priorities? During wartime? While rebuilding the hurricane-ravaged Gulf Coast?

Coburn's idea was to scrap some patently frivolous spending to help pay for truly important projects, such as helping rebuild our hurricane-ravaged Gulf Coast. As he noted, the $200,000 earmarked for the ''Stand Up for Animals'' shelter in Rhode Island could buy six months of emergency housing for 50 families left homeless by Katrina.

This logical thought was alien to most of Coburn's colleagues. Prioritize spending? Spend housing funds on housing? What madness is this? The amendment failed, 86-13.

Six of every seven senators, it seems, feel it's more important to shelter suburban strays than fellow Americans left homeless by hurricanes.

Just as egregious, only 15 senators voted for Coburn's proposal to take money set aside for Alaska's infamous ''bridge to nowhere'' and instead rebuild a vital New Orleans bridge destroyed by Hurricane Katina. The rest of the Senate indefensibly chose pork over rebuilding New Orleans with those funds.

But perhaps the House of Representatives can do better.

Concerned about a 33 percent spending increase since 2001, House leaders are now trying to decide how to offset Katrina spending by trimming funds elsewhere. One idea offered by Speaker Dennis Hastert: increase five-year entitlement savings from the $35 billion planned last spring, to $50 billion.

It sounds ambitious, but actually it's quite modest: $50 billion represents just half of 1 percent of the $7.8 trillion entitlement spending planned for that period. The challenge is no greater than that facing a family of four making $50,000 a year and suddenly faced with the need to pay off a $250 emergency-room bill over a five-year period.

Leadership is also considering peeling back 1 percent or 2 percent of the discretionary budget that has swelled by 48 percent since 2001.

Yet these modest proposals have liberals - and more than a few self-described ''conservatives'' - screaming. Some contend that these proposals single out poor families. That is absolutely false. Half of the planned entitlement savings would come from corporate pension fees, auctions of old television spectrum, revenues from the Arctic Natural Wildlife Refuge, and corporate welfare farm subsidies. None of those policies affect low-income families.

As for Medicaid, virtually all planned savings thus far are on the administrative side. These proposed reforms mean that Medicaid would grow by ''only'' 40.8 percent, rather than 41.3 percent, over the next five years. Overall, entitlement spending would still increase by 31 percent over the next five years. Not exactly the cold-hearted ''entitlement slashing'' the media describes it as. If lawmakers cannot even enact these basic reforms, how will they ever fix the coming crises in Social Security and Medicare? In the absence of entitlement reform, lawmakers would have to either: (a) raise tax rates every year until they are nearly 60 percent above today's level in 2050; or (b) immediately begin eliminating programs until 2045, when only Social Security, Medicare, Medicaid and net interest would remain. This would put the nation smack in the midst of uncharted economic waters and each year of delay leaves the inevitable entitlement reforms more expensive and painful.

Against that backdrop, Congress must pursue fiscal sanity, not fiscal suicide. The House leadership's attempt to reduce spending is a good start, but they must go further by delaying the unaffordable Medicare drug entitlement and finally placing a moratorium on pork project spending. As it stands, Congress's pork-laden spending spree threatens the standard of living of every American.

Brian Riedl is Grover M. Hermann Fellow in Federal Budgetary Affairs in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.

About the Author

Brian M. Riedl Grover Hermann Fellow in Federal Budgetary Affairs
Thomas A. Roe Institute for Economic Policy Studies

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