Two iconoclastic new studies challenge the grim fatalism surrounding the congressional super committee charged with identifying the next steps toward taming the long-term federal debt.
The glum, growing consensus in Washington is that the super committee is more likely to perpetuate than resolve the parties’ stalemate over the deficit. The betting is that, with Republicans still rejecting any tax increases (even though federal revenues, as a share of the overall economy, now stand at their lowest level since 1950), Democrats won’t accept any meaningful restraints on entitlement spending (even though payments to individuals now consume more than three-fifths of the federal budget, squeezing all other liberal priorities). Conventional wisdom now assumes that the committee will offer just enough savings to avoid complete failure (which might further rattle spooked financial markets) but not enough to truly confront the long-term problem.
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Yet the two recent studies from unusual left-right coalitions show the opportunity for greater boldness. In each report, groups that started with diametrical ideological views about the role of government coalesced behind reform programs that would substantially reduce the deficit by eliminating programs that are either ineffective or that unnecessarily subsidize special interests.
The agendas offered by these odd-couple alliances alone are not sufficient to stabilize the long-term budget—that can only be done by restraining entitlements and raising more revenue. But these plans show how austerity can enable reform: They underscore the opportunity to use the deficit challenge to rethink federal expenditures that are now justified by little more than the strength of the lobbies protecting them. Equally important, the reports should signal to Congress that, with enough creativity and determination, it’s possible to bridge even gaping ideological divides.
One of the studies, called “Green Scissors,” proposes $380 billion in savings over just the next five years in programs that, as the report argues, “both harm the environment and waste taxpayer dollars.” The plan was assembled by two liberal groups (Friends of the Earth and Public Citizen) and two staunchly conservative organizations (the Heartland Institute and Taxpayers for Common Sense). “In some ways, [these groups] are further apart than Democrats and Republicans in Congress … on the role that government should play,” said Benjamin Schreiber, a Friends of the Earth tax analyst who helped write the study. “When we can agree on $380 billion in potential savings, it shows just how much is out there to save by eliminating harmful programs.”
One series of recommendations proposes that Washington stop subsidizing private interests by charging so little for access to federal resources such as timber, grazing land, hard-rock minerals, and oil and gas leases on public lands; as the report notes, the Government Accountability Office has calculated that U.S. royalty rates for oil and gas production are among the world’s lowest. Another set of recommendations would roll back direct subsidies for energy producers—such as tax breaks for domestic oil production and loan guarantees for an array of energy projects, from nuclear power plants to alternative energy. A third bucket would retrench or eliminate federal insurance programs that subsidize farmers to put new land in production (often in environmentally fragile areas), encourage homeowners to build on terrain vulnerable to floods, and limit the liability of offshore oil drillers for spills. “This is a long list of programs that lots of people can agree are terrible ideas,” said Eli Lehrer, a vice president at the Heartland Institute. “This is the real low-hanging fruit in the federal budget.”
In the same spirit, the conservative National Taxpayers Union and U.S. PIRG—a liberal, campus-based, public-interest organization—recently released a report (“Toward Common Ground”) that identified more than $1 trillion in potential savings over the next decade. Some of those estimates may be a bit exuberant. But the report contains dozens of bitingly specific recommendations for economies organized around four large themes: ending corporate subsidies (particularly for agricultural and energy interests); reforming military spending (mostly by improving contracting and eliminating questionable weapons systems); streamlining government operations (especially by building on initiatives that President Obama has already launched to modernize computing systems); and pursuing rifle-shot reforms that target dubious payments in Medicare and Social Security.
Few people would support all of the changes in either report. And, for each party, a few of the ideas touch raw ideological nerves. But most of the proposals sidestep the left-right impasse. Instead, they raise a different question: In pursuing deficit reduction, will Congress target weak claims or only weak clients?
The vast majority of programs challenged in both reports represent transfers to powerful interests that have applied their formidable clout to defending special treatment. Once, these subsidies might have been more easily justified because most at least partially serve some public purpose—for instance, encouraging more domestic oil production. But now, with every federal program under pressure, the balance between private gain and public benefit for all of these programs deserves much stricter scrutiny. If the super committee doesn’t apply that scrutiny, it can’t say it’s because no one told it where to look.
This article appears in the Oct. 1, 2011, edition of National Journal.