I Cut Spending by 10%

May 17, 2010

House Republicans proposed some small cuts to the federal budget on their new YouCut website last week. I noted that the GOP cuts amounted to just 0.017 percent of the federal budget, and suggested that the conservative party in Congress could do much better. Below I’ve listed 10 terminations that would save about $380 billion a year, which is more than 10 percent of total federal spending.

Many politicians and congressional staffers will look at this list and consider the cuts too radical. But those folks should take a closer look at current budget projections, which show federal debt exploding to 100 percent of GDP within a decade and heading to the moon after that. Rising debt all but guarantees that there will be radical changes to the budget in coming years. So we can start making changes in an orderly way right now, or we can make then later when it’s harder to dig out from an even bigger pile of debt.

Besides, the 10 cuts proposed below are not radical. Canada doesn’t have a federal Department of Education, so why do we need one? New Zealand doesn’t hand out farm subsidies, so why should we? Britain’s new conservative-liberal government is cutting public-sector salaries, so why can’t we?

Cuts in subsidies will cause short-term dislocations for the groups dependent on them, but people will adjust quickly and society will be better off in the long run. Welfare supporters said that the reforms in 1996 would be a social disaster, but benefits were cut and low-income families prospered.

Americans don’t need subsidies, and the government obviously can’t afford them anymore. It’s time to start getting rid of them. The savings listed here are rough and rounded 2010 outlay amounts from the president’s budget.

1. Community Development Subsidies. The Department of Housing and Urban Development should not be funding local activities such as street repairs and parking lots. Save $10 billion.

2. Homeowner Subsidies. Federal subsidies for home ownership helped to cause the financial meltdown and recession by putting people into homes they could not afford. Save $10 billion

3. Energy Subsidies. Federal energy subsidies have a long record of waste and boondoggle. Private markets will invest in energy technologies when there is a reasonable chance for a return. Save $20 billion.

4. Higher Education Subsidies. Federal student aid contributes to college tuition inflation, and it can be replaced by private borrowing, family savings, and private charity. Save $20 billion.

5. Overpaid Federal Workers. Federal workers earn an average $120,000 a year in wages and benefits—twice what the average American earns. Federal wages should be cut 10 percent. Save $20 billion.

6. Farm Subsidies. More than 70 percent of aid goes to the largest 10 percent of farm businesses. With an average income 28 percent higher than the U.S. average, farm households don’t need federal welfare. Save $30 billion.

7. Public Housing and Rental Subsidies. Federal housing policies have damaged cities and created concentrations of poverty. They are based on a myth that markets can’t provide low-income housing. Save $35 billion.

8. K-12 Education Subsidies. Rising federal funding of the public schools has not improved test scores. It has only created large bureaucracies and stifled local control and innovation. Save $60 billion.

9. Transportation Subsidies. State governments and the private sector can more efficiently fund highways, airports, rail, urban transit, and air traffic control without federal subsidies and regulations. Save $85 billion.

10. Food Subsidies (Food Stamps and School Lunch). Low-income families often suffer from poor food choices and obesity, not a shortage of calories. Food aid for the needy should be left to private charities. Save $90 billion.

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