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Policy: Budgets & Deficits

A New Year's resolution on spending cuts the federal government could keep

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Opinion,Columnists,Veronique de Rugy,Budgets and Deficits,Spending,Subsidies

The new year is a time to make resolutions to improve your life over the next 12 months. The problem is that people often try to make massive, sweeping changes — a tactic more likely to yield failure and frustration than success. It is better to make smaller promises that you know you can keep than major ones that are doomed to fail.

The same principle is true for the federal government, and their inevitable “New Year, New Washington!” promises to get spending under control. I propose three resolutions for fiscal responsibility that could actually receive enough support to be enacted quickly, and would be beneficial for taxpayers and the economy alike.

True, these are the low-hanging fruit of spending cuts and do not amount to enough savings to put us on a sound fiscal path. They certainly aren't what I have in mind when I usually write about the need to cut spending. However, success with these smaller steps may help build a consensus to tackle the bigger challenges — such as unsustainable entitlement spending and our mess of a tax code — we all know await us.

-- End all farm subsidies. In 2012, the Department of Agriculture spent $22 billion on subsidy programs for farmers, including direct payments and insurance subsidies. First introduced in the 1930s to help struggling small family farms, they are now viewed by many on the Right and the Left as the quintessential example of wasteful corporate welfare. While only 2 percent of Americans are directly engaged in farming, they aren’t necessarily struggling anymore. In 2010, the average farm household earned $84,400, up 9.4 percent from 2009 and about 25 percent more than the average household income nationwide.

What's more, a handful of farmers reap most of the benefits from the subsidies: wheat, corn, soybeans, rice, and cotton have always taken the lion's share of the feds' largesse. And for what? Most economists agree that the policies tend to increase the price of food at the expense of consumers, and in particular of the poorest Americans. It is time to abolish these subsidies.

-- Eliminate duplication. In April, a Government Accountability Office report, once again, exposed 162 areas where agencies are duplicating efforts at a cost of billions of dollars to taxpayers. For instance, it found 23 different federal agencies running hundreds of programs to support renewable energy, and that each branch of the armed services is developing its own camouflage uniforms without checking in with the other branches.

The overall cost is unknown, but it is likely large. The administration’s budget requested some $25 billion in savings in Fiscal 2014 from consolidation alone. That would amount to a nice stack of savings over 10 years. Putting an end to this type of waste should be the low-hanging fruit of all-low hanging fruit since the federal government shouldn’t even be involved in providing most of the duplicative activities — such as the 47 separate job training programs.

-- Cut non-defense defense spending. That's right; the Department of Defense actually spends a lot of money each year on stuff that has nothing to do with protecting our country. A report by Sen. Tom Coburn, R-Okla., called “The Department of Everything” identifies almost $70 billion over 10 years in wasteful spending that can be eliminated "without cutting any Army brigade combat teams, Navy combat ships, or Air Force fighter squadrons.” Examples include eliminating the $9 billion spent for Pentagon-run grocery stores, and the $10.7 billion it spends to educate children of military families in the United States when these kids already have the option of attending public schools. Coburn's press release notes that the report merely skims the surface; much more needs to be done.

Clearly, much more could -- and should -- be cut not only at Defense and Agriculture, but throughout the federal government. Considering Congress' record, however, simply committing to making the easiest and most obvious cuts (at least to everyone but the interest groups who benefit from them) is perhaps the wisest resolution Washington can make this year. If Congress can successfully accomplish these tiny things, it could create the critically needed momentum to start working on the much more difficult tasks that this nation faces.

Veronique de Rugy, a Washington Examiner columnist, is a senior research fellow of the Mercatus Center at George Mason University.

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Veronique de Rugy

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The Washington Examiner