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November 2, 2010

GET TO WORK: Freeze and Cut Spending

THE ISSUE

Congress should craft a spending solution for the long-term. But while Congress works diligently on a vitally needed ultimate solution to entitlements and welfare, it must take immediate steps to freeze and cut Federal spending. Cuts cannot wait.

Congress must immediately freeze discretionary budget authority at 2010 levels and cut at least $170 billion from the federal budget for fiscal year 2012. This is only a first step, but significant to demonstrate real resolve and get spending under control. In the past four years, Congress has approved more spending than even the bureaucrats can handle. Congress must immediately survey unobligated balances of all appropriations made in the past four years and should reclaim these unspent taxpayer funds and use them to reduce the deficit.

THE FACTS

  • Soaring Spending: Federal spending per household, which has already surged from $25,000 to $30,000 since 2008, would reach $36,000 by 2020 under President Obama’s budget (adjusted for inflation).
  • Debt and Taxes: Even with $3 trillion in tax increases over the next decade that President Obama proposes, his budget would double the national debt to more than $20 trillion ($138,000 per household) by 2020.
  • Spending is Driving Long-Term Deficits: Soaring spending drives America’s dangerous deficits. By 2020, federal spending, which has averaged 20% of the gross domestic product (GDP) since World War II, will soar to 26%. Revenues are likely to return to their post-World War II average of 18% of GDP by 2020, even if the 2001 and 2003 tax relief is made permanent. Thus, with current spending and taxing policies, spending is the variable that drives up deficits.

CONGRESS MUST

  • Freeze Spending: Congress must by law ensure that the total amount of discretionary budget authority for the Federal Government in fiscal year 2011 cannot exceed the total amount in fiscal year 2010.
  • Cut Spending: Congress must immediately cut at least $170 billion from the federal budget (CBO baseline) for fiscal year 2012. This is only a significant and plausible first step – more will be necessary.
  • Survey Unobligated Balances: Congress must immediately survey unobligated balances of all appropriations made in the past four years and should reclaim unspent taxpayer funds not needed for vital functions like military operations or homeland security. These funds can then be used to reduce the deficit.
  • Stop Digging. Any new unemployment assistance should be offset by spending cuts elsewhere. Any remaining unobligated TARP funds should be rescinded before they can be allocated to new spending. Most important, lawmakers must repeal Obamacare, a ticking spending and deficit time bomb.
  • Rein in Entitlements: Congress cannot rein in runaway spending without substantive reforms to make these programs affordable and more effective.
  • Establish Reasonable Fiscal Constraints in Welfare Spending. Congress should establish an aggregate cap on means-tested welfare spending in future years. The cap would require that when the recession ends, aggregate means-tested welfare would be returned to pre-recession levels (adjusted for inflation), and in subsequent years would grow no faster than inflation.
  • Ban Corporate Welfare. Lawmakers should reform America’s largest corporate welfare program—farm subsidies, which are overwhelmingly distributed to large, profitable agribusinesses rather than struggling family farmers. Other corporate welfare programs like the Technology Innovation Program should be eliminated.
  • Eliminate Pork and Waste. In fiscal year 2009, for example, Washington lost $98 billion to payment errors and paid $25 billion to maintain vacant federal properties. Washington also diverts about $20 billion annually into pork projects, by assigning taxpayer dollars based on lobbying rather than merit.
  • Bring Federal Pay in Line with the Private Sector. Congress should bring equity to federal pay and align federal compensation with market rates. When fully implemented it would save taxpayers approximately $47 billion a year.

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