GOP Won’t Cut Federal Spending

By Kennedy Maize

Washington, D.C., Nov. 11, 2010 — Pardon my cynicism, but I don’t for a minute believe that the Republican electoral sweep earlier this month will result in significant cuts in federal spending anytime soon. Am I charging that Republican electoral doctrine is a tissue of hypocrisy? Yes, I am, and we will see that tissue tear apart when Congress decides on spending for energy programs.

Before getting to the specifics, let’s start with the general. Where can the Republicans, who have fenced off the Defense Department and entitlements (Social Security, Medicare, and Medicaid) find real budget cuts? GOP religious doctrine takes some 85% of federal spending off the cutting board. What’s left? Here are some areas where I predict the GOP will not direct its meat cleaver: the National Institutes of Health, the Department of Homeland Security, crop subsidies at the Department of Agriculture, No Child Left Behind, non-DOD defense spending, for starters.

To see just how empty GOP spending rhetoric really is, take a look at energy spending and tax subsidies (the same thing) at DOE, the Department of the Interior, and USDA. This week, the chairmen of the estimable and bipartisan National Commission on Fiscal Responsibility and Reform have suggested a series of federal spending cuts and reforms aimed at cutting the federal deficit. The commission leadership has some good ideas for getting the nation on the path toward reduced deficits, although, wisely, the cuts would not come during the current slow recovery from recession.

The panel chairmen – former Wyoming Senator Alan K. Simpson and former Clinton chief of staff Erskine Bowles – on Wednesday floated a draft report designed as the basis for a final report by the 18-member commission, created by the Obama administration when Senate Republicans chickened out of a plan for a commission created by law with the force of law. When it comes to energy spending, the chairmen propose some good ideas, several of them periodical chestnuts that have been proposed and repeatedly rejected by Republicans and Democrats.

To their credit, Simpson and Bowles do not try to wrap themselves in the American flag by fencing off military spending, suggesting some $100 billion in savings from DOD, including cutting some major weapons systems, such as the troubled V-22 Osprey tilt-rotor aircraft.

On energy spending, the first specific cut Simpson and Bowles suggest is to save $500 million in fiscal 2015 by slashing USDA’s Rural Utilities Service (RUS). Some of that will come from rural telecommunications programs, not its power plant subsidies. A suggestion for eliminating “energy tax credits for the oil and gas industry” has no savings figure assigned to it. The Simpson-Bowles plan would increase the federal gasoline tax by 15 cents per gallon starting in 2013. Two other recommendations, with no dollars attached are: “Restructure Power Marketing Administrations to charge market-based rates,” and “Require Tennessee Valley Authority to impose transmission surcharge on electricity sales.”

In an accompanying paper, the chairmen say the RUS “runs a number of programs which are outdated, overlapping, and which provide limited or questionable public policy benefits. These include the Local Television Loan Program among others.” The discussion paper also suggests $900 million in savings from cutting DOE’s applied fossil fuels research program. The discussion notes, “This funding was created at a time when the prices for these types of fuels were partially controlled and the development of technology was stunted. Today, the situation is quite different. In addition, much of this federal research duplicates what is being conducted in the private sector. The Office of Management and Budget has reported that the additional oil reserves which have resulted from technology developed by the program have been minimal.”

The chairmen’s suggestions in the area of energy spending are quite small and none, by themselves, would make much of a dent in the deficit. The same is true of most of the proposed cuts, although some are large, such as Social Security savings. Together they all put a lot of money on the table, a laudable beginning point for an important discussion.

My bet is that little to none of these recommendations actually result in spending cuts, including the tax spending reforms. All of the programs that Simpson and Bowles target have constituencies behind them. Many of the cuts have been tried before, with no success. For example, the issue of “market rates” for power from the DOE Power Marketing Administrations has come up in virtually every administration going back to Richard Nixon. The public power community – represented in Washington by the American Public Power Association and the National Rural Electric Cooperative Association – quickly mobilizes and besieges Congress to protect their access to low-cost electricity. There’s no reason to believe that won’t happen again.

The gas tax increase, a good idea, is DOA. Why? Because of the “T” word: tax. Heavens, we can’t have tax increases, even consumption tax increases. Indeed, Texas Gov. Rick Perry, an empty suit and a stuffed shirt all in one sartorial dog’s dinner, has suggested repealing the 16th amendment, which authorizes the federal income tax. I’m surprised he doesn’t argue that the constitutional amendment is unconstitutional.

Just how unserious the GOP is about spending comes from today’s New York Times, where reporter Jackie Calmes writes, “Note to the incoming Republican majority in the House: Eliminating government programs that do not exist does not save money.” Congressional Republicans say they can save $25 billion over 10 years by killing $2.5 billion in annual spending for an emergency welfare fund. But there’s a problem with that arithmetic. The program expired at the end of September.

Ultimately, the GOP has boosted its electoral success by perpetrating and exploiting myths about federal spending. I have no doubt that many voters believed Republican (and Democratic, for that matter) candidates who said or implied that cutting federal spending is a no-brainer. But any experienced legislator knows that appeal is fraudulent. Just watch what happens when naïve or cynical newcomers to Washington try to cut earmarks. It won’t be pretty. It will be educational.