The Proposed Republican Budget Cuts

By Chris Mooney | January 20, 2011 2:34 pm

A list is out from the House Republican Study Committee, devising specific plans to reduce the deficit. Along with big picture stuff, it includes a number of smaller scale items. Let me list a few that immediately caught my attention–for instance, the media and culture cuts:

Corporation for Public Broadcasting Subsidy. $445 million annual savings.
National Endowment for the Arts. $167.5 million annual savings.
National Endowment for the Humanities. $167.5 million annual savings.

And the dirty energy cuts:

Department of Energy Grants to States for Weatherization. $530 million annual savings.
Applied Research at Department of Energy. $1.27 billion annual savings.
Energy Star Program. $52 million annual savings.

And the denial cuts:

Eliminate taxpayer subsidies to the United Nations Intergovernmental Panel on Climate Change. $12.5 million annual savings.

And the cuts that I probably support but that have no meaning whatsoever in the context of the massive deficit:

Eliminate Mohair Subsidies. $1 million annual savings.

If this was a song it might be called “looking for money in all the wrong places.” Defunding the IPCC, and saving just $ 12.5 million, seems particularly wrongheaded.

Last year’s estimated budget deficit was $ 1.171 trillion.

CATEGORIZED UNDER: Global Warming, Politics

Comments (24)

  1. Mike H

    Looks good to me, gotta start somewhere. Next up defense and entitlements.

  2. BCC

    Oh, let ‘em cut the CPB money already. I’ll bump up my NPR contribution if it means we can stop the whining on this one. Besides, the whine about NPR’s leftish lean, while exaggerated, has a teensy bit of merit.

    Cutting Energy Star is just f-ing stupid. I’ll go to the barricades over that one.

  3. Jon

    Next up defense and entitlements.

    What, social security? It will run a surplus for the next decade. It’s been taking in more than it’s been putting out for quite a while.

    If you’re talking about Medicare, GOP just got through attacking the healthcare plan for Medicare cuts. They won’t turn around and cut the same programs they just used to beat the Dems over the head with.

  4. The programs you listed are the ones that stood out to me as well. The fact that there is no defense cuts (budgeted or discretionary) – in fact, they flat-out state:

    “Further, impose discretionary spending limits through 2021 at 2006 levels on the non-defense portion of the discretionary budget”

    makes this a no go for me.

  5. Jon

    I hadn’t heard that. But it’s been running a surplus, and will go back to surplus, which yes, will end in a few years.

    But it’s been contributing to the general fund now for how long? As Paul Krugman points out, what would be the accumulated interest on those general fund donations that taxpayers have been making?

    http://krugman.blogs.nytimes.com/2008/03/28/about-the-social-security-trust-fund/

  6. ERic

    @Jon re “They won’t turn around and cut the same programs they just used to beat the Dems over the head with.” Really? You clearly don’t understand politics.

  7. 500 million seems like a lot, and it’s hard for people to wrap their heads around the difference between that and the trillion dollar deficit. In the recent “This American Life” there was a really great line: “Remember that a trillion dollars is to a million dollars what a million dollars is to one dollar.”

  8. Jon

    Touche, Eric, but the GOP would also have the AARP on their butts. Don’t think that would work for them. (But this is all getting off topic…)

  9. Along the lines of what Kevin commented on – If anybody wants to see a video (less than 2 mins) that puts some context to the fed budget click my name. Demonstrates the scale pretty well of what we’re dealing with numbers wise.

    And no, it doesn’t make any political points. Just a demonstration.

  10. John Wayne

    Hey Cheyenne the U.S. Treasury says:

    “..Whoever mutilates, cuts, disfigures, perforates, unites or cements together, or does any other thing to any bank bill, draft, note, or other evidence of debt issued by any national banking association, Federal Reserve Bank, or Federal Reserve System, with intent to render such item(s) unfit to be reissued, shall be fined not more than $100 or imprisoned not more than six months, or both.”

    I’m telling on you!

  11. SS began running a deficit in 2010.

    Megan McArdle notwithstanding, Social Security is not running a deficit. Even the article she links to doesn’t make that claim. What it does say is that:

    This year, the system will pay out more in benefits than it receives in payroll taxes

    Fortunately, they invested the last several decade’s worth of surpluses in investments, a small portion of which they are now cashing in. Even if we do nothing, the Social Security fund isn’t projected to run a deficit for decades.

  12. ThomasL

    Jinchi (#12),

    Do you really believe that? This isn’t even hard to find public knowledge stuff… and while I might not agree with you often I never took you for being mathematically challenged. The “trust” is whatever the current receipts from payroll taxes are and a whole lot of treasury paper – and that would be U.S. treasury paper, not some “investment”. In other words, our government borrowed the entire surplus that there has ever been and replaced it with promises to pay it back when needed, spending the actual funds as part of the Federal Governments “general fund”.

    That’s why the “paying out more than payroll taxes are bringing in” is rather important here. It means that the “trust” is cashing those checks with the treasury about 6 years earlier than anyone thought they would be. And by definition in the financial world that would also mean it is running at a deficit (it is spending more than it brought in and has to liquidate assets to make up the difference…). Depending on any employment recovery this may or may not go back to positive in any meaningful manner prior to returning to a negative state. Currently they are worried about all the 62 year olds signing up earlier than expected -> but if one can’t find a job they might as well take SS, even if reduced. Those couple years to maximize their monthly checks are a luxury they no longer have.

    Being in a negative state puts even more pressure on the Federal budget -> remember, they have been using it to fund the daily operations for many,many years now. Not only is that no longer there to spend, but the general fund is being asked to pay back part of what it has borrowed & spent.

    Really, research what is going on there. Never say you weren’t warned when you discover how hollow anything in that promise turns out to be.

  13. Jon

    The “paying out more than payroll taxes are bringing in” is rather important here.

    Sure it’s “rather important”, but as Krugman points ouot in the link above, it isn’t because of some big fault in the program. The program has been running in surplus, and the surplus was invested. The program has been administered well, and has been run well.

    If you’re looking for a program with problems, look at Medicare:

    http://www.prospect.org/csnc/blogs/ezraklein_archive?month=05&year=2007&base_name=social_security_as_signifier

    This is why the first priority has been fixing the health care system, not social security.

    The reason for all the fuss about Social Security has less to do with any faults in the program and more to do with this:

    http://www.slate.com/id/2112796/

    (Apologies, these links are a bit dated, but still relevant.)

  14. Eric the Leaf

    Personal, corporate, financial, and government debt are at historic highs. The growth that must occur to pay down this debt is almost unfathomable. Some wish to stimulate the economy by increasing government debt, which unless it leads to real, long-term growth, can only be a temporary fix. Others wish to reduce all spending and implement austerity measures, which can lead to a dangerous deflationary spiral–some see this as right around the corner anyway. If growth proves difficult or impossible, then all bets are off, and there are reasons to believe this will be the case.

    In my opinion, one of the leading “explainers” of the modern human condition is Richard Heinberg. Known especially for “The Party’s Over: Oil, War, and the Fate of Industrial Societies,” he has turned his attention to the economy, resources, and the environment. This newest book, slated for publication later this year, is appearing online in serial form on his website.

    I highly recommend reading the first 3 chapters so far:

    http://richardheinberg.com/221-economics-for-the-hurried

    http://richardheinberg.com/222-the-end-of-growth

    http://richardheinberg.com/224-the-sound-of-air-escaping

    I would be interested to hear what others think. Since the health of the economy is central to our energy future (and vice versa), maybe Chris would care to provide commentary or link the articles in a future post to promote further discussion.

  15. In other words, our government borrowed the entire surplus that there has ever been and replaced it with promises to pay it back when needed, spending the actual funds as part of the Federal Governments “general fund”.

    I’m missing the part where my math is faulty, but maybe you can clarify something. Do you expect the treasury to default on all it’s debts or just the bonds in the Social Security account?

    Because it seems to me that you’re making two arguments. One is that Social Security is a system based on a dedicated tax which has been running a surplus for decades. From that perspective, Social Security is not running a deficit, because those surpluses were invested and those investments will bear out for another several decades. In fact, there is no point in running a surplus unless you intend to cash it in at a future date.

    Your second argument is that Social Security is really just part of the general fund and the taxes dedicated to it are really just another revenue stream, like the income tax, licensing fees, tariffs etc. By this logic, Social Security is not “running a deficit”, any more the Defense Department or the Highway fund is running a deficit. We attribute deficits in the general fund to the whole not to individual pieces of it.

  16. ThomasL

    Jon & Jinchi…

    SS is a tax that has been running at a surplus for years if you really think what the government collects in one hand and spends with the other is somehow disconnected. There never was a “surplus”, there was however another income stream that allowed higher spending without seemingly higher taxes (cause as it was put above “they invested it”… in our General Fund, but accounting allows for lots of strange arrangements).

    It’s based on so many workers per retired beneficiary. It’s a classic Ponzi actually, but we’ll even ignore that. Unless you believe in perma forever growth it is unsustainable, as over time the number of workers per beneficiary will drop forcing either an increase in age (so less gets collected due to mortality) or an increase in taxes (as the percent paid per worker increases as their numbers drop). Even then there are only so many such adjustments you can make before you hit the failure to grow enough issue. We’ve already done those and are about to do them again. That will “fix” it for another 20 or 30 years (maybe), and then we have the same issue, only even larger numbers. The classic “kick the can” situation.

    And a situation where basically we regularly lie to ourselves about things and regularly change the rules well after many are already part of the system (as in they aren’t going to get what they were promised when they started…).

  17. It’s a classic Ponzi actually, but we’ll even ignore that.

    To be clear, even Megan McArdle realizes that Social Security has been running in the black for the first 75 years of it’s existence. It’s been run so well that it can cover 100% of it’s obligations through the next 25 to 35 years, even if we do nothing at all. It’s been the only part of the government in the black for most of the last 30 years. In fact, it’s been propping up everything else.

    And you think Social Security is the problem? Social Security didn’t give us our current deficit. If the rest of the government was run as well as this “Ponzi scheme” we’d be in great shape.

  18. ThomasL

    Sorry, SS is and always has been a “pay-as-you-go” system, despite accounting rules that may pretend otherwise. “This means that when you work, the government takes your money and gives it to Social Security recipients. In order to get workers to accept this system, the government promises to take other people’s money and give it to you when you retire.” (http://mises.org/daily/3469)

    Here is some reading. The points made by Greenspan are worth thinking hard on before you try to answer this question.

    “real- terms” as in economic real – nominal and how they differ… :

    http://blog.mises.org/3260/greenspan-talk-social-security-cant-pay-up-in-real-terms/

    “The National Commission on Social Security Reform (informally known as the Greenspan Commission after its Chairman) was appointed by the Congress and the President in 1981 to study and make recommendations regarding the short-term financing crisis that Social Security faced at that time. Estimates were that the Old-Age and Survivors Insurance Trust Fund would run out of money possibly as early as August 1983.”

    So sorry, I *DO NOT* agree that it has been in the black for 75 years. It has already been forced to “re-organize” if you will a couple times, this being one of them…

    http://mises.org/daily/4528

  19. Jon

    Really? The Ludwig Von Mises Institute has bad things to say about Social Security?

    Who knew?

  20. ThomasL

    Jon,

    http://www.oftwominds.com/blogjan11/Social-Security-fraud01-11.html

    I’m not sure how that response was actually a counter point, but here’s another take leading to the same conclusion by one who would generally be in political alignment with most on this blog…

  21. This means that when you work, the government takes your money and gives it to Social Security recipients. In order to get workers to accept this system, the government promises to take other people’s money and give it to you when you retire.

    Right. That’s called taxation. It’s how governments fund themselves.

    But let me put this a different way. There are people at the Social Security Administration who are responsible for sending out checks to retirees every month. Those people are going to make sure that the checks are paid in full as long as they have the resources to pay them. They don’t care about the debt in the general fund in the sense that it isn’t their job to fix it.

    If there aren’t enough tax receipts to pay the bills, they are going to start cashing in the treasury bonds. This isn’t a hypothetical point. If they took it upon themselves to simply send a partial payment when they have resources available, they would be fired in the time it takes furious retirees to pick up the phone and yell at their Senator.

    It has already been forced to “re-organize” if you will a couple times

    Right. They projected future demographic changes and adapted the policy to cover the bills. That’s how they keep in the black. Again, if the rest of the government was run that way, we wouldn’t have a $14 trillion deficit.

  22. ThomasL

    Jinchi,

    “Right. That’s called taxation. It’s how governments fund themselves.”

    O.K., but then that sure isn’t any kind of a “trust” fund situation then, is it? And that is kind of the point -> the “trust fund” is a lie. Honestly, read Charles Hugh Smiths breakdown of the entire system linked above. I would be 100% happier if we just stopped lying about it and put it in the general budget where it belongs. Think of it as being very much the same as what they did with the two housing monstrosities – let’s pretend they really aren’t part of the government debt structure so it looks better by spinning them off as “companies” (otherwise known as GSE’s -> Government Sponsored Entities”. You likely know them by their more common names, Fannie Mae and Freddie Mac). It worked for 40 years. Made the books look lots better while they ramped up Vietnam in fact…, now they are back in the Governments hands with trillions in problems and red ink because everyone knew they were government backed no matter how much we said “no they aren’t”. That’s reality VS. theory in finance and Government…. In the current rendition it’s going to be the “trust fund that really didn’t exist” -> why do you think everyone who understands the system is sounding the alarms?

    “Those people are going to make sure that the checks are paid in full as long as they have the resources to pay them. They don’t care about the debt in the general fund in the sense that it isn’t their job to fix it.”

    Ummmm. With what money? The money Treasury is going to cough up to buy the fake bonds with (fake because they are not marketable -> only our treasury can purchase them…)? Where is treasury going to come up with those dollars? Having the resources to pay is exactly the point Jinchi, and our government doesn’t have anywhere near the resources (read Greenspans’ commentary). Thus one can be assured there will be tax increases and drops in benefits (and I guess for you that would count as staying in the black, for me and everyone else in the financial world, we call it a default…).

    “If there aren’t enough tax receipts to pay the bills, they are going to start cashing in the treasury bonds. This isn’t a hypothetical point. If they took it upon themselves to simply send a partial payment when they have resources available”

    If you had read any of the links above you would know that the part about having “resources available” is the issue. SS doesn’t have any resources until treasury gives it to them. The “bonds” are only payable by the treasury (they cannot be sold on the market). There are no “real” resources in the trust, just IOU’s for money that has already been spent, and there will be no paying without radical reworking of the system (read way higher taxes, substantially lower benefits or combinations thereof). While this is working itself out there will be ever more strain on the general fund (you know, the one that actually pays for everything, like science research for example…).

    “Right. They projected future demographic changes and adapted the policy to cover the bills. That’s how they keep in the black. Again, if the rest of the government was run that way, we wouldn’t have a $14 trillion deficit.”

    ??? To quote the response to that line of thinking that is actually straight out of one of the above links: “The people who are saying that Social Security is broke are warning the public that we will need to either suffer a payroll tax hike, or deal with a reduction in promised benefits, or both. Dean Baker then comes along and says that’s nonsense, because we’ve been in this situation before, and we solved it — by raising taxes and cutting benefits.” You seem to agree with Dean Baker, except you are failing to acknowledge that raising taxes or lowering benefits was not part of any deal anyone involved thought they were making… I actually like Sweden’s model, and it isn’t a Ponzi.

    However, If that is what you mean by staying in the black I suppose you are correct. Most of us consider that something very different. And I should point out, and as explained very well in some of the above links, it isn’t just SS that plays these games, all of which are designed to mislead those who don’t have a financial background.

    And just because I am sure student loans are something near and dear to most here, you might want to check this out…:
    http://globaleconomicanalysis.blogspot.com/2011/01/budget-deficit-accounting-fraud-and-off.html

    Really, read. Everyone has an interest in this for reasons that are far too hard to explain in this blog. But if you think they have budget issues now that threaten “scientific research” funding, wait a couple more years…

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About Chris Mooney

Chris is a science and political journalist and commentator and the author of three books, including the New York Times bestselling The Republican War on Science--dubbed "a landmark in contemporary political reporting" by Salon.com and a "well-researched, closely argued and amply referenced indictment of the right wing's assault on science and scientists" by Scientific American--Storm World, and Unscientific America: How Scientific Illiteracy Threatens Our Future, co-authored by Sheril Kirshenbaum. They also write "The Intersection" blog together for Discover blogs. For a longer bio and contact information, see here.

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