Heading for a Deficit Dustup

Are House Republicans Putting Together a Reasonable Approach for Cutting Government Spending?

Scott Lilly explores the consequences of the big budget deficit fight over this fiscal year’s spending levels. It’s not pretty.

Speaker of the House John Boehner (R-OH) and Majority Leader Eric Cantor (R-VA) on Capitol Hill. (AP/Alex Brandon)
Speaker of the House John Boehner (R-OH) and Majority Leader Eric Cantor (R-VA) on Capitol Hill. (AP/Alex Brandon)

The politics of budgeting often require making choices look hard rather than making hard choices. House Budget Committee Chair Paul Ryan (R-WI) may have held the committee gavel for only a month but his announcement today on spending cuts for the current fiscal year indicates he has already mastered the art of budget optics. There is clearly less than meets the eye in his claim of $74 billion in discretionary spending cuts for the remainder of the current fiscal year.

After weeks of public and private arguments between the Republican Study Committee, House Speaker John Boehner (R-OH), and House Majority Leader Eric Cantor (R-VA) over whether cuts in the current year should be $55 billion or $100 billion, Ryan’s number seems to have come fairly close to splitting the difference. But one of many issues that have never been clarified is what the House Republicans are cutting from.

It turns out they are not cutting from the Congressional Budget Office baseline assumptions for spending in the current fiscal year, which ends September 30, 2011, as had been widely expected, but instead from the amounts requested by President Barack Obama a year ago—a figure that is $45 billion above the baseline and accounts for 60 percent of Ryan’s savings.

The most dramatic impact of this comparison is in the area Ryan labels “security programs.” In this area he claims spending reductions of $15 billion. This is despite the fact that these so-called “spending cuts” levied against the Departments of Defense, Homeland Security, and Veterans Affairs result in an aggregate spending level for these three departments that is $7.5 billion more than last year. The security “spending reductions” mandated by Ryan are in fact savings that were identified in the Omnibus Appropriations bill put together by House and Senate Democrats last December ($11 billion) as well as the savings announced by Senate Appropriations Chairman Daniel Inouye (D-HI) last week when he said he would not accept requests for earmarks ($3 billion).

There is considerably more reality in Ryan’s attack on domestic programs such as education, science, and health care. It might be fair to say Ryan’s total cut package is $44 billion, with all of it leveled at one small portion of the budget, which he calls “non security discretionary programs.” Spending for this category now totals $464 billion, which is equal to about one-eighth of the total budget.

While these programs constitute a small share of total federal spending, they make up the vast majority of what we think of as the federal government, with 12 of the 15 departments and nearly all of the independent agencies. Since Ryan has essentially taken everything else off the table, the cuts he is proposing to this one-eighth of the budget must necessarily be deep. His $44 billion will force cuts on average across this range of programs of 9.5 percent.

What we will soon discover as these marching orders are passed on to the Appropriations Committee is that a great many of the programs in this “non security” category cannot be cut by anything like that amount, particularly considering the reduction is being made halfway through the fiscal year. While the reduction in the annual level of spending for the program may be 9.5 percent, the actual impact on operating levels in much of government will be twice that size since the fiscal year is close to being half over and many agencies have spent nearly half of their annual budget.

Take the FBI. It has been operating at an annual rate of $7.8 billion since October. (The threat of a Senate filibuster in December forced Congress to abandon efforts to complete legislation that would have funded the president’s request to increase FBI funding to the level above $8 billion a year.) Since we will soon pass the halfway mark for the current fiscal year, the Bureau has already spent close to half its $7.8 billion. Ryan’s proposed cut of $44 billion applied across the board to all programs in the one-eighth of the budget subject to cuts would result in reducing FBI spending by almost $750 million, leaving it with less than $3.2 billion for operations for the remainder of the year—about 19 percent less than operated on for the first half of the year.

But the FBI, like many agencies, has no quick or easy way to reduce its budget by such an amount. Since 96 percent of its funds goes to pay its 33,000 employees, the only option for significant savings is a reduction in force. That becomes a highly problematic means of reducing expenditures over the short term since the cost of terminating workers eats up nearly all of the savings from payroll reductions for a number of months after the terminations have occurred. An organization such as the FBI might not be able to achieve a 19 percent reduction in expenditures in a six-month timeframe even if it shut itself down entirely.

I am confident that House Republicans will say they have no intention of shutting down the FBI, and I am sure they don’t. But the FBI is not the only major law enforcement agency they failed to classify as “security.” Also falling outside that definition are the U.S. Marshals; the Drug Enforcement Administration; the Bureau of Alcohol, Tobacco, Firearms and Explosives; and for that matter the U.S. Attorneys. All would be exposed to devastating reductions if these cuts were applied across the board.

Any or all of these programs could of course be removed from the cut list but we are talking about significant amounts of money. For every program we remove, the cuts required against the remainder become ever more severe. Further, law enforcement programs are not the only federal efforts that significantly impact our security and would be devastated by such across-the-board cuts in the same manner as the FBI. The Bureau of Prisons where we spend more than $6 billion a year would be virtually shut down by such an across-the-board cut as would air traffic control where we spend more than $9 billion, or food safety programs where we now spend close to $4 billion—with recently signed legislation calling for dramatic increases in that level.

So programs making up a significant share of the $464 billion on the Republican chopping block are likely to absorb far less than their share of this $44 billion cut. The question is what is left on the chopping block and is it what the American people really want to cut.

Early indications are that House Republicans are going where they have repeatedly gone for cuts in the past—during the Nixon administration in the 1970s, in the early Reagan years of the 1980s, and during the “Gingrich revolution” in the mid-1990s. They are going after education and health, science, and safety-net programs for the poor.

The Department of Education has a budget of more than $80 billion and discretionary health programs including the National Institutes of Health account for another $60 billion in discretionary budget authority. Together they make up nearly a third of programs subject to these cuts. In one sense they are easy to cut because (unlike the FBI and other federal activities we have just discussed) most money in federal health care and education programs is dispensed as grants—most of it to state and local governments. All you have to do is reduce the size of the check you send out in the final months of the fiscal year.

But is this what the American people mean when they say they want less government? There are plenty of surveys showing a desire to cut spending but those same surveys send an almost equally strong signal that the areas of spending about to be cut are not the areas the public wants cut. The CBS/New York Times survey found that people want the deficit reduced through spending cuts rather than tax increases by a margin of 77 percent to 9 percent, but they oppose cuts for health care and education as a means of reducing the deficit—by a margin of 67 percent to 27 percent. Rank-and-file Republicans were more willing to cut these programs than either Democrats or independents but they still rejected such cuts by a margin of 52 percent to 40 percent.

Similar results were found in a January 25 CNN poll. Asked whether it was more important to reduce the federal budget deficit or prevent education programs from being significantly cut, respondents opposed education cuts by a margin of 75 percent to 25 percent.

Some may say the public is confused and that in the end they want cuts and will accept the best effort Congress can make regardless of what gets cut. I think they are misreading popular sentiment. The bottom line is the American people are quite skeptical of government but they value many of the activities the government is engaged in. The public wants to maintain or in some instances even expand those activities but believes there is considerable waste and inefficiency across government that can be eliminated. They want a far more vigorous effort to insure that happens.

The catch is that finding wasteful spending and rooting it out of the budget is hard work. There are unquestionably thousands of contracts in which the government is paying far more for goods and services than it should. There are programs that have outlived their usefulness and no longer provide a good return on investment. There are bureaucrats that linger too long at the water cooler and have too little to do when they return to their desks. But separating the good from the bad is neither easy nor straightforward. It takes hard work and perseverance, and so far, despite all of their budget-cutting rhetoric, the new Republican majority in the House has shown little inclination for either.

Nor are they preparing for the hard work and extra hours needed to tackle waste, fraud, and abuse in the federal government. The legislative calendar released some weeks ago by House Majority Leader Cantor cuts the number of days the House will be in session this year by 36 percent to 20 percent below the number of days the House met during the first session of the last Congress. In the crucial month of June, when most of the Appropriations bills are moved through the House, he has scheduled the body to be out of session on 11 of the month’s 22 weekdays and only partial sessions for five of the remaining 11 days.

Equally disturbing has been the reduction in staff tasked with tracking waste in the bureaucracy. Only a few weeks ago incoming Appropriations Committee Chairman Hal Rogers (R-KY) responded to leadership demands for staff cuts by announcing a 9 percent reduction in the committee’s payroll. A new listing of subcommittee staff assignments indicates that the staff of the defense subcommittee will drop from the 16 listed in last year’s House phone directory to just 10 for the coming session.

Even if staffing on the subcommittee had remained constant, the amount of money each staffer on defense must on average oversee would rise from $41 billion to $44 billion. As a result of the “savings” in committee expenditures, the average defense subcommittee staffer will now be overseeing $70 billion in annual federal outlays.

History gives us some indication of where this effort may end up. The American electorate may be ready to reward politicians who make a good faith effort at preserving good parts of government and eliminating the bad, but they have little patience for grandstanders who will use the excuse of spending cuts to carry out longstanding vendettas against programs that may be unpopular with a narrow but powerful niche of their own party but are supported by the electorate as a whole.

The CNN poll asked respondents, “In your view, do current Republican proposals to cut spending go too far, or not?” The answer appears to be good news, at least for the time being, for the new House majority. By 56 percent to 40 percent, the respondents said the Republicans were not going too far. But interestingly this is the identical question that CNN asked during the former Speaker of the House Newt Gingrich’s efforts at budget cutting in 1995.

Speaker of the House Boehner is starting this round of budget cutting with about twice the level of opposition that Gingrich had in 1995—when only 19 percent of the public thought Republicans were going too far. But Gingrich’s 68 percent-to-19 percent advantage on that question steadily evaporated as the details of his plans became more broadly known. By November 1995, Americans by a majority of 56 percent to 37 percent believed the proposals went too far. By the following April less than a majority of House Republicans supported the cuts. Gingrich soon lost his post.

It is not too late for Republicans to learn from past mistakes and avoid the pitfalls of the Gingrich revolution. But they will have to shift their focus quickly, recognizing that the American people want savings to come from efficiency and reduced waste—not the dismantling of important government operations and services.

Scott Lilly is a Senior Fellow at the Center for American Progress.

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Scott Lilly

Senior Fellow