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RIEDL: Obama’s historic spending-cut plans
Does Congress support President Obama's plan to slash the Office of Elementary and Secondary Education by 69 percent? What about his proposal to shrink the Environmental Protection Agency by one-third? Or his 12 percent cut in housing assistance for AIDS patients?
For that matter, does the president himself support these proposals, which have been published by his White House?
Let's step back.
The president inherited a dire fiscal situation. Merely extending today's spending and tax policies would expand the budget deficit to an unsustainable $1.9 trillion by 2020, mostly because of rising entitlement and net interest costs.
The White House budget, released in February, offers a two-part strategy for deficit reduction. It consists of $2 trillion in tax increases (plus a "cap-and-trade" tax) and a cut in discretionary spending from today's 9.6 percent of the economy to 6.2 percent by 2020. That would match the lowest discretionary spending level since the 1940s.
While the tax-increase proposals have received enormous attention, the discretionary-spending reductions largely have been ignored. This may be because the cuts wouldn't occur for a few years. Or possibly because past presidential budgets listed true discretionary proposals for only the following year and then used generic place-holder figures (such as all programs growing by inflation) for the subsequent years.
Yet the Obama White House has indicated that these cuts are, in fact, the president's official policy.
For starters, some discretionary programs' budgets would grow, and others would fall, all at varying rates over the next decade. This suggests that individual decisions, rather than a generic inflation formula, determined the yearly spending figures.
More important, the White House continues to trumpet these cuts. The president has emphasized that his budget proposal reduces the 10-year deficit to less than 4 percent of the economy. New York Times columnist David Brooks has written that the White House sent him a chart showing this 10-year discretionary spending decline and invited him to "hang this chart on my wall and judge them by how well they meet these targets."
That's a good thing. Coupled with serious entitlement reform, these types of admittedly painful reforms are necessary to rein in our trillion-dollar budget deficits and avoid an eventual economic catastrophe.
Certainly, Mr. Obama will face challenges reconciling this pledge with past promises to substantially increase funding for education, transportation, energy, health, veterans and science — programs Congress rarely passes up an opportunity to expand.
Fortunately, as part of the president's budget, the White House website includes a 528-page book titled "Federal Programs by Agency and Account." It details the president's blueprint for bringing discretionary spending down to 6.2 percent of the economy by 2020.
As mentioned above, the president's budget slashes elementary and secondary education outlays by 69 percent between 2010 and 2020. (I have adjusted all figures for inflation, at a 1.9 percent annual rate.) Even setting aside the current education stimulus buildup, Mr. Obama still would keep this 2020 spending below pre-recession levels. The budget also trims special-education outlays by 24 percent and vocational/adult education by 18 percent.
The National Institutes of Health (NIH) budget — which has doubled over the past 15 years — would fall 11 percent through 2020. Proposed anti-poverty spending reductions include child care block grants (22 percent), low-income home energy assistance (36 percent), aid for the homeless (8 percent) and housing for the elderly and disabled (70 percent).
Non-discretionary anti-poverty programs — such as child-support enforcement, social service block grants and Temporary Assistance for Needy Families — also face significant cuts.
Defense outlays, which make up half of all discretionary spending, would drop by 11 percent. In addition to bringing the troops home, the president proposes slashing research and development as well as weapons procurement.
There's more. Energy research — a major presidential priority — is targeted for a 45 percent cut between 2010 and 2020. The budget ax would strike the Departments of Homeland Security (13 percent), the Interior (17 percent) and Justice (7 percent) as well as spending on highways (23 percent) and mass transit (35 percent). Community Oriented Policing Services (COPS) outlays would plummet 82 percent. The National Endowment for the Arts (27 percent) and Humanities (12 percent) are not spared, either.
It's not just a matter of today's stimulus spending expiring. For many programs, Mr. Obama proposes that 2020 spending levels fall below even their pre-stimulus 2008 levels.
Not all discretionary programs would be trimmed. Mr. Obama proposes a 20 percent increase for veterans' health care and a 264 percent increase for the agency that runs AmeriCorps. International assistance outlays would soar 213 percent above their 2008 levels.
The White House should explain whether these proposals truly reflect Mr. Obama's policies. If they do not, why is the administration claiming them as part of its deficit-reduction strategy? Perhaps Mr. Obama could show his seriousness by calling on Congress to enact a law capping total discretionary spending at the levels proposed in his budget.
The president has proposed a bold discretionary-spending blueprint that can begin to rein in the deficit. The question is whether he plans to follow through on it.
• Brian Riedl is Grover M. Hermann Fellow in Federal Budgetary Affairs at the Heritage Foundation (www.heritage.org).
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