Federal Spending Reduction Ideas for Pres. Trump

Cato ^ | November 10, 2016 3:18PM | Chris Edwards

[expat_panama]

President-elect Donald Trump said on the campaign trail that he will balance the federal budget and cut wasteful spending. Here are some of Trump’s views on budget reforms:

• “We are going to ask every department head in government to provide a list of wasteful spending projects that we can eliminate in my first 100 days.” Source.
• “We can also stop funding programs that are not authorized in law. Congress spent $320 billion last year on 256 expired laws … Removing just 5 percent of that will reduce spending by almost $200 billion over a ten-year period.” Source.
• “I may cut Department of Education. I believe Common Core is a very bad thing,” Trump said. “I believe that we should be — you know, educating our children from Iowa, from New Hampshire, from South Carolina, from California, from New York. I think that it should be local education.” Source.
• “If we save just one penny of each federal dollar spent on non-defense, and non-entitlement programs, we can save almost $1 trillion over the next decade.” Source.
• “We’re going local. Have to go local. Environmental protection—we waste all of this money. We’re going to bring that back to the states … We are going to cut many of the agencies, we will balance our budget, and we will be dynamic again.” Source.
• “Waste, fraud and abuse all over the place. Waste, fraud and abuse. You look at what’s happening with Social Security, you look—look at what’s happening with every agency—waste, fraud and abuse. We will cut so much, your head will spin.” Source.

I hope my head does spin from cuts, although most of Trump’s proposals are vague and quite timid. Still, I’m hoping that the more the incoming president finds out about the federal budget, the more he will appreciate the need for major terminations.

So let me suggest some wasteful spending that the new administration should tackle, and the annual savings from terminating each:

• K-12 school subsidies, which generate bureaucracy and stifle innovation ($25 billion).
• Farm subsidies, which enrich wealthy landowners and harm the environment ($25 billion).
• Rural corporate welfare, which is handed out by the Department of Agriculture ($6 billion).
• Energy subsidies, which have been one boondoggle after another ($5 billion).
• TSA airport screening, which Trump has said is “a total disaster” ($5 billion).
• The war on drugs, which wastes police resources and generates violence ($15 billion).
• Excess pay for federal workers, especially gold-plated retirement benefits ($33 billion with a 10 percent cut).
• Housing subsidies, which distort markets and damage cities ($37 billion).
• Community development aid, which is corporate welfare used for buying votes ($11 billion).
• Urban transit and passenger rail funding, which are properly local and private activities ($12 billion).
• Obamacare exchange subsidies and Medicaid expansion, which should be repealed along with the overall law ($225 billion a year by 2026).

President Trump will face major budget pressures in coming years as deficits and entitlement spending soar. Today’s $600 billion deficits are headed toward $1 trillion, and deficits will be even higher if a recession comes along.

Federal spending cuts would help avert a fiscal crisis and boost growth by reducing economic distortions. The incoming Trump team should start with some of the cuts here, and there are plenty more proposals at DownsizingGovernment.org.

[expat_panama]

Don't anyone think that fed cuts are cuts. Base line budgeting automatically adds ten percent --that has to stop if we're serious about this.

[expat_panama]

Good morning and NASDAQ leads and techs are bouncing!   However volume fell and this morning's furures are off -0.23%.    Precious metals are just like yesterday --worse:  futures -0.79%.

Maybe because today the flood begins:

7:00 AM MBA Mortgage Index
8:30 AM PPI
8:30 AM Core PPI
9:15 AM Industrial Production
9:15 AM Capacity Utilization
10:00 AM NAHB Housing Market Index
10:30 AM Crude Inventories
4:00 PM Net Long-Term TIC Flows

Meanwhile...

Why the Bond Markets Dislike Donald Trump - Chris Matthews, Fortune
Bill Ackman's Fortune Is Down, but Not Out - Stevenson & Goldstein, NYT
With Trump's Signature, Obama's Rules Could Fall - Stacy Cowley, NYT
Here Are 140 Regs That Congress Could Abolish - Wayne Crews, Forbes
A Financial Warning Sign Is Flashing in China - Jun Luo & Helen Sun,BBW
A Vote Driven By Econ. & Social Myths - Jeff Harding, An Independent Mind
Pres. Trump Really Shouldn't Kill NAFTA - Michael Taube, National Review
Economists Must Stop Cheerleading For Globalization - Dani Rodrik, PS

[cweese]

Eliminating the EPA would save a bunch of money.

[RFEngineer]

You are correct. If the budget is reduced even by one dollar it will be a tectonic event. If the budget comes within $100B of being “balanced” in any given year it will be a miracle.

It goes to show you that a “win” merely means government grows only slightly less voraciously.

But I voted for trump to enforce immigration law. I suppose he will be better on government growth than the alternative. We shall see.

[WayneS]

We are going to ask every department head in government to provide a list of wasteful spending projects that we can eliminate in my first 100 days.

That is sort of like asking the fox for ideas on how to improve security in the henhouse.

[rollo tomasi]

The Federal budget has a menacing grip on our fragile economy. The slightest tweak (Drastic funding cuts/raising interest rates, etc...) will cause some type of havoc. The ship has sailed and in order to harness fiscal sanity, a massive correction needs to occur. The problem is that the market is a massive retirement program/life blood of many individuals.

In short, decades of manipulation to provide for the "here and now" created this atmosphere. When the economy was humming along, proper spending cuts (Rate of growth cuts were impotent and deceitful) never materialized (Federal/States spent like crazy). When times were lean, spent like crazy too.

[AndyJackson]

The problem with Washington DC is that inefficient, ineffective, corrupt cronyism and crony capitalism have eaten out all the solid wood holding the place up. You have to root it out root and branch, termite by termite.

It requires radical management at every level. Policy papers aren't going to fix it. Leadership at every level is needed.

[DoodleDawg]

“If we save just one penny of each federal dollar spent on non-defense, and non-entitlement programs, we can save almost $1 trillion over the next decade.”

Non-defense discretionary spending is about $600 billion a year, maybe less. One percent of that is $6 billion. Over ten years that's $60 billion. Where do the other $940 billion in savings come from?

[WomBom]

Corect me if I am wrong, but didn’t Cato come out against Trump’s candidacy and pro Hillary?

The only one who never turned their backs on him was Heritage... stick with date you came with.

Screw Cato and the rest of the BushBots!

[Mashood]

Cut deep. You’re gonna be blamed for any cut you make so it might as well be a good chunk of change!

[DoodleDawg]

Eliminating the EPA would save a bunch of money.

It would save $8.2 billion this past year. That's a rounding error for the budget as a whole.

[PGalt]

Great post. Thanks. BUMP!

[Gaffer]

Sort of. But if you make them hit a target cut percentage, it forces them to sort out what’s in their rice bowl they want to protect and what parts they got because Obama was spending like a drunken Muslim.

[central_va]

No need to cut anything. Just freeze all spending at 2016 levels for 8 years. No COLAS no budget increases for depts etc. for 8 years.

Politically how can anyone complain about that?

[Gaffer]

Nearly every state in the country has its own EPA-like division/department. The Federal EPA is nothing more than a whip master for them as well as being the strong arm of the President’s political whims who is usually pandering to a bunch of eco-kooks.

Let the states do their jobs for their citizens.

[steve8714]

Eliminate the baseline, Gephart’s Gimmick; end Energy and education; Decentralize; move departments to rural depressed areas with no ballet. Outlaw the CR and get Congress back to appropriating.

[Cobra64]

True. All these numbers should be expressed as per centages of the total budget.

[agere_contra]

Savage cuts are needed.

Trump will also need to boost revenue enormously. America’s debts aren’t going away.

If Hillary was in charge she would simply plunder everyone’s pensions to balance the books.

Trump will have to go another route. I suggest he begins the process of monetising Federal land. There are immense tracts of land (and mineral rights) that could be sold off.

He also needs to boost revenue by *lowering* taxation and simulataneously removing every barrier to wealth creation in the USA.

[Soul of the South]

“That’s a rounding error for the budget as a whole.”

$8.2billion here, $1 billion there, another billion under the rug. Ultimately it adds up to real money

Actually small cuts have a tremendous cumulative effect over time. Several years ago a study was done showing the impact of reducing the budget by 1% per year versus prior year. Imagine asking every department in the government to spend 1 penny less next for every dollar it spent this year. Hardly an onerous burden. The budget is balanced in less than 10 years.

Reducing the budget by 1% per year is a simple concept much easier to sell to the people than axing entire departments all at once. It is also more difficult for the Democrats to oppose with dire predictions the Department of the Interior will be closing the Grand Canyon, old people will be eating cat food, and children will be starving. Announce the first year 1% will come from personnel cuts. In that event the “pain” will only be felt by the bureaucrats let go. The new administration can use the personnel cut to eliminate deadwood in the bloated federal bureaucracy. While Democrats and the media will squeal, few voters in the heartland who have lived through two decades of downsizings in the private sector will care.

[Soul of the South]

Here’s a link to the study showing the impact of successive 1% annual cuts in federal spending. https://www.mercatus.org/system/files/wp1105-the-one-percent-solution.pdf