- The Washington Times - Sunday, September 21, 2003

The federal deficit is projected to hit a whopping $455 billion this year and close to $500 billion next year, or nearly one-fourth of the government’s entire budget.

In the words of the late Sen. Everett Dirksen of Illinois, a billion here, a billion there, and pretty soon we’re talkin’ real money. Half a trillion dollars is a lot of borrowing by any criteria.

Just about everybody complains about the budget deficit, especially President Bush’s critics. But very few want to deal with its chief underlying cause (besides slower economic growth): too much spending.

All the Democratic presidential candidates loudly bemoan the deficits and pine for the return of the budget surpluses of the late ‘90s. But their only prescription is to repeal all or most of Mr. Bush’s $1.7 trillion in tax cuts, which would raise paycheck withhholding rates, substantially reduce incomes — especially for the middle class — and shortcircuit the economic recovery, which would worsen the deficit.



I am not one of those who thinks the deficit should be the focus of our fiscal recovery. We are at war against a dangerous enemy that can inflict horrendous damage on our country. Wars are costly in both lives and money. But as Mr. Bush often says, you can’t put a price on freedom.

Moreover, deficits can sometimes have a short-term stimulative effect on the economy. The sharp rise in defense spending this year contributed to some extent to the faster 3.1 percent economic growth rate in the second quarter.

Instead of wringing our hands over the deficit, we should worry about the growth of government and hold nondefense spending to more manageable levels.

When Mr. Bush came into office, we had a $1.8 trillion budget. In the last three years, it has mushroomed to $2.2 trillion. Government spending this year will exceed $21,000 per household for the first time since World War II. It is growing “at an unsustainable rate,” says Heritage Foundation budget analyst Brian M. Riedl.

The 2004 Congressional Budget Resolution approved earlier this year ordered all the congressional committees to identify and cut at least 1 percent in waste, fraud and abuse from all mandatory budget programs.

That may not sound like much of a savings and many budget-cutters, including me, think we could cut much deeper.

“However, cutting wasteful spending today saves money not only in the current budget, but in future budgets as well,” Mr. Riedl says in a recent 14-page analysis. “If congressional waste cutters had reduced mandatory spending by 1 percent in 1980, taxpayers would have saved $190 billion through 2003 — more than $2,000 per household,” he says. That would have cut this year’s projected deficit nearly in half.

Where can we cut spending? Here are a few of Mr. Riedl’s suggestions:

c Food stamps: Auditors found overpayments were made to the tune of $1 billion in 2001. Illegal trafficking in food vouchers by crooked store owners costs taxpayers $660 million a year. Reforms would save $6 billion over 10 years.

c Flood insurance: The federally subsidized National Flood Insurance Program protects 4.5 million properties from flood costs. But Mr. Riedl found “it pays nearly 40 percent ($200 million per year) of its claims to the same 1 percent to 2 percent of properties that flood repeatedly.” Requiring owners of risky properties to pay the full cost of their insurance would save taxpayers $1 billion over the coming decade.

• Earned Income Tax Credit: This income-raising program gives nearly 20 million low-income families $31 billion a year in refundable tax credits. IRS auditors say nearly one-third, or about $10 billion, of these funds are overpayments. Improved verification of real incomes would save $80 billion to $90 billion over 10 years.

c Medicaid: Waste, fraud and abuse has long permeated this federally subsidized program that provides health care for 44 million low-income people. Too often states overreport their costs to get more money from the feds than they need.

Congress’ watchdog auditors in the General Accounting Office have “identified state schemes that shift money between state accounts to create an illusion of higher Medicaid expenditures.” Then these states turn around and spend these federal tax dollars on non-Medicaid purposes, Mr. Riedl reports. Banning such schemes would save taxpayers $26.5 billion over 10 years.

• There are many more examples where these came from. Higher Amtrak subsidies for declining ridership; $21.8 billion for student loans that are in default and often going to undeserving upper-income families; $3 billion in low-priority, waste-ridden Community Development Block Grants for bike paths and pleasure boat harbors.

So the next time you hear some outraged politicians here decrying the rising deficits, ask them where they would cut spending to balance the budget.

If they don’t have an answer to that question, then hold on to your wallet or purse because they probably want more of your money to make big government even bigger.

Donald Lambro, chief political correspondent for The Washington Times, is a nationally syndicated columnist.

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