Friday, April 5, 2013

How to Cut $450 Billion in Federal Spending

Cut $450 Billion from the Federal Budget Now (Without touching Medicare/Medicaid)
  1. Eliminate Ethanol subsidies. These subsidies exist because ethanol is not cost-effective (why else would it need subsidies?)   Imported Brazilian ethanol is cheaper (but there are trade barriers to this source). Ethanol doesn't make economic sense compared to petroleum distillates. Stop consuming up to 40% of the corn crop for fuels! Stop the madness! The agriculture department couldn't even cut this consumption when corn prices were soaring during drought conditions in recent years.  Cost: $6 billion per year.
  2. Cut much of the Agriculture Dept.  Eliminate most of the current programs per Cato Institute suggestions,  Subsidies to corporate farmers has never made sense.  Devolve the food stamp and food subsidies to the States. All of various food subsidy programs including SNAP cost $100 Billion per year would be transferred to The States.  Net savings: $31+ Billion per year (assumes The States keep all of the SNAP expenditures.
  3. End Electric car subsidies to wealthy people who buy $100,000 electric cars (Tesla and Fisker cars cost $100k), Cost: $6.5 billion.
  4. Cut Defense Department per Cato Institute suggestions. We don't need troops in 140 countries. Military procurement has been a boondoogle for decades.  Veterans retirement benefits are very generous and expensive.  Cost savings: at least $100 Billion each year for the next decade.
  5. Downsize Commerce Department per Cato Institute suggestions.  Cost Savings: $2 billion
  6. Eliminate the Department of Housing and Urban Development per Cato Institute Suggestions.  Cost savings: $62 Billion per year.
  7. Cut Mortgage subsidies (tax credits) for mostly wealthy or well-off people to finance their homes and even multi-million dollar McMansions,  These tax subsidies should be limited!  Cost savings: $69 billion to $100 billion per year depending on who you believe. 
  8. Education department is wasting money that we don't have, Sending money to Washington DC for them to re-allocate it doesn't make sense.   End the entire department and dismantle all of it's programs! Cost savings: $106 billion each year.
  9. Energy department who brought you Solyndra and countless other wasteful boondoggles.  End it per Cato Institute suggestions!  Private enterprise is entirely capable of providing funding for energy research. Privatize the Strategic Petroleum storage program. Put defense related expenditures in the Defense budget.  Cost savings: $38 billion per year.
  10. Cut Health and Human Services Dept. . HHS spending is over 1/4 of the total federal spending or $900 Billion per year. Cut many of the programs that the Cato Institute recommends (exclude Medicaid/Medicare cuts). Cost Savings:  $81 Billion per year.
  11. Medicare and Medicaid fraud Cost estimated at up to 20% or $150 billion in fraud.  Go to the block grant to the states per the Paul Ryan budget.  There is some chance that States might root out that fraud which is exactly why no one wants to do this!
  12. SS Disability Fraud:  How about the rising fraud in the $124 BILLION Social Security disability program?  Disability program enrollments soar after easing of rules allowing claims of "mental distress" or "back pain"?  Cost of fraud: I don't know but I would estimate about 10% of claims or $12 billion.  Tighten standards back to where they were before Obama was elected.  
  13. Repeal 1931 Bacon Davis Act and 1935 National Labor Relations Act. The extra cost of union requirements in Federal projects is huge.  Stop it!  Pass a National Right-to-Work act.  See Cato Inst write-up on reforming Labor Markets
  14. Substantially Dismantle the Department of Labor.  Devolve the $131 Billion Unemployment Insurance program to the states.  Eliminate job training programs, job corps, trade adjustment services per Cato Institute suggestions.  Net Cost savings: $13 Billion per year if States provide exactly the same Unemployment insurance.
  15. Sugar industry price supports are a complicated combination of import restrictions, production quotas and a kind of guaranteed prices.   The US government makes sugar prices higher than world prices and drives candy-making businesses to Canada and Mexico taking factory jobs with it! , Last year, the price of sugar around the world averaged 26.5 cents per pound, compared with 43.4 cents in the U.S.  Stop it!
Total Cost Savings per year: $450 billion without including any Medicare and Medicaid reforms which are the biggest areas where cost restraint is required going forward.

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