Country Boys Blog

Writing Waste

2011-11-18T16:12:00.001-06:00

Writing Waste

Volume XVI No. 46: November 18, 2011

Finally! It's been two years since the last spending bills were considered in (semi) regular order. It wasn't procedurally perfect---three bills jammed together nearly two months after the start of fiscal year 2012---but hey, you have to start somewhere.

That means there are nine more spending bills to go. So Congress needs to pick up the pace. Most of the year was dithered away by Congress as they jockeyed for position on the debt ceiling increase and the great budgetary spectacle that is the Super Committee (aka Joint Select Committee on Deficit Reduction). Tasked with finding at least $1.2 trillion in deficit reduction, next week we'll know whether they pulled a rabbit out of a hat or laid a turkey on the American taxpayer.

Believe it or not, the Super Committee is largely irrelevant to the deliberations on this fiscal year's spending bills. These twelve bills will fund the government for FY12, which will probably be over by the time any deficit reduction prescribed by the Super Committee takes effect. They are on separate tracks.

Even if the Super Committee flops big next week, the minibus package of bills Congress passed yesterday already extended temporary funding for the rest of government until December 16.

So instead of letting a post-Thanksgiving tryptophan stupor set in, lawmakers need to scramble and get the Defense, Health & Human Services, Veterans, Energy, Homeland Security, Interior, and the rest of government's spending in place.

A closer look at the three bills---Agriculture, Commerce-Justice-Science, and Transportation-Housing and Urban Development---that were passed yesterday is instructive. Overall budget levels were slightly down compared to fiscal year 2011 and cut even more compared to fiscal year 2010. Another interesting difference between those three bills in FY10 and in FY12: in FY10 those bills contained 3,569 in disclosed lawmaker earmarks worth $2.3 billion. In FY12....<crickets>.

The facts belie the old canard that cutting earmarks wouldn't save any money. For example, the "special research grants" at the National Institute of Food and Agriculture received $105.2 million in FY10, which included 169 earmarks worth $88 million. In the FY12 bill, "special research grants" received $4 million. Guess they were only "special" when lawmakers could direct the funding to their pet projects.

But that's not the end of the story. We always realized that "eliminating" earmarks would be like squeezing a balloon. Congressional interest in pursuing funding for parochial projects will simply be squeezed into other forms. Rather than earmark, in some cases lawmakers will instead pick up the phone to call agencies to argue for funding for their interests: phonemarking. In other cases they send letters: lettermarking.

While we certainly recognize every lawmakers constitutional right to petition their government, there is no guarantee of privacy--each and every one of the letters are subject to the Freedom of Information Act and can be obtained by the public. A memo from the first days of the administration said anything that could be FOIA'ed should be pre-emptively disclosed. In addition, a Bush era Executive Order directs agencies to disclose these lettermarks and not give them any deference in decision-making. A recent draft memo from the Obama administration also directs disclosure. So what's the hold up?!

Disclosure of lettermarks is absolutely the right thing to do. We have called for this since the earmark moratorium was established. The purpose of the moratorium was to bring spending decisions into the light. End runs like lettermarking and phonemarking are disappointing but predictable responses. We have to keep up the pressure to get to point where the American public can review clear and transparent metrics and criteria that lead to spending decisions based on merit, competition, or formulas. It isn't all about Congressional decision-making either. To further increase budgetary transparency, lawmakers should embrace lettermarking transparency and turn around and demand the Executive branch to open up what is too often black box budgeting and let the public see how spending decisions are made.

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Going on at Taxpayer.net This Week

TCS Testifies on Royalties before House Natural Resources Subcommittee

Speaker's "Drilling for Transportation Dollars" Proposal: A Dead End for Taxpayers

Analyzing Transportation Provisions in Mini-Bus Appropriations Bill

A Legacy for Earmarks (updated 11/14/2011)

DOE Loan Guarantees: Overview, Risks, and More

TCS Earmark Databases

TCS Preliminary Earmark Analysis for FY 2011

Download FY2010 Earmark Database

Earmark Frequently Asked Questions

TCS in the News

TCS was cited in dozens of stories this past week. Check them all out in the Headlines About TCS section of our website.

We Need Your Support!
TCS needs you to help us fight government waste
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Current Action Items

Tell the Super Committee to Cut the Deficit not Protect Subsidies
GO »

End All Wasteful Energy Subsidies
GO »

Notable Quote

"In the last week, each side has busted through a wall. Democrats are talking about entitlement reform, curbing the increase in spending on mandatory programs like Medicare. Republicans have broken through the wall on tax revenue increases. Now they have to figure out if they can meet each other somewhere in the middle."

- Senator Joseph I. Lieberman, Independent of Connecticut (The New York Times)

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Nuke Numbers Game

2011-11-10T16:06:00.001-06:00

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Nuke Numbers Game

Volume XVI No. 45: November 10, 2011

When a high-stakes budget fight erupts in Washington, nearly every discussion devolves into a numbers game. Politicos on either side of an issue will pull figures out of a study or report, throw them together, and stir until they get the thickness they hope will stick in the minds of their colleagues. One of these budgetary food fights is throwing some needed light on a particularly confusing area of the budget: nuclear weapons.

Last month, Rep. Ed Markey (D-MA) wrote a letter to the Super Committee saying the hundreds of billions the United States plans to spend on nuclear weapons over the next decade is unnecessary and can be trimmed. Congressman Michael Turner (R-OH), chairman of the House Armed Services Strategic Forces Subcommittee and from a district that includes Wright Patterson Air Force Base, followed with a letter discounting Markey's figures and placing them much lower.

Who is right? This would seem an easy question to answer: Just look up the annual budget for the National Nuclear Security Agency (NSSA), the office within the Department of Energy that oversees our nuclear weapons "complex." But as it turns out, nuclear weapons functions are spread across multiple agencies, and no one in the government has ever added them up in one place.

A 2009 study on nuclear security spending (to which TCS contributed) found that annual operations and maintenance costs for nuclear weapons exceeded $29 billion per year, not including classified funding. That constitutes 67 percent of the DOE budget and 7 percent of the DOD budget. If you include all weapons-related spending, i.e. costs that would not exist if it were not for nuclear weapons, that number jumps upwards of $50 billion. These costs include funding for nonproliferation programs and cleaning up environmental waste resulting from weapons development.

No President or Congress has ever attempted to create a unified, comprehensive nuclear weapons budget, however. The closest we have is the annual budget for NNSA and what the Defense Department calls a "major force program," which neglects many overhead, support, and research costs plus all costs for tactical nuclear weapons.

Whether or not you think we should have more or less nuclear weapons, you need to know how much we spend. Resources are always part of strategy, and you can't figure out your strategy without knowing how much you spend and where. It's hard to ride herd over any government function if you don't really know what you spend on it.

A deeper problem is the amount of tax dollars wasted in our nuclear weapons complex. The Government Accountability Office (GAO) has included DOE on its list of "high-risk" programs for more than 20 years due to financial mismanagement. NNSA has been singled out as particularly problematic, with the GAO stating that the agency "struggle(s) to develop credible and reliable cost estimates, meet cost and schedule goals on projects, and overcome other related project management challenges." Cost overruns on NNSA and environmental management projects reviewed by the GAO in 2007 totaled $14 billion.

Exhibit A of this syndrome is the Chemistry and Metallurgy Research Replacement (CMRR) facility currently under construction at Los Alamos Laboratory in New Mexico, which is only half finished but its price tag has already increased to $6 billion--more than ten times its original estimate. Or take the Mixed-Oxide Fuel Fabrication (MOX) facility in South Carolina, toward which taxpayers have already paid $3 billion of its total $5 billion cost even though no customers exist for the recycled plutonium fuel it is supposed to sell.

There's no excuse for this kind of waste, national security or no. Demanding fiscal accountability from our government won't harm our security -- indeed, it will make us safer by ensuring that high-priority projects are finished on time and on budget and by getting unnecessary programs off our books.

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Going on at Taxpayer.net This Week

TCS Mourns the Loss of Rob Stuart, One of Our Founding Board Members

A Legacy for Earmarks

Cashing In: Biofuels Industry Buys Congress's Continued Support -- TCS Report

Just Say No to Stillwater Bridge

TCS Earmark Databases

TCS Preliminary Earmark Analysis for FY 2011

Download FY2010 Earmark Database

Earmark Frequently Asked Questions

TCS in the News

TCS was cited in dozens of stories this past week. Check them all out in the Headlines About TCS section of our website.

We Need Your Support!
TCS needs you to help us fight government waste
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Current Action Items

Tell the Super Committee to Cut the Deficit not Protect Subsidies
GO »

End All Wasteful Energy Subsidies
GO »

Notable Quote

"The fact of the matter is, you can't do this with just reducing spending, you can't do it with just reforming entitlements, and you can't just do it on the revenue side. It takes a combination of all three."

- Saxby Chambliss, (R-GA) (Government Executive)

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Get Over Yourselves

2011-11-04T15:33:00.001-05:00

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Get Over Yourselves

Volume XVI No. 44: November 4, 2011

Do your job. That's all we're asking. Being picked for the Joint Select Committee on Deficit Reduction wasn't a plum assignment to be sure. But here these twelve lawmakers are. Six Senators and six Representatives. Six Democrats and six Republicans. And after countless hours of public meetings, closed door meetings, and party only meetings, it's time to deliver. T minus 19 days and counting until the legally-mandated November 23rd deadline.

We did not need a new committee to tackle this task: 535 lawmakers representing 300 million Americans is a "super committee" and Congress has all the authority they need to reduce our deficit and start taming our debt. But here we are. Get over yourselves. The job is to find at least $1.2 trillion in deficit reduction. Just do it.

Here's our plan that yields more than $1.5 trillion in deficit reduction before you even get to most of the entitlement programs which would drive that number far higher. If we can do it, the members of the Super Committee certainly should be able to.

Spreading the pain is critical. As 100 members of the House - 40 Republicans and 60 Democrats - wrote "To succeed, all options for mandatory and discretionary spending and revenues must be on the table." In other words everyone's ox must be gored. For revenues, tax loopholes and breaks must be eliminated and the tax code made to be flatter, simpler, and fairer. Which means, yes, some people and corporations will pay more taxes than they do under the current byzantine system. Mandatory spending must be curtailed, and that means benefits will change. Agriculture has been living high off the hog on the public dole for too long. Medicare has been underwater in revenue for years with costs growing far faster than revenue, and Social Security has just started to go underwater, too. And despite the caterwauling you hear from the Armed Service committee, we can afford to make further cuts to the defense budget, the largest component of our discretionary spending. What we cannot afford to do is line the pockets of private contractors who charge a premium for government services, or continue to throw money at weapons systems that are outdated.

Spreading the pain is important politically and substantively, but so is how, where, and when you cut. The $1.2 trillion target is for deficit reduction over ten years. If changes to entitlement programs like Social Security and Medicare protect current beneficiaries, the savings are going to be slight in terms of deficit reduction in the near-term but could be important in terms of long term management of the debt. Cuts in discretionary spending can yield short and long term savings, and eliminating wasteful tax expenditures can result in immediate revenue as well.

Many of the critics of the Super Committee have valid points. The fragile state of the economy also can't be ignored. There is a balancing act between making real and legitimate savings to reduce the deficit without cutting essential or important services and support in a weak economy. On the other side, figuring out what government should and should not be doing is an important element of reducing our deficit. Just because government was once involved in an activity doesn't mean we should continue. Smart, targeted cuts that serve to prioritize government spending will make the government work better down the road. But there is no reason these concerns should impede the Committee's process. The tired kabuki dance around lines drawn in the sand over policy positions must be discarded.

We all dug this hole -- Congress, the Executive Branch, and the American people who elected them. It's time to take the strong fiscal medicine and not just stop digging, but start filling the hole in.

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Going on at Taxpayer.net This Week

California's Rail Project Costs More Than Double: Are Federal Taxpayers on the Hook for More?

Coalition Letter Opposing Passing Farm Bill Through Super Committee

Uranium Loan Guarantee Is Bad Bet

November 2, 5:24 PM--The Latest on the Deficit Cutting Super Committee

TCS Mourns the Loss of Rob Stuart, One of Our Founding Board Members

TCS Earmark Databases

TCS Preliminary Earmark Analysis for FY 2011

Download FY2010 Earmark Database

Earmark Frequently Asked Questions

TCS in the News

TCS was cited in dozens of stories this past week. Check them all out in the Headlines About TCS section of our website.

We Need Your Support!
TCS needs you to help us fight government waste
Click here to Join Today!

Current Action Items

Tell the Super Committee to Cut the Deficit not Protect Subsidies
GO »

End All Wasteful Energy Subsidies
GO »

Notable Quote

"If you spend a buck and borrow 42 cents of it, you're stupid."

- former U.S. Sen. Alan Simpson of Wyoming (Roll Call)

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Tell your representatives to end all wasteful energy subsidies!

2011-11-03T15:02:00.001-05:00

Dear Fellow Taxpayer,

The fifth in our six-week series of action alerts leading up to the deadline for the so-called Super Committee focuses on the billions of dollars of taxpayer money that’s being used to prop up the energy industry. As we have said before, there are lots of ways Congress can save taxpayer money. It is time to end the wasteful tradition of subsidizing the energy industry!

It’s time to let the energy industry stand on its own. For decades the government has been subsidizing multiple forms of energy, most of which have been tried, tested, and proved profitable on their own. With our massive debt and deficit, we cannot afford to give away taxpayer money to the profitable energy industry.

Tell your members of Congress to end wasteful energy subsidies HERE.

Every year, taxpayers shell out $15.6 billion in tax breaks and other handouts to the oil and gas industry. This is on top of tens of billions of taxpayer dollars in subsidies to the mature nuclear, coal, and biofuels industries. All the while, these companies are thriving. In the third quarter of this year alone, six of the largest oil companies recorded $36.8 billion in profits, bringing the year-to-date total up to $115.1 billion. These are industries that do not need taxpayer-funded handouts.

This is a time of tough decisions, both for the federal government and for individual Americans. We all have to prioritize how we spend our money, and funding the energy industry first as taxpayers and again as consumers should not be anywhere close to the top of the list. Americans are not going to stop needing oil or electricity, so why should we have to pay for it twice?

Tell your members of Congress to repeal all wasteful energy subsidies because the government shouldn’t force taxpayers to pay for energy twice.

CONTACT CONGRESS HERE

Sincerely,

Ms. Ryan Alexander
President

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Farm Bill Fiasco

2011-10-28T13:30:00.000-05:00

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Farm Bill Fiasco

Volume XVI No. 43: October 28, 2011

Never let a crisis go to waste. Agriculture Committee leaders are following that old maxim, asking the "Super Committee" charged with reducing the deficit by at least $1.2 trillion, to lock in high levels of farm spending for the next five years at the same time. Aggies clearly recognize that cuts are coming and they want to make sure that they don't both cut now and again later when the current farm bill expires in 2012.

While the bi-partisan and bi-cameral Agriculture Committee leadership is trying to grab all they can, most of the country is increasingly aware of the need to rein in deficits and have proposed trillions of dollars in savings. President Obama proposed $33 billion worth of savings from agriculture, Republican House Budget Chairman Paul Ryan (R-WI) found $30 billion, and TCS chronicled $90 billion. The leadership of the Agriculture Committees came up with a mere $23 billion over the next 10 years. But even more galling, House Agriculture Committee Chairman Lucas (R-OK) is leading the charge to circle the wagons and protect their sacred cows stating he "would hope that that $23 billion cut would reflect a commitment from leadership in Congress that ag's done its part for the next five years." And he goes on to raise the specter of using the Super Committee to "tie down the resources that are available for a farm bill for the next five years."

Trying to get the Super Committee to include the Farm Bill in their package takes some chutzpah and more than a little contempt for the 523 lawmakers not on the Super Committee, as well as the American public. The Farm Bill is a massive piece of legislation Congress passes about every five years to create, continue, or modify hundreds of programs relating to agriculture. It covers programs supporting agriculture producers, conservation spending, research, trade, nutrition, and is the vehicle that governs school lunch programs and food stamps. Any legislation that comes out of the Super Committee will receive little debate and can't be amended. It's untouchable; take it or leave it. The Farm Bill is too important to rush through a quick process without a fully engaged public. The Farm Bill affects everyone, so everyone needs to be involved.

The Super Committee needs to stay focused on its job---reducing the deficit---and savings from mandatory spending programs like agriculture should be part of it. But, laying the groundwork for the next five or ten years of agriculture policy (or transportation policy, water resources, etc.) is better left to the committee process and open floor debate. Perhaps agriculture leaders see the writing on the wall: House consideration of the FY12 Agriculture appropriations revealed a legislative interest in cutting farm programs, like paying millions in bribes to Brazil so that we could continue our wasteful and illegal subsidies to cotton producers. This kind of taxpayer victory won't happen if the special interest provisions are baked in behind closed doors.

Setting agriculture policy under regular order in no way limits the Super Committee from finding significant savings by weeding out wasteful, outdated, or unnecessary spending. There is near consensus that direct payments -- cash given to land owners simply because the land used to be farmed --need to be eliminated. Billions can be cut from crop insurance where taxpayers foot the bill for an average 60% of the farmer's insurance premium, and reimburse insurance companies for all their administrative expenses, all while insuring the insurance companies against their losses. There are tens of billions worth of low hanging agriculture fruit. The Super Committee should implement these cuts rather than spend their time crafting a backdoor way to pass contentious legislation.

The Farm Bill is one of the sacred cows in Washington. It's filled with many programs that no longer meet the reality of farming in the 21st century. The Super Committee is going to have a hard enough time finishing everything that's already on its plate. Crafting long term agriculture policy is better left to those of us with a hunger to make government work for taxpayers, rather than special interests.

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Going on at Taxpayer.net This Week

October 28, 10:29 PM--The Latest on the Deficit Cutting Super Committee

Transportation Infrastructure Finance and Innovation Act (TIFIA) Loan Program: Program Expansion Must Not Erode Taxpayer Protections

Department of Energy Loan Guarantee Program: Uranium Enrichment

Congressmen Support Common Sense Cuts to Wasteful Ag Spending

Press Release: Taxpayers for Common Sense Targets Oil and Gas Tax Breaks

TCS Earmark Databases

TCS Preliminary Earmark Analysis for FY 2011

Download FY2010 Earmark Database

Earmark Frequently Asked Questions

TCS in the News

TCS was cited in dozens of stories this past week. Check them all out in the Headlines About TCS section of our website.

We Need Your Support!
TCS needs you to help us fight government waste
Click here to Join Today!

Current Action Items

Tell the Super Committee to Cut the Deficit not Protect Subsidies
GO »

Disclose Super Committee Lobbyists
GO »

Notable Quote

"It is unjustifiable to spend billions each year on a program that pays farmers for no other reason than because they chose to grow one of six commodity crops, for which they are already receiving record market prices."

- Rep. Earl Blumenauer (D-OR) (Oregon Live)

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Tending the Budgetary Harvest

2011-10-21T15:27:00.001-05:00

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Tending the Budgetary Harvest

Volume XVI No. 42: October 21, 2011

Like growing a healthy garden, managing the budget takes a lot of maintenance. You have to weed out the unwanted, prune the suckers, and sow new seeds. At the moment, Congress is focused on weeding out the overgrowth in the federal budget. Pruning the many tax expenditures, including those in the energy sector, has been a recommendation of ours and others, as well. At the same time, the government should also reap revenue rightfully owed to the taxpayer. This needs to come from royalty payments from oil and gas on public lands and waters, but also from the fertile ground of renewable energy development – such as wind and solar – on public lands.

The potential for renewable energy generation on public lands in the United States is enormous, and very aggressive targets have already been set to promote its expansion. But Congress lacks a statutory framework designed to allow renewable development to take root. The Energy Policy Act of 2005 established a goal of 10,000 megawatts of non-hydropower renewable energy projects on the public lands by 2015, but left the Bureau of Land Management (BLM) in charge of approving renewable energy projects through rights of way authorizations originally established by the Federal Land Policy and Management Act of 1976 (FLPMA) for locating power lines, pipelines, and communications towers and lines on federal land.

The more appropriate framework for conveying authorizations for commercial development of wind and solar power generation on public land is a system of competitive leasing and royalties, similar to development of other energy sources on public lands – and what renewable energy developers now find on private land. Not only would this create a more fertile environment for private investment by providing a permanent, predictable system, it would ensure taxpayers are enjoying the fruits of this investment.

Revenues from the collection of rents, royalties, and bonus bids for access to publicly held energy resources represent one of the largest non-tax income sources for the federal government. Fair and accurate collection is necessary to ensure taxpayers are receiving what they are rightfully owed. In the recent past, however, the oil and gas royalty collection system has lacked accountability, transparency, and accuracy in charging, collecting, and auditing payments to the federal treasury. For renewables, BLM’s existing “rental fees” for wind and solar projects on public land attempt to account for the value of renewable energy inputs – wind and solar – but cannot charge per unit of power produced, which is the better method of capturing a fair return for taxpayers. And not only do we need to ensure that revenue collection is accountable and clear, but development decisions must consider potential long term liabilities.

Even before revenue from rents and royalties from new energy development has been captured, some in Congress are trying to spend it on infrastructure projects, state aid, you name it. So while one Congressional hand created the Super Committee to cut spending, the other is counting, promising, and trading the chicks before they hatch are even laid.

Efforts to increase domestic energy production are popular on both sides of the aisle. But experience shows that cutting corners in oil and gas leasing hampers accurate royalty collection, and the risk of Solyndra’s collapse was missed in part because of the Administration’s effort to fast-track renewable energy development. Instead of acting like a venture capitalist, the government should focus on building a rich bed in which private investment in renewable energy development can grow.

As the Super Committee comes up with a way to clean up the federal budget garden, they should direct lawmakers to tend to the budding revenue from our public assets. Most importantly, that revenue needs to go to feeding deficit reduction, not to lawmakers hungry for pet projects back home.

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Going on at Taxpayer.net This Week

Congressmen Support Common Sense Cuts to Wasteful Ag Spending

Press Release: Taxpayers for Common Sense Targets Oil and Gas Tax Breaks

TCS Earmark Databases

TCS Preliminary Earmark Analysis for FY 2011

Download FY2010 Earmark Database

Earmark Frequently Asked Questions

TCS in the News

TCS was cited in dozens of stories this past week. Check them all out in the Headlines About TCS section of our website.

We Need Your Support!
TCS needs you to help us fight government waste
Click here to Join Today!

Current Action Items

End Title XVII Loan Guarantee Program
GO »

Disclose Super Committee Lobbyists
GO »

Notable Quote

"There is no doubt there are scandalous cost overruns associated with it. The first trillion-dollar weapons system in history."

-Sen. John McCain (R-AZ), speaking about the troubled F-35 Joint Strike Fighter project. (Forbes)

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Support McCain Amendment: No More Ethanol Industry Handouts!

2011-10-18T12:12:00.001-05:00

Dear Fellow Taxpayer,

The third in our six-week series of action alerts leading up to the deadline for the so-called Super Committee focuses on the billions of dollars of taxpayer money that’s being used to prop up the ethanol industry. As we have said before, there are lots of ways Congress can save taxpayer money! It is time to end the wasteful tradition of subsidizing the corn ethanol industry!

Senator McCain (R-AZ) has offered an amendment (#741) to H.R. 2112, the fiscal year 2012 Agriculture Appropriations bill, to ensure that taxpayer money isn’t used to fund the ethanol industry’s building of blender pumps. Taxpayers are currently subsidizing the ethanol industry in many ways, including through the Volumetric Ethanol Excise Tax Credit (VEETC), which costs taxpayers $6 billion a year. VEETC is already a waste of taxpayer money, we shouldn’t have to cut them another check. A vote is expected to take place today.

Urge your Senators to vote yes!

Since the 1970's, Congress has been subsidizing the corn ethanol industry. Accounting for more than 75% of all renewable government subsidies, corn ethanol enjoys a 45 cent per gallon excise tax for every gallon of the biofuel blended with gasoline. This subsidy cost taxpayers $5.7 billion in 2010, and will cost taxpayers $6 billion this year.

Corn ethanol, which accounts for 98% of all ethanol use in the U.S., has never made sense economically, or environmentally. When ethanol is used as an additive in gasoline, it only contains two-thirds the energy a standard gallon of gasoline can provide, and costs taxpayers $1.78 for every gallon of gasoline that is substituted with corn ethanol. Ethanol is also ensured a market by the Renewable Fuels Standard, which mandates that 36 billion gallons of renewable fuels be blended with U.S. gasoline by 2022, up to 15 billion gallons of which can come from conventional corn ethanol. For more information on this wasteful ethanol subsidy, read our Green Scissors report here.

After 33 years, it's time to let the ethanol industry stand on its own. Ask your Senators to support the McCain Amendment and protect taxpayers from another ethanol handout!

CONTACT CONGRESS HERE

Sincerely,

Ms. Ryan Alexander
President

Taxpayers for Common Sense is a 501(c)(3) organization and donations are tax-deductible as allowed by law. Donate today to help us make government work for taxpayers.

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Big Government Defenders

2011-10-14T15:56:00.001-05:00

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Big Budget Defenders

Volume XVI No. 41: October 14, 2011

Political leaders tackling our budget mess should have visited the Washington Convention Center this week for a lesson on federal spending. The Association of the United States Army packed hundreds of exhibitors into two exposition halls the size of football fields at its annual convention, and companies from around the world came to sell the U.S. Army everything from mammoth tanks to micro-thin wires. Corporations such as Raytheon and KBR erected multi-level installations nearly big enough to generate their own zip code, complete with conference rooms and coffee bars.

In his address to the convention, Defense Secretary Leon Panetta called sequestration, which would impose $600 billion in defense cuts if the Joint Select Deficit Reduction Committee (or Super Committee)'s $1.2 trillion in proposed reductions are not adopted by Congress, a "doomsday mechanism." Later in the week, Rep. Randy Forbes (R-VA), who represents a district heavy with defense contractors, launched an initiative claiming that sequestration would "cause significant harm to United States interests." The initiative echoed a report released last month by the majority staff of the House Armed Services Committee that read like a list of campaign debate talking points---light on facts but replete with fear-mongering claims that reductions risked "increasing the threat of nuclear proliferation" as well as our ability to "adequately defend allies."

This all cleverly misses the point. Sequestration was meant to be the scary stick to get Congress to take the deficit cutting medicine. What big defense budget boosters are trying to do with this line of reasoning is to protect Pentagon spending in the Super Committee deliberations as well.

It's no surprise that the Pentagon would scramble to protect its flank in these budget-cutting times, but the offense from Panetta, Congress, and industry is brazenly alarmist---and sometimes downright wrong. Panetta told Congress that sequestration would increase the country's unemployment rate by 1 percent, despite absence of any evidence. And presumed GOP presidential nominee Mitt Romney pledged in a speech to "reverse Obama's massive defense cuts." But the defense budget has actually increased billions of dollars under President Barack Obama.

Let's review some more facts. First of all, the $450 billion in defense cuts that the debt ceiling deal enacted would only lower the rate of increase in DOD's budget, a rate that has gone through the roof in the last ten years. Even the "doomsday mechanism" would only bring DOD's budget back down to the 2007 level---a pretty comfy one, considering war spending won't be touched.

Second, our country faces a $1.3 trillion deficit, and every part of the government needs to step up and trim down. As consumer of the largest piece of our discretionary budget pie, the Defense Department cannot dodge its share, nor can tax expenditures, entitlements, and other discretionary spending. There's certainly plenty of fat to cut at DOD: The agency buys more than $1 billion of goods and services every day; employs some three million people globally, more than the world's largest corporation; and its headquarters, the Pentagon, is the world's largest office building. If that doesn't epitomize Big Government, we don't know what does.

Finally, the chances of sequestration coming to pass are slim to none, and Forbes et al know it. Whatever the Super Committee produces, it will fall to Congress to adopt the recommendations or come up with some of their own. As we said, this full-court press on behalf of defense is likely an attempt to dissuade the committee from making any cuts at all, or prepare for the battle over programs that will take place in Congress over the coming years. Exploiting taxpayers' anxieties about jobs and safety is a cynical way to avoid making tough decisions that will affect our security for decades to come.

###

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Solyndra Probe Continues

October 13, 5:09 PM--The Latest on the Deficit Cutting Super Committee

Bridging the Gap: Redirecting Investments to Fix the Nation's Bridges

It's Time to Rethink the Stillwater Bridge

Deal May Increase Transportation Spending, But at What Cost?

TCS Earmark Databases

TCS Preliminary Earmark Analysis for FY 2011

Download FY2010 Earmark Database

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Notable Quote

"The sequester that was built behind this is ugly, and it was meant to be ugly so that no one would go there. I don't underestimate how hard it's going to be to come to an agreement by the so-called super committee, but we have to get to one."

- House Speaker John Boehner, R-Ohio (ABC News)

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End the Title XVII Loan Guarantee Program

2011-10-13T11:25:00.000-05:00

Dear Fellow Taxpayer,

The second in our six-week series of action alerts leading up to the deadline for the so-called Super Committee focuses on the recent controversy over the Solyndra bankruptcy. The Super Committee is racing to find at least $1.2 trillion in savings or risk across-the-board cuts in January 2013 – a condition of the increase in the debt ceiling. As we have said before, there are lots of ways Congress can save taxpayer money!

Based in Fremont, California, Solyndra received a $535 million loan guarantee in 2009 from the U.S. Department of Energy to manufacture solar photovoltaic panels. Two years after receiving the funding from the Federal Financing Bank, a part of the Department of the Treasury, the company filed for Chapter 11 bankruptcy and is now under federal investigation. Solyndra is the first casualty, but certainly not the last, of the embattled Department of Energy (DOE) Loan Guarantee Program – a fundamentally flawed program that could ultimately cost taxpayers billions.

Tell your representative to end the Title XVII Loan Guarantee Program

The Title XVII Loan Guarantee Program was first created to fund the construction of nuclear reactors, then morphed into a much broader program that now includes coal, biofuels, energy transmission and efficiency, and renewable energy projects. Members of Congress and the media have shown great interest in the Solyndra case because of the political fallout for the Administration. Congress should take this opportunity to rid taxpayers of the program completely.

DOE has put taxpayers on the hook for billions of dollars in pending and committed loan guarantees for other projects that were poorly vetted and carry far too much risk. They’ve even offered an $8 billion loan guarantee for a nuclear reactor – Georgia Power's Plant Vogtle – that’s facing significant legal and technical hurdles and has held all negotiations behind closed doors.

And that’s not the only company poised to put billions of taxpayer dollars on the line. USEC, a uranium enrichment company building a plant in Piketon, Ohio, is using all of its political muscle to push a loan guarantee through DOE and risk another $2 billion, even though the project was effectively rejected by the DOE two years ago.

Contact your member of Congress and tell them to end this flawed program.

CONTACT CONGRESS HERE

Sincerely,

Ms. Ryan Alexander
President

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Cut Where the Money Is

2011-10-07T15:26:00.000-05:00

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Cut Where the Money Is

Volume XVI No. 40: October 7, 2011

When asked why he robbed banks, Willie Sutton supposedly observed, "because that's where the money is." This yielded the "Willie Sutton Rule" of business: concentrate efforts on cost-cutting and efficiency where you have the greatest costs. The same maxim applies to cutting the deficit.

As much as we rail against waste, fraud, and abuse and try to excise it from government, it doesn't amount to $1.2 trillion -- the target for the Joint Select Committee on Deficit Reduction. Not even close. This type of spending should not be exempt by any stretch, and wasteful spending provisions make up a good part of our Super Cuts for the Super Committee list. But it does mean we can't kid ourselves into thinking we can just eliminate waste and bureaucratic excess and we'll have the books balanced.

We also have to deal with cold hard numbers. Whether you like or hate foreign aid, it doesn't add up to much more than a budgetary hill of beans at around 1 percent, or $44.9 billion in a $3.52 trillion federal budget in 2009. Same goes for items like earmarks. We've been an uncompromising critic of special interest spending slipped in to the federal budget. And we cannot afford to make spending decisions on the basis of political muscle over project merit like earmarks did. But congressional earmarks were $15.9 billion in fiscal year 2010 -- less than half of 1 percent of the budget. Good sound bites don't always equal big savings.

Now there is value in rooting out waste, fraud, and abuse. The $400 hammer or $600 toilet seat increases the public's cynicism and skepticism of the federal government and this has a societal cost. But as Deputy Defense Secretary Lynn observed earlier this week, we can't sufficiently shrink the budget just through efficiencies alone. We have to prioritize. The "nice to haves" must go.

For years, we have been living beyond our means. We didn't offset tax cuts or new programs. Instead of sharing the sacrifice of war across the budget, we did it through emergency spending and passed enormous farm and transportation bills while creating a new prescription drug benefit. And we did this all on the nation's credit card---the last surplus was in fiscal year 2001, a decade ago.

The budgetary chickens have come home to roost. We cannot expect that a nip here and a tuck there will trim the budget sufficiently. There will be some pain and yes, some nice to have, okay programs and spending are going to have to go.

The "Super Committee" is going to have to tackle tax expenditures -- special interest carve-outs in the tax code that cost $1.1 trillion in revenue every year. They are going to have to look at reforms to major mandatory spending like Social Security, Medicare, and farm programs. And they are going to have to look at discretionary spending -- including defense, which accounts for more than half of all discretionary spending.

Quite simply it's not about goring someone's ox. A whole herd of oxen are going to have to get gored. No one should suffer under the illusion that there is some "get savings quick" scheme, some silver bullet solution to deficit issues. Reality must trump rhetoric. Just about everyone shared in gains from deficit spending, now we all will feel some pain.

###

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Going on at Taxpayer.net This Week

It's Time to Rethink the Stillwater Bridge

October 3, 3:09 PM--The Latest on the Deficit Cutting Super Committee

Clock Ticking Only On Some of the Risky DOE Loan Guarantees

Deal May Increase Transportation Spending, But at What Cost?

TCS Materials on Loan Guarantees

TCS Earmark Databases

TCS Preliminary Earmark Analysis for FY 2011

Download FY2010 Earmark Database

Earmark Frequently Asked Questions

TCS in the News

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Notable Quote

"Have we really reached a point where one person's demand for ideological purity is paralyzing Congress to the point that even a discussion of tax reform is viewed as breaking a no-tax pledge?"

- Rep. Frank Wolf (R-VA) (New York Times)

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Super Committee: Disclose the Lobbyists

2011-10-06T16:51:00.001-05:00

Dear Fellow Taxpayer,

The Joint Select Committee on Deficit Reduction, or 'Super Committee' has a critical undertaking ahead of them -- find at least $1.2 trillion in savings over the next ten years or trigger deep, across-the-board spending cuts.

At Taxpayers for Common Sense, we examine exactly how our tax dollars are spent and identify areas of spending that are wasteful, ineffective, or outdated. There are many places spending can be cut to reduce the deficit and make government work. We believe this is where the Super Committee should start. To that end, we have identified more than $1.5 trillion in common sense deficit reduction for the Super Committee to consider.

Each week for the next six weeks we will send action alerts that allow you to directly contact your representative and advocate for a leaner, more effective government.

This week, we start with a call for transparency in the Super Committee process. We all know that lobbyists and special interests have major influence in the legislative process. Their voices tend to drown out the voice of the general public, and, too often, the best interests of taxpayers.

Please contact your representatives and remind them of the need for transparency in Congress and the Super Committee process.

CONTACT CONGRESS HERE

Sincerely,

Ms. Ryan Alexander
President

Ryan Alexander
President

P.S. With this list we've exceeded the Super Committee's goals using a fraction of Congress's budget. Please make a tax-deductible donation today and help us continue to make government work for taxpayers instead of special interests.

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Budgeting on Reality

2011-09-30T16:06:00.000-05:00

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Budgeting on Reality

Volume XVI No. 39: September 30, 2011

As millions of Americans do every year, Congress should jot down some New Year's resolutions. But instead of waiting until January, these can be tied to the 2012 fiscal year that starts October 1st. And instead of resolving to shed a few pounds or cut back the swearing, they can resolve to get the budget in shape and stop the gridlock and waste that leads taxpayers to fill their swear jars.The resolutions should be straightforward and simple.

Pay Our Bills On Time -- One of Congress's only constitutionally mandated duties is to write the checks to fund government every year. Lawmakers jealously guard their "power of the purse" but seem to forget that with power comes responsibility. This is the second year in a row that not a single one of the twelve spending bills that fund government is signed into law before the start of the fiscal year. Congress needs to do its job and stop helping create the dysfunction and waste in the federal government that lawmakers like to rail about.

Don't Be Penny-Wise And Pound-Foolish -- We need budget cuts. But we need to be smart about this. Some of the greatest tools on Congress's fiscal tool belt are the independent, non-partisan agencies that advise them, like the Congressional Research Service, Congressional Budget Office, and the Government Accountability Office (GAO). The GAO is the investigative arm of Congress and helps root out waste, fraud, and abuse through hundreds of publicly available reports every year. Unfortunately lawmakers in both chambers, but particularly the Senate, are trying to cut nearly $50 million (just shy of 10%) from the agency's requested budget. Some lawmakers, apparently, don't like what comes out of the unbiased investigators mouths. Sometimes the truth hurts, but it's important to hear. With $14 trillion in debt and a fed-up public, taxpayers are demanding an increase in accountability, not its abandonment.

Stop the Fuzzy Math -- Both the President's recent cuts proposal and the budget from Rep. Paul Ryan (R-WI) tapped savings from drawing down forces in Iraq and Afghanistan as savings in their 10-year budget projects. This is no chump change, totaling more than $1 trillion over those ten years. But let's face it, the plan was not to spend that money, so counting it toward cuts to the projected budget totals is bogus and little more than budgetary smoke-and-mirrors. Similarly there are lot of budget gimmicks to be sworn off, from double counting offsets to counting revenue and spending cuts (like cuts to the Medicare physician reimbursements) that are never going to happen. Just like manipulating the scale to look like you made your weight loss goals, horsing around to make the budget deficit look better doesn't accomplish anything in the long run.

Stop the Pandering -- Both parties are guilty of telling people what they want to hear instead of owning up to the cold hard truth--for too long we've lived beyond our means and now we must find new revenue, cut spending, and reform entitlements. There is no way around it. We can't step back from the fiscal brink by holding defense, entitlements, taxes, or [insert your favorite policy here] as untouchable. We need shared sacrifice and we can't achieve that if politicians keep telling their own constituencies that the buck stops over there. It's time to gore a whole herd of oxen, lest we all stampede off the fiscal cliff.

All we are asking of Congress and the Administration is to do the job they signed up for honestly and vigorously. Washington has shirked responsibility for too long while pointing the finger at the other guy. It's time for leadership and statesmanship. This year, let's resolve to make government work.

###

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Going on at Taxpayer.net This Week

Clock Ticking Only On Some of the Risky DOE Loan Guarantees

Deal May Increase Transportation Spending, But at What Cost?

Department of Energy: Loan Guarantee Program Overview

Joint Letter in Support of Common Sense Flood Insurance Amendments

September 21, 4:28 PM--The Latest on the Deficit Cutting Super Committee

TCS Earmark Databases

TCS Preliminary Earmark Analysis for FY 2011

Download FY2010 Earmark Database

Earmark Frequently Asked Questions

TCS in the News

TCS was cited in dozens of stories this past week. Check them all out in the Headlines About TCS section of our website.

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Notable Quote

"We are concerned that the Government Accountability Office (GAO) is being unfairly singled out with both excessively deep cuts and overly burdensome new mandates that will consume the agency's more limited resources for no apparent benefit"

- Senator Tom Coburn (R-OK), along with Sens. Ron Johnson (R-WI), Claire McCaskill (D-MO), John McCain (R-AZ), and Scott Brown (R-MA) in a letter to the members of the Senate Committee on Appropriations. (ABC News)

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Guaranteed Loss

2011-09-23T08:31:00.001-05:00

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Guaranteed Loss

Volume XVI No. 38: September 23, 2011

You may have heard about Solyndra. The first casualty, but certainly not the last, for the embattled Department of Energy (DOE) Loan Guarantee Program. The solar start-up received a $535 million loan guarantee in September of 2009. Announced with much fanfare, it was the first commitment to come from the DOE program, which was created in the 2005 Energy bill.

It's pretty clear that Solyndra had a slew of problems, but we must not lose sight of the forest for the trees. You can't be shocked when a bad process yields bad results. Solyndra is part of a fundamentally flawed program that we and others have warned could cost taxpayers billions.

Created first as a program to fund the construction of nuclear reactors, the Title XVII Loan Guarantee Program morphed to include coal, biofuels, transmission, energy efficiency, and renewable projects, greasing its wheels through Congress in 2005. After getting beefed up in several appropriations bills and finally the stimulus, it now provides loan guarantees for just about every energy form on the planet.

Through most of its life the program has lurked in the shadows. But Solyndra's woes, coupled with the September 30th deadline for the majority of renewable technologies portion, has brought the program into the light of day. Before the sun sets on this particularly troubled solar project, the entire Title XVII program should come under serious scrutiny or taxpayers will lose billions.

As the program expanded over the course of its six year life, the few taxpayer protections originally provided were slowly eaten away. In October 2007, DOE issued a final rule detailing the processes and parameters of the program. Originally DOE proposed guarantees covering 90% of the value of the loan. Since taxpayers covering 90% just wasn't enough for some, at the behest of industry and lawmaker pressure, DOE increased the coverage to 100% of the value of the loan.

Then in August 2009 it appeared DOE wanted to move quickly and quietly on a second industry sweetener---a hit to taxpayers' ability to recoup lost assets. Shadily, DOE suggested this while Congress was out of town. A few lawmakers complained, so DOE delayed the closing of the public comment period until Congress returned to Washington. Unfortunately, DOE shrugged off any concerns raised and plowed ahead. In the end, taxpayers' right to getting back our portion of the defaulted loans was weakened---no longer were we guaranteed a place first in line when a project went belly up---even when we put up the most cash in the first place.

Now DOE is on the line for billions of dollars in pending and committed loan guarantees for other projects that were poorly vetted and leave taxpayers carrying far too much risk. They've already committed us to an $8 billion nuclear reactor that's facing significant legal and technical hurdles and where all negotiations have been held behind closed doors.

We need to put the brakes on this program before it's too late. Solyndra will likely cost taxpayers hundreds of millions of dollars in losses. But the losses won't stop there if the Solyndra case is used only to score political points and not address a larger systemic problem. This default is a warning that Congress and the Administration must heed. Taxpayers must not be burned again.

###

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Joint Letter in Support of Common Sense Flood Insurance Amendments

September 21, 4:28 PM--The Latest on the Deficit Cutting Super Committee

TCS Testifies on the Inland Waterways Trust Fund

TCS Materials on Loan Guarantees

Coalition Letter to Support Transparency in Super Committee

TCS Earmark Databases

TCS Preliminary Earmark Analysis for FY 2011

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Earmark Frequently Asked Questions

TCS in the News

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Notable Quote

"I'm a little less interested in taking money from crop insurance than I am other places, but the bottom line of it is, agriculture can't be a sacred cow and not contribute something to deficit reduction..."

- Iowa Senator (R) Chuck Grassley (Radio Iowa)

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Matrix Budget Scoring

2011-09-16T17:21:00.000-05:00

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Matrix Budget Scoring

Volume XVI No. 37: September 16, 2011

In The Matrix, Morpheus could have been describing the government's budgeting rules: "some of them can be bent, others can be broken." While not dodging bullets or bending spoons, there are a lot of gimmicks that lawmakers employ to make objects appear smaller than they actually are. These can end up costing taxpayers dearly.

Last week the deficit reduction "Super Committee" started meeting, and it is clear that the effectiveness of the Committee will be depend partly on how they interpret the rules. A key point discussed was the baseline -- the predicted amount of spending and revenue for the next ten years and the resulting deficit. The Committee's goal is to cut that baseline deficit by $1.2 trillion. Simply put, how much you actually cut depends on where you start. The Committee needs to start with a realistic projection -- not ignore that absent significant changes, certain programs are going to be funded each year, Medicare payment cuts to physicians aren't going to materialize, certain expiring tax cuts are going to be extended, and future squishy savings from efficiency and targeting waste, fraud, and abuse are more vapor than substance.

The baseline is not the only place where the budgetary funhouse mirrors come into play. The Super Committee is using a 10-year budgetary window, but different deficit reducers will have different effects inside and outside of that window. For example, the tax cuts of 2001 and 2003 were phased in over several years, so the revenue loss in the first ten years is far smaller than it will be in the second ten. You can do the same thing with spending. On the flip side of the coin, there are reforms that can have a much greater effect outside of ten years. Small, phased-in changes to entitlement programs may not take effect for years, but could significantly improve our long-term budgetary picture. Even though these won't count against their $1.2 trillion deficit reduction target, the Committee should pursue these reforms.

Another gimmick: the convenient fiction approach. Even though it's clear that we are going to have to bail out the Post Office to the tune of billions, its current independent structure enables Congress to ignore that cost while stymieing reforms the Post Office wants that may help its bottom line. Or, in the case of the last highway bill, ignoring reality and assuming that gas tax revenues would magically jump to pay for all the extra spending crammed into the legislation. Fact, not fiction, needs to rule the day.

And of course, there is the budgetary fig leaf, where you mask the size of the problem. Years ago Congress looked at then-surpluses in the Social Security and Medicare trust funds and came up with the unified budget that made the size of deficits less noticeable, further enabling budgetary imbalance.

It is not just the Super Committee that could be engaging in budgetary distortions. The President's new jobs proposal recommends the creation of a national infrastructure bank that would use federal loan loans and loan guarantees to leverage private investment in a variety of projects. These types of funding instruments have proliferated in part because budget scoring rules make them appear cheap -- the liabilities aren't accounted for in the budget. But in reality the taxpayer is on the hook if the loan goes bad. A recent beneficiary of another loan guarantee program, the solar energy company Solyndra, went belly-up, and Uncle Sam may be out nearly $600 million because of it. The same program is making other high-risk bets in nuclear energy projects -- risks Wall Street wouldn't even touch when they were going gaga over junk mortgages.

Let's be clear-eyed about one thing: we are staring at a $14 trillion debt. It took a lot of creative budgetary wizardry to help us get to this point. We know it won't be pretty when our eyes are open to the real costs of what we expect government to do. But we cannot afford the budget gimmicks and games. To the Super Committee and all of Congress and the Administration: we want the truth. We can handle it.

###

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Super Cuts for the Super Committee

September 13, 2:10 PM--The Latest on the Deficit Cutting Super Committee

The American Jobs Act: Concerns mount over President's Infrastructure Bank proposal

Report Highlights Significant Savings in Essential Air Service Program

House and Senate Craft Disappointing Extension of Surface Transportation, FAA Programs

TCS Earmark Databases

TCS Preliminary Earmark Analysis for FY 2011

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Urge Your Representative to End VEETC, Follow the Senate's Lead
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Clean Up the Deficit by Cutting $380 Billion in Harmful Spending
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Notable Quote

"We need to know how this happened, who should be held accountable and how to avoid future risk to taxpayer dollars."

- said by Rep. Henry A. Waxman

(D- CA) concerning the recent bankruptcy of Solyndra, a company financed by the Department of Energy's loan program (The Washington Post)

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W(h)ither Appropriations

2011-09-09T15:03:00.001-05:00

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Run with the Scissors

Volume XVI No. 36: September 9, 2011

Lawmakers of all political stripes are fond of reminding everyone in earshot that the Constitution gives them the power of the purse. Congress wields this power through twelve spending bills that fund all facets of government and have to be passed each year. Well, fiscal year 2011 turns into a pumpkin at midnight September 30, just three weeks away, and how many of the dozen bills have been signed into law? Uh, that would be zip, zilch, zero, nada.

In many years the House passes all of their bills before they leave for August recess, and the Senate has at least moved everything through committee if not the floor. Not so in 2011. The House has passed six spending bills; the Senate has passed a grand total of one. But that's just the start. Remember after each chamber adopts their version of a bill, they have to hammer out their differences in a conference committee and pass the resulting bill. None of that has occurred. Clearly they aren't going to get there from here.

Unfortunately this isn't a surprise. It's been well over a decade since all the bills were done before the beginning of the fiscal year. And it's worth remembering it was mid-April, more than half way through the fiscal year, when the FY11 spending decisions were finally approved. That followed a fall where the then-majority Democrats couldn't get any of the bills done before the 2010 elections, punting to the newly elected Republican House majority in the New Year. This time around, wrangling over the debt ceiling debate delayed Congress from even determining what the total amount of spending should be in FY12 putting them behind the legislative eight ball again.

This Congressional failure is more than an embarrassment or an inconvenience. Operating on stopgap spending, agencies are held hostage, unable to adequately budget, hire or promote staff, fulfill certain parts of their mission, or interact with the public if it requires travel. And it's not just in Washington; this affects Farm Service Agency offices, National Park Rangers, and medical research grants amongst others. It used to affect veterans as well, but Congress admitted failure and approves much of the Department's budget a year in advance! This is Congressionally-driven government dysfunction.

There are already rumblings of a month-long continuing resolution to buy Congress time until October 31st. That should be more than enough time to finalize the bills and have some certainty in fiscal year 2012 spending. The debt ceiling deal locked in the spending levels so now it's just about filling in the details with something the House and Senate can agree on. The final deal provided less security spending and more non-security spending than the House had previously agreed upon in their budget and that may be a hurdle, but in the end the deal passed both chambers with bi-partisan majorities (although clearly the debt limit sword of Damocles was part of the impetus).

From the impasse over the FY11, spending bills to the wrangling and brinksmanship over the debt ceiling deal, the public is fed up with Washington infighting. The creation of the so-called deficit "Super Committee" is just the latest example of the Congress not fulfilling their constitutionally mandated job. To put it in perspective, we have 535 people representing more than 300 million Americans -- if that isn't a "super" committee we don't know what is. Congress needs to roll up their sleeves and get the FY12 spending bills done -- only a month late. Sad as it is, that would still be progress.

###

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Comparing Proposals for a National Infrastructure Bank

September 8, 3:15 PM--The Latest on the Deficit Cutting Super Committee

TCS Letter to the 'Super Committee'

Transportation: Gridlock may lead to Crashes ahead

TCS Earmark Databases

TCS Preliminary Earmark Analysis for FY 2011

Download FY2010 Earmark Database

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"The real problem with big issues like Medicare is that both parties have to be brave at the same time...Every pollster will tell you not to do that to get partisan advantage. Too many people here are willing to deliberately harm the country for partisan gain."

- Jim Cooper, a Blue Dog Democrat, quoted in The New York Times

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Disasters in the Budget

2011-09-02T12:02:00.001-05:00

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Disasters in the Budget

Volume XVI No. 35: September 2, 2011

As the Northeast dries out from Hurricane Irene, it is sobering to think that this likely multi-billion dollar storm that rode the east coast from North Carolina to Maine is only the most recent in a year that saw flooding on the Mississippi and Missouri Rivers, a record drought and wildfires that lead Governor (and Presidential candidate) Perry to declare the entire state of Texas a disaster area, and a tornado so horrific in Joplin, Missouri that the United Arab Emirates committed $1 million to help rebuild the schools. We are not out of hurricane season yet, so we can be in for more.

While costly and tragic, disasters provide an opportunity to review how the country prepares for and responds to these events both budgetarily and on the ground. And in both areas there is a lot of room for improvement. Disaster relief should be better budgeted and at least a portion of emergency aid offset. Furthermore, disaster aid and flood or crop insurance must be better aligned with robust mitigation efforts that will reduce future disaster payments.

After a major disaster, a governor can request a major disaster declaration from the president. This is almost always in the governor's interest because it results in federal aid and assistance -- relatively free (to the state) money. Much of this is in the form of low interest rebuilding loans from the Small Business Administration, but there is also direct funding for individuals and communities through the Disaster Relief Fund (DRF). The DRF consists of funds allocated in the budget at the beginning of the year. Of course, specific disasters are hard to predict, but it is a lock that there will be some disasters every year. This tactic represents a budgetary double edged sword. That money is burning a hole in FEMA's pocket, so it is virtually guaranteed to be spent in any given fiscal year. But if you don't set enough aside, Congress resorts to emergency spending and just adds disaster relief to that year's deficit. Since 1989, $120 billion (non-inflation adjusted) has been spent by the DRF, and $100 billion of that was unbudgeted emergency funding.

That isn't the only aid. There is also federal flood and crop insurance available. We've talked about the problems in both of these programs before, but one of the major problems (other than enormous taxpayer subsidies) shared by both is that they do too little (or in crop insurance nothing) to reduce future risk -- even after the inevitable disaster has occurred.

Over the coming days, we are going to find out about many businesses and individuals that didn't purchase flood insurance and yet are left with enormous losses. Floods happen. And they happen when you don't expect it. Just because it hasn't flooded in a hundred years doesn't mean it won't happen tomorrow. Neighboring development, landscape changes, subsidence all can move you further into the floodplain. In recent years, FEMA has begun modernizing flood insurance rate maps, figuring out the relative chance of flooding in given areas. Rather than working with their constituents to deal with the reality on the ground, some lawmakers are trying to delay the implementation of the maps -- and concomitant flood insurance requirements. Stopping a map doesn't stop the deluge. It's a twisted form of legislative paternalism that would leave homeowners without one of the tools to reduce their risk and shift costs of risky development to taxpayers.

Still others in Congress want government to get further into the insurance racket by providing a back stop for state insurance programs even if they are notoriously underfunded. This unwise intrusion into the private marketplace (there is adequate reinsurance -- insurance for insurance companies or states) that would encourage high risk development and stick Uncle Sam with more of the tab.

In the end, the government cannot just stop at handing out cash after the latest natural disaster. But we can do a better job. One study estimates that every dollar spent on mitigation saves four in disaster relief. But a close examination reveals that FEMA's major mitigation program was rife with special interest earmarks for years. Furthermore, too often disaster relief funding or flood or crop insurance is directed at rebuilding what was there before or encouraging the same activities (growing crops in drought or flood-prone land). For the country to be less prone to natural and fiscal disasters, the budgetary response and mitigation efforts have to be revamped. In the end this will better protect taxpayers and make fewer Americans victims of disasters.

###

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"I would say we have an absurd tax code that has so many ridiculous features that are there because special interests have carved them out. I'm all in favor of reforming it so we can get rid of those kinds of features."

- "Super Committee" member Senator Pat Toomey (R-PA), quoted in Politico

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Run with the Scissors

2011-08-26T12:56:00.001-05:00

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Run with the Scissors

Volume XVI No. 34: August 26, 2011

It's past time to get out the scissors. This week the latest deficit projections emerged, forecasting a $1.3 trillion federal deficit this year, and an additional $3.5 trillion in debt over the next ten years. We're suggesting a way to get things started by slicing as much as $380 billion in wasteful and environmentally harmful low hanging budgetary fruit.

This week we joined with environmental group Friends of the Earth, free market think tank Heartland Institute, and consumer watchdog Public Citizen to release the Green Scissors 2011 report. The new analysis highlights billions of dollars in cuts to unnecessary, outdated, and ineffective spending programs that also support environmentally harmful activities and can produce additional long-term liabilities for taxpayers.

While the report provides good reading for all lawmakers, the ones who should be sitting in the front row include the 12 members of Congress who now sit on the so-called "Super Committee" tasked with producing a set of recommendations for saving up to $1.5 trillion over the next ten years.

To be sure, the new Congressional "Super Committee" will have its hands full coming up with cuts and revenue raisers, but the Green Scissors report provides some good fodder. Like a lean, mean, slicing machine, it offers up about a 1/3 of the reductions they need to achieve in only half the time!

Green Scissors details billions of dollars in agriculture, energy, land and water, and transportation spending waste that should be a part of any deficit reduction plan. Of course this doesn't list every way we can pare down our deficit --- check out our starter list of discretionary, mandatory, and tax expenditures so far --- but it's a start. We'll never get our debt in check if we don't start somewhere. So why not start right here?

The federal government can save billions every year making sure it receives its fair share of revenue for use of public resources, as well as cutting bogus spending. Taxpayers own vast amounts of natural resources and we should get a fair market value when they are developed, instead of just giving them away, as is the case with the 1872 Mining Law and royalty-free oil and gas drilling. We also need to rein in the litany of tax breaks that litter the code, increase complexity, and unnecessarily subsidize highly profitable industries -- whether it is for oil and gas or in the alternative energy field of ethanol and biofuels. And we need to make sure federal tax dollars are only funding infrastructure projects that serve a real national need and are good stewards of our dollars. Subsidizing rural airline passengers up to a $1,000 a piece, spending $2 billion on a boondoggle, the economically unjustified Mississippi River navigation locks, or building fancy bridges when just as useful, but far cheaper, alternatives are available, is something we cannot afford.

There is also future risk to consider. The nuclear industry is set to receive billions in loan guarantees for new reactor construction, new reactors that are plagued with cost, safety, and technological concerns. These are high risk loans that private markets won't finance, so why should taxpayers take on this financial burden? Or promoting high risk development and crop production with billions of dollars in flood and crop insurance subsidies.

There are many things Congress and the federal government can do to save money and help the environment. We're just getting started. There are timber subsidies, ranching subsidies, and subsidies for companies overseas. The list goes on.

To be sure, all of these programs and projects have political constituencies. It won't be easy; it never is. But considering a broad, extremely diverse coalition has come together and agreed that all of this wasteful and environmentally harmful spending has got to go, this is where the Super Committee has to start.

###

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"I think we are all committed to ... looking at the tax code, getting rid of the loopholes, things that we all agree need to be done, and then along with that you have to have real reductions in government spending"

- Sen. John Boozman (R-AR) earlier this week. (Arkansas News)

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Weekly Wastebasket: A Helping Hand

2011-08-19T15:06:00.001-05:00

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A Helping Hand

Volume XVI No. 33: August 19, 2011

Incapable of producing a grand compromise to rein in our burgeoning debt, Congress has punted that responsibility to a bi-partisan "Super Committee" of twelve lawmakers. $1.5 trillion dollars. That's what they have to find in savings, and they have to do it all before Thanksgiving. A pretty tall order.

But don't fret. At TCS we've been working on this for a while. We were concerned with the deficit before it was cool, and we have packaged together some easy to implement cuts for Congress. So start with these low hanging budgetary fruit.

Most of these changes are common sense outside the confines of the Capitol. Stop sending payments to land owners simply because they own land that used to be farmed---even if in some instances it's not farmed now. Eliminate the tax credit which pays oil companies to blend ethanol with gasoline, something they are already required to do under the Renewable Fuels Standard. Don't gamble taxpayer dollars backing projects Wall Street treated as radioactive even at the height of the mortgage bubble. And there's more, we've found about $900 billion worth to start.

It's really that simple. All the committee members need to do is just pick this up (it's only 14 pages; an easy read for them as they shuttle between fundraising dinners) and they'll be 60% of the way there. Implement these easy ones, and you can spend more time on the difficult but critical ones like reforming entitlement programs.

The most challenging task of the Super Committee is not finding cuts; it's finding the political courage to follow their oath to the Constitution instead of their parochial interests. Sure, they are elected by their constituents, but they serve in the U.S. Congress. And when push comes to shove, they need to work in the interest of all of US.

Yes, some of the items on the list are popular, but we're not running a popularity contest. We're trying to get our country out of the fiscal ditch. Big savings can come from adjusting programs to better meet their purpose. Phasing reforms to the mortgage interest tax deduction---applying it to only loans of less than half a million dollars and making it a tax credit instead of a deduction---can save taxpayers billions and make homeownership possible for those on the margins without subsidizing the wealthy. Healthcare costs take up 8% of the military's budget and are projected to take up significantly more in the future, yet TRICARE premiums haven't budged in over a decade. Increasing premiums just a bit for working age retirees, who might get health insurance through their private sector jobs, can save billions. And do more with less. For instance, instead of spending hundreds of millions more to get an expensive bridge in Stillwater, Minnesota, pocket the difference and build a simpler bridge. We need functional and can't afford fancy.

And this quick list gets us far down the road without even touching the biggest entitlements. Save yourself some time and bickering over the easy stuff, by following our lead. With this freed up time, they can devote more effort to finding common ground on fiscal reforms to Medicare, Medicaid, and Social Security. At the least make some progress before we release our next list, which we're working on now.

For decades Congress has ignored the tough to focus on fluff. But now we've reached a dead end. Kick the can down the road anymore, and we'll plunge down a $14.6 trillion fiscal cliff.

If there was ever a time for some political courage, it is now. And sometimes the most courageous thing you can do is ask for help.

###

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"Our national security apparatus is going to have to operate effectively in a constrained fiscal environment as well... we'll find a way to do our national security mission at those levels."

- Representative Mike Pompeo (R-KS) commenting about the anticipated cuts to defense from the Joint Committee on Deficit Reduction. (Wichita Eagle)

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Failure Is Not an Option

2011-08-12T15:51:00.001-05:00

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Failure Is Not an Option

Volume XVI No. 32: August 12, 2011

Others have already pointed out the obvious: the newly appointed ‘Super Committee’ is nowhere close to the first committee or commission established with the aim of resolving our worsening fiscal problems. But there are a few differences this time around that may be enough for the newly created Super Committee to succeed in deficit reduction where so many others have failed.

As part of the recent debt deal, the Joint Select Committee on Deficit Reduction must present their recommendations for $1.2 to $1.5 trillion in additional deficit reduction over the next ten years by November 23. If just seven of the members endorse a proposal, both chambers must vote on it by December 23, no amendments, no filibuster. If the committee or Congress fail to agree on a plan by Jan. 15, 2012, automatic, across-the-board spending cuts will go forward.

The most notable difference this time around is the threat of automatic cuts. Neither party really wants to see this happen. Democrats because they will fall entirely on spending, Republicans because half of the cuts will hit defense. The other difference is the guaranteed floor vote without the chance for amendment or the requirement of a super majority to pass. So, if enough responsible lawmakers from both parties can come together, they can get this over the finish line.

The other difference is urgency. As Peter Orszag, the former Budget Director under Obama recently pointed out: “the scope for constructive legislation has now become so narrow and the costs of doing nothing so high, we need to make ambitious proposals and hope that the legislative constraints can be adjusted.”

This leaves the committee itself. The good news about the appointees is that they are all seasoned members of Congress who understand the complexity of the federal budget. The bad news is that many of the members are best known for their tough and uncompromising defense of their own priorities. Senator Murray is famous for her efforts on behalf of defense contractors in her state. Senator Kyl has worked to defend increases to nuclear weapons spending even as other Republicans looked to slash federal spending. Representative Hensarling is a dyed in the wool tax cutter. And Representative Clyburn has a long history as an unapologetic earmarker.

In order to succeed the Super Committee members will have to put aside the specific interest groups they have worked so hard to defend throughout their careers and be open to all solutions. It is good policy and good politics. National polling shows real dissatisfaction with Congress: a National Journal poll found a level of public dissatisfaction similar to polling before the 2006 and 2010 landslides. In other words, the brinksmanship that has characterized negotiations so far have not helped anyone’s reelection chances.

Fortunately, for the committee members, a lot of hard work has already been done. Not only have previous commissions set out bipartisan plans for achieving even more savings than this commission is tasked with, there is some agreement about how to get there. In three instances, the Simpson-Bowles and Domenici-Rivlin commissions, and the Senate’s "Gang of Six" all ultimately offered plans that overlapped in significant ways: they all include entitlement reform, tax reform (eliminating or reducing current tax expenditures), and meaningful defense cuts.

This is where we are: between now and the end of the year, Congress has to come up with a plan to save up to $1.5 trillion, or sit on the sidelines and watch as automatic cuts go into effect. And no amount of rhetorical flourish or saber rattling is going to save members of either party from the political fallout that would surely follow. The public will see Congress for what it is: paralyzed by politics, even in the face of potentially another Great Depression. The Super Committee, with or without the support of their party leaders, should and must take up the different bipartisan proposals before them and submit a savings package that walks us back from the edge of this financial cliff. Failure is not an option.

###

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“We already have a bipartisan commission: It's called the United States House of Representatives and the United States Senate.”

- Rep. Jason Chaffetz (R-UT) earlier this week. (ABC News)

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Mailing It In

2011-08-04T14:06:00.000-05:00

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Mailing It In

Volume XVI No. 31: August 4, 2011

It’s down to the wire. Weeks of debate, marathon meetings at the White House, and hundreds of press conferences have all led to this. The House vote on the debt limit is about to happen. Then there’s a pause...“Pursuant to clause 1(c) of rule XIX, further consideration of S. 627 is postponed.”

Whaaaaa? Postponed?

“Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 2548) to designate the facility of the United States Postal Service located at 6310 North University Street in Peoria, Illinois, as the ``Charles `Chip' Lawrence Chan Post Office Building.''

If you were on the edge of your seats watching C-Span last Thursday—you know we were—that’s what you saw. After months of haggling, with partisans on both sides declaring the debt ceiling vote would determine the future of our country or the fate of the world economy, we instead got a discussion on renaming a Post Office in Peoria, Illinois. Then renaming one in Geneva, New York. Then Iuka, Mississippi. Instead of voting on the – like it or not – consequential House debt ceiling deal, lawmakers spent hours “debating” bills naming post offices, eight different ones in fact.

Shirking the tough decisions and instead debating feel good legislation is a time honored tradition. The House revised the rules so we don’t have votes on things like designating July National Watermelon Month, but renaming of Post Offices is still around. (The Senate is a different matter--the same day they passed the debt ceiling deal they also designated October 8^th National Chess Day). Since 2000, more than 700 bills proposing the renaming of a Post Office have been introduced. And more than 400 of these have been signed into law. While some may think this is a good use of Congress’s time, we can think of about 14.6 trillion reasons why it’s not.

Congress’s relationship with the Postal Service is also emblematic of lawmakers inability to make tough decisions. The Postal Service is in a bind. Recent reports indicate it will lose $8 billion this year, after losing more than $8 billion last year. And in an uncanny resemblance to the federal government, it will max out its $15 billion line of credit (debt ceiling) from the Treasury. Even though in recent years the Postal Service has shed 130,000 employees and is now contemplating closing nearly 3,700 of its facilities, falling mail volumes and rising personnel costs mean a plan for economic viability is nowhere on the horizon.

Yet, for the most part, Congress stands firmly in the way of reform. The Postal Service is an independent executive agency that’s supposed to be self-sustaining. But Congress just can’t keep from meddling in the day to day operations to the detriment of the USPS and taxpayers. Eliminate Saturday delivery to save $3 billion a year – legally prohibited by Congress since 1983. Close one of the 3,000 retail post offices that generate less than $27,500 a year while often costing close to $100,000 to operate—Congress won’t allow the closing of traditional brick-and-mortar post offices on purely financial grounds. And even mention the possibility of closing a postal facility that sees less than 50 people a day or generates a loss, and Congressmen get up in arms.

Taxpayers cannot afford for Washington to “mail it in” and avoid tough decisions by focusing on inconsequential legislation. Congress has raised the debt ceiling and shifted the hard work of finding $1.5 trillion in future deficit cuts to a “super committee” of 12 members. But the 523 others need not sit on the sidelines. Forgetting about renaming post offices and developing a plan to avoid a future Postal Service bailout would be a good start. It’s time Washington have an open and honest debate about the hard choices we must make to right our fiscal ship.

###

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"It's true that I turn 50 tomorrow, which means that by the time that I wake up I'll have an email from AARP asking me to call President Obama and tell him to protect Medicare.”

- President Obama, on Wednesday, discussing his birthday. (Wall Street Journal)

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Just Do It

2011-07-29T14:56:00.001-05:00

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Just Do It
Volume XVI No. 30: July 29, 2011

The competing debt ceiling plans from House and Senate leaders have several things in common. Obviously increasing the debt limit, but also discretionary spending caps and creation of a special congressional committee to come up with more savings. Okay, special committee = eye roll. But if it does its job there could be some real savings.

Now, the fact there is even talk of a special committee means Congress hasn't done its job. Lawmakers in both parties in both chambers can rage all they want about deficits and debt ceilings, but the fact is they have nearly complete control over the budget. If they simply do the job they are elected to do, we won't have any need for special committees, debt ceiling debates, or the endless partisan sniping they produce. But here we are.

The bi-partisan (six Republicans and six Democrats -- three of each flavor from each chamber) committee would develop a deficit reduction plan which could include entitlements, discretionary spending, or revenue raisers. Both the House and Senate bills have mechanisms to force Congress to vote on the joint deficit committee's recommendations.

A key point in the charter of this special committee is that the goal is deficit reduction. That means reforms to entitlement programs and tax expenditures -- loopholes and breaks in the tax code -- are on the table and should be part of the mix. Regardless of what comes out of this debt ceiling debacle, we know that the spending trajectory of entitlement programs is unsustainable and the tax code is ripe for budget saving reform. Tackling mandatory spending, which isn't just Social Security and Medicare (which need reform) but also wasteful agriculture subsidies and other auto-pilot programs, is necessary for our nation's long-term fiscal health. And targeting special interest breaks like the tax credit for blending ethanol, or breaks for the highly profitable oil and gas companies or favored treatment of racetrack owners and movie producers, is critical to having a more fair tax code.

The so-called Gang of Six proposal that was recently released by a bipartisan group of Senators provides a guide for looking at tax reform. The proposal would wipe out scores of tax breaks, reduce the rates and number of personal income tax brackets to three, and cut the corporate tax rate by getting rid of special interest tax earmarks. Lower the rates, broaden the base.

There is, however, a key difference between the House and Senate committee proposals. The House requires $1.8 trillion in deficit reduction, and makes a second tranche of debt ceiling increase contingent on its approval. The Senate gives all the debt ceiling increase up front and sets the deficit reduction goal at three percent of Gross Domestic Product (GDP). That's not nearly aggressive enough. First, we don't know whether that's an average of ten years, or in one particular year -- that's an important distinction. But even more, a deficit of 3% of GDP would have been $440B in FY10 -- hardly fiscal restraint or putting our budgetary house in order (the actual FY10 deficit was 8.9% of GDP). The President's FY12 budget proposal (which admittedly had rosier economic predictions than are likely) predicted a deficit of 3.3% of GDP in FY16! And that was without a commission. Over the last decade we ran deficits less than 3% of GDP for four years and less than 3.5% in three more. Getting to 3.0% of GDP isn't really much of a budgetary goal considering the deficit bender we've been on -- we need better.

But the first step is getting the debt ceiling raised, and then Congress has to do its job and aggressively pursue cuts and tax reforms that will right our nation's fiscal ship.

###

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Going on at Taxpayer.net This Week

TCS on the Debt Ceiling

Stillwater Bridge Proposal is Too Big, Too Costly for Nation’s Taxpayers

TCS Testifies on Revenue Sharing from Offshore Drilling

TCS VP Steve Ellis on CBS News speaking on Federal Funding for Pet Projects

TCS Letter to the Editor "Raising debt ceiling is essential"

Debt and Debt Ceiling Q&A

Spending Less, Spending Smarter: Recommendations for National Security Savings FY 2012 to FY 2021

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Notable Quote

" … to say that if you get rid of a tax earmark…of $6 billion in subsidy for ethanol, that that’s a tax increase? I mean, you gotta be goofy to get that kind of math.”

- Alan Simpson, former Republican Senator from Wyoming, on CNN Arena, July 28, 2011 .

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Doomsday Debt Clock

2011-07-22T14:56:00.001-05:00

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Doomsday Debt Clock
Volume XVI No. 29: July 22, 2011

Eleven days and counting. Then the debt ceiling clock strikes midnight and the federal budget turns into a pumpkin. Bottom line is the country cannot afford the shock wave this would send through the worldwide economy and the increased interest rates the government would pay to service our debt. But the other bottom line is we can't afford continuing to pile on to the $14.3 trillion we already owe. We must get our nation's fiscal house in order before it crumbles around us.

First things first, stop the brinksmanship, pass a bill to lift the debt ceiling, and do it fast. There should be trillions of dollars in savings attached, but the debt ceiling has to be lifted. The ratings agencies have spoken -- just lifting the debt ceiling and throwing a few trillion dollars of savings will not necessarily be enough to keep our Aaa bond rating. There must be a comprehensive budget plan to lead the country out of the fiscal wilderness.

This week the so-called Gang of Six came out with a plan. There's something in there for everyone: spending cuts, tax reform, and entitlement changes. Of course that also means there's something in there for everyone to hate. Sounds like a good start to us!

The plan isn't perfect. To start, it lacks specifics. Some details aren't fleshed out and it's hard to confidently track the numbers. For instance, it's unclear which budget baseline they use -- which makes it hard to know how much of the savings are real, or not worth the paper they are printed on. And a lot of decision-making on the cuts is tasked to the committees, including the tax reform package which calls for lower overall rates and fewer brackets, elimination of tax expenditures that complicate the code, and abolishing the Alternative Minimum Tax.

But instead of looking for flaws, let's focus on the bigger picture. This bi-partisan group---three Republican and three Democratic Senators---picked up the president's deficit commission report from last year and made a plan. This is a start. We're willing to help. We released cut lists earlier this year, and, working with the Project on Government Oversight, came up with $600 billion in low-hanging fruit defense cuts yesterday.

But across the Capitol, House Republicans passed the "Cut, Cap, and Balance" plan seeking immediate spending cuts, budgetary caps limiting the size of government with respect to GDP, and a form of constitutional "balanced budget" amendment (BBA). The Gang of Six plan has cuts and caps, but what about the BBA?

A balanced budget amendment would be simple. Spending cannot exceed revenues from the previous year unless there is a two-thirds vote by both Houses. Done.

The proposed amendment does this in the first 50 words. But then it goes on for another 500 words to detail the exceptions, caps on government, oh and interest on that $14.3 trillion pile of debt -- it doesn't count. These loopholes and minutiae reveal a fundamental problem with balanced budget amendments. Lawmakers find ways to avoid them. Setting up a situation where Congress routinely end-runs the Constitution is wrong-headed.

And to be clear, balanced budget amendments do not lead to fiscal responsibility nirvana. Just look around at the more than 40 states with constitutional balanced budget amendments. Many of them are still in dire fiscal straights and resorting to all sorts of gimmicks to get around making the tough decisions of what to cut or where to raise revenue. We don't need a constitutional amendment to pass a balanced budget, we need fiscal accountability in Washington.

Regardless, the House passed "Cut, Cap, and Balance" and the Senate voted it down. So the time has come for both parties in both chambers to roll up their sleeves, raise the debt ceiling with a package of cuts and then get to work. Any plan should spread out the budget cut pain, eliminate wasteful tax breaks, reform the code to be simpler, and reform entitlement programs to make them affordable. The country can't afford anything less.

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Bombers Away

2011-07-15T15:42:00.001-05:00

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Bombers Away
Volume XVI No. 28: July 15, 2011

Anyone following the House of Representatives' recent debate over defense spending could be forgiven for thinking defense has fallen off the debt-negotiation table. House members passed a spending bill last week adding $17 billion to last year's DOD budget and rejecting amendments to bring it in line with inflation. But such obstinance threatens to put Congress behind the curve when it comes to finding the $400 billion Obama wants trimmed from the DOD budget.

Calls for cuts are emerging even within the Pentagon, and square in their sights is a group of new weapons that could put DOD in the poorhouse. For example, in the past year the Defense Department announced plans to begin developing a replacement for the Navy's SSBN ballistic missile submarine, the SSBN(X), and a "next-generation" bomber aircraft to replace the Air Force's B-52, B-1, and B-2 planes, which drop both nuclear and conventional bombs.

These weapons don't come cheap. The SSBN(X) program is projected to cost around $100 billion cradle to grave, more than the Navy's entire shipbuilding budget over the next five years. The bomber is projected to cost at least $55 billion over its lifetime, including development.

It's clear that these kinds of figures are not feasible in today's fiscal environment. In fact, OMB canceled a bomber program just last year, criticizing the gold-plated design as unaffordable and pointing out that the current fleet was performing well and could meet foreseeable challenges with ongoing upgrades. It also cited Congressional Budget Office warnings that DOD's weapons acquisition program, including the future bomber fleet, was in danger of breaking the military's bank.

Though the Pentagon says it is committed to the new programs, critics from some unlikely places are beginning to emerge. This week, Joint Chiefs Vice Chair Gen. James Cartwright - the military's second highest-ranking officer - said the new bomber still ran the risk of breaking the bank with its "exquisite" technologies. He also suggested cutting or delaying development of new aircraft carriers, which cost $15 to $20 billion each.

Though major weapons systems are generally characterized at their inception as all-or-nothing propositions, Cartwright's comments remind us that options for savings exist. For example, he repeated analysts' suggestions to ditch the SSBN(X) in favor of redesigning the current Virginia-class submarines, cutting the price roughly in half from $5 to $7 billion per sub to $3.5 billion. Simply waiting is another real option: Deferring development of costly next generation weapons until we really need them saves money by enabling us to make the most of what we've got while we hone future weapon designs.

A hint of where such ideas might run aground can be found in the defense appropriations bill passed by the House last Friday. The chamber approved an amendment that would prevent the military from retiring any B-1 bombers, which the Air Force says will save money. The amendment was sponsored by several representatives of the areas surrounding Dyess Air Force base in west Texas where the bombers are based, including Republicans Randy Neugebauer and Mac Thornberry.

This follows on the heels of years of successful fighting by Democratic Senators in North Dakota to reduce the number of B-52s DOD wanted to retire. Similarly lawmakers on both sides of the aisle have fought any efforts to reduce aircraft carrier fleet from the current stable of eleven.

When it comes to defense spending, Congress has always wanted to have its cake and eat it too, and until now it largely has. But those days are drawing to a close. Those on Capitol Hill and northern Virginia are going to have to make some hard decisions in the months ahead, and that's going to mean settling for less icing.

###

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"You can't blame the survival of these programs on just Democrats or Republicans, it's both. But if we can't cut small programs worth millions of dollars that benefit a few, how are we going to make serious cuts and get this country on the right track?"

- Representative Jeff Flake (R-AZ), who has proposed cutting several costly subsidies and programs. The New York Times

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