September 28, 2005 | WebMemo on Federal Budget
Last week, Rep. Mike Pence (R-IN) and 16 other members of the 110-member conservative House Republican Study Committee (RSC) unveiled "Operation Offset," a menu of spending cuts to offset the costs of hurricane relief and rebuilding efforts. At a time where federal spending has grown by 33 percent over the last four years and spending on entitlements like Medicare and Social Security is set to explode in the next four, Rep. Pence, Chairman of the RSC, is right to call for budget offsets to meet this new national priority. "Operation Offset" would ensure that limited federal dollars are directed to the highest priorities, and Congress would be right to embrace this effort.
Congress responded quickly to Hurricane Katrina with $63 billion in emergency relief funding to help meet the needs of the hundreds of thousands of affected individuals. The President then called for a greater federal commitment to rebuild the areas even better than before, stating "We will do whatever it takes" to get the job done. Leaders in the Administration and Congress have taken this vision to heart, advancing many ideas for an ever-growing federal role in the rebuilding. However, they have been virtually silent on how to pay for these efforts. Alarmed by what is loosely projected to be a $200 billion price tag, the RSC has offered the first comprehensive response in Congress to these costs.
The RSC Budget Options 2005 report, compiled by Rep. Pence and RSC Budget and Spending Task Force Chairman Rep. Jeb Hensarling (R-TX), lists over 100 specific offset targets and their associated savings. These include:
The RSC proposal contains more than enough savings to cover the total projected cost of the federal government's response to Hurricane Katrina.
With this comprehensive accounting of options, finding offsets to pay for hurricane relief should be easy, though naturally there will be disagreements on which specific cuts are the most sensible. The RSC's proposal is a bold step in the right direction, calling for fiscal discipline and answering House Majority Leader Tom Delay's challenge to "Bring me the offsets, I'll be glad to do it." Not only does the RSC offer this menu of offsets, but Reps. Pence and Hensarling have indicated their willingness to redirect their highway earmark projects as a part of this effort. However, one man's pork is another man's project and Rep. DeLay and other members of leadership are adamant that the highway bill's earmarked projects, including bicycle paths, walkways, snowmobile trails, and several bridges in sparsely inhabited areas, are absolutely vital.
Pence and the RSC should be commended for their bold leadership on fiscal restraint and sacrifice. Conversely, Rep. DeLay appears to have changed his mind about offsetting this new spending and has yet to embrace any aspect of the RSC plan. Worse, according to reports, he and House Speaker Dennis Hastert have taken Pence to task merely for launching Operation Offset. One must wonder if it is acceptable to set a loose goal of spending tradeoffs, but not to get down to brass tacks and discuss specific programs to cut.
Similar efforts to offset the cost of responding to Katrina are underway in the Senate, where Sens. John McCain (R-AZ) and Tom Coburn (R- OK) have also called for reprioritization of the massive $2.5 trillion federal budget and the redirection of highway bill earmarks. McCain has also suggested rethinking, or at least delaying, the Medicare Prescription Drug Benefit. While not embracing these proposals, Senate leadership has asked the President to step forward with a specific list of offsets and rescissions. Some doubt remains, however, that this is a serious request that will lead to legislative action.
The disconnect between fiscal conservatives and congressional leadership can only be resolved with strong presidential leadership. The President's FY 2006 budget proposal includes savings in both discretionary and mandatory programs that Congress should seriously consider. Moreover, the President should challenge Congress to adopt some or all of the RSC's offset proposals to cover the cost of Katrina, while postponing some of his own initiatives.
The President and Congress are making huge federal commitments for relief and rebuilding, but these should not translate into an unprecedented expansion of the federal budget at a time when spending is already near an all-time high. Rep. Pence and the RSC are to be applauded for their courageous commitment to fiscal responsibility, and they should continue to advance "Operation Offset" despite House leadership's hostility to it. As Americans across the nation are taking out their checkbooks to donate to charities for hurricane relief and making sacrifices to do so, surely our nation's political leaders could do the same.
Alison Acosta Fraser is Director of, and Michelle Muccio is a Research Assistant in, the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.
Reps. Mike Pence and Jeb Hensarling, "RSC Budget Options 2005,"
September 22, 2005, at
Edward Epstein, "Pelosi willing to give up S.F. funds for
recovery," The San Francisco Chronicle, September 21, 2005,
 Robert Novak, "GOP in Turmoil," Washington Post,September 26, 2005.