January: Mr. President, Address the Deficit
Friday, January 24, 2003
By: Tom Schatz

President Should Address Government Reform in the State of the Union

New estimates from the White House project the 2003 budget deficit approaching the $300 billion mark.  Ultimately, strong economic growth is critical to balancing the government's books, so the president was correct to propose an aggressive economic stimulus to boost markets and new growth.  Yet, I fear Mr. Bush and his party run the risk of appearing too cavalier about rising budget deficits and national debt.  The president has acted boldly to stimulate economic growth; in his State of the Union address he should pair his tax cut proposal with an equally audacious government reform agenda to restructure government and cut budget waste once and for all, or risk losing the mantle of fiscal responsibility.  

That deficits have returned should surprise no one.  Congress's chronic failure to reform how government spends in the past two decades has made this problem inevitable and recurrent.  The surpluses of the late 1990s were a brief vacation from budget reality, but now we're back and there are bills to pay. 

To their credit, the president and his budget director, Mitch Daniels, have acted to root out and cut waste.  They have implemented new performance standards for federal programs and bureaucrats, challenged congressional pork projects, subjected the Government Printing Office to competition, and cut the federal government's oversized car fleet.  But these efforts, while commendable, are small potatoes; the billions in duplication, fraud, abuse, and mismanagement wasted by virtually every agency and program year after year remain unchallenged.

To address the government's fiscal problems, the president and his allies should take the following steps:

First and foremost, restrain new spending.  Leaders must jettison the mindset that every year domestic spending must increase for all programs, across the board, at a pace far outstripping inflation.  Discretionary spending has increased from $501 billion in 1995 to $688 billion in 2002, an increase of 37 percent.  With the Omnibus spending bill awaiting passage, the government would allocate at least $750 billion in discretionary spending, a 50 percent increase from 1995. Last year, Congress passed a bloated $170 billion farm bill to increase subsidies 65 percent over previous levels.  Congress has repeatedly skirted its own budget caps by appropriating some $90 billion in "emergency" supplemental spending since 1995. 

Second, cut pork.  Unauthorized, unrequested projects have cost taxpayers $139 billion since 1991.  Last year alone, pork barrel projects totaled $20 billion, including $13.6 million for various wood research, $2 million to refurbish the Vulcan Statue in Birmingham, Ala., and $50,000 for a tattoo removal program in California.  The president and his leadership allies should put Appropriations Chairmen Rep. Bill Young (R-Fla.) and Sen. Ted Stevens (R-Alaska) on notice that they will no longer tolerate recent years' record pork levels.

Third, end corporate welfare.  This would save taxpayers at least $80 billion annually.  Cutting the Advanced Technology Program, the Economic Development Administration, and steel industry subsidies, for example, would save $4 billion in the next five years.  If Congress would heed President Bush's past calls to eliminate the Export-Import Bank, it would save another $3.2 billion over five years.

Fourth, agencies must stop the $33.7 billion they make each year in erroneous payments to the deceased or imprisoned, and to others who cheat the system.  Medicare alone lost $12 billion this way last year.  Worse, there are few mechanisms for recouping lost funds, even though private companies exist that would do it for a percentage of the returned revenue.

Fifth, the president should empanel a private sector, non-partisan Government Waste Commission, similar to President Reagan's Grace Commission, to audit all federal programs and agencies.  The commission would report back within one year with a list of government agencies and programs that are mismanaged, duplicative, out-dated, unnecessary, subject to fraud, or otherwise mismanaged.  Here's the catch: like the successful Base Realignment and Closure Commission of the 1990s, which effectively shut down dozens of military bases to save taxpayers $15 billion as of 2001, the Government Waste Commission's final reform recommendations would be submitted to Congress en masse for a mandatory up or down vote.  By CAGW's estimate, such government-wide reforms would save at least $1.27 trillion over five years, more than the president's first tax cut and his current proposed package, combined.

The president and his allies should push such a package not only to make the point they are not apathetic about deficits, but to reinforce that government continues to be far too costly and wasteful.  Cutting excess government is a political winner when principled leaders explain the issues to voters.  With deficits back, the economy weak, and the nation on the verge of war, the president cannot afford to ignore government waste.