Where the Savings in the Budget Deal Will Come From

WASHINGTON, DC - DECEMBER 10: Senate Budget Committee Chairman Patty Murray (D-WA) and House Budget Committee Chairman Paul Ryan (R-WI) hold a press conference to announce a bipartisan budget deal, the Bipartisan Budget Act of 2013, at the U.S. Capitol on December 10, 2013 in Washington, DC. The $85 billion agreement would set new spending levels for the next two years and create $63 billion in so-called 'sequester relief.' 
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Billy House
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Billy House
Dec. 11, 2013, 3:52 p.m.

Re­quir­ing newly em­ployed fed­er­al em­ploy­ees to pay more in­to their pen­sion funds and char­ging air­line trav­el­ers a high­er se­cur­ity fee are the two most talked-about moves to off­set spend­ing in the budget deal pending be­fore Con­gress.

But a crazy quilt of oth­er ideas, from the quirky to the spec­u­lat­ive, also are part of the plan — such as crack­ing down on pris­on­ers who some­how re­ceive un­em­ploy­ment checks and mak­ing dead-cer­tain that dead people don’t get tax re­funds.

Un­im­pressed, some con­ser­vat­ive and tax­pay­er groups on Wed­nes­day likened these pro­pos­als to smoke and mir­rors, la­beling them weak prom­ises of fu­ture sav­ings made in re­turn for more spend­ing today.

The crafters of the budget deal, Re­pub­lic­an Rep. Paul Ry­an and Demo­crat­ic Sen. Patty Mur­ray, in­sist the pro­jec­ted sav­ings are real. “All in all, we provide $63 bil­lion over two fisc­al years in se­quester re­lief, which is re­placed with $85 bil­lion in man­dat­ory sav­ings, for a net de­fi­cit re­duc­tion of $23 bil­lion,” Ry­an said dur­ing a House Rules Com­mit­tee hear­ing Wed­nes­day.

“We stop pay­ing Medi­caid bills that dead­beat dads should be cov­er­ing, we stop send­ing un­em­ploy­ment checks to crim­in­als,” Ry­an said, tick­ing off some of the pro­pos­als to real­ize sav­ings by lower­ing spend­ing, curb­ing fraud and waste, or in­creas­ing fees.

But closer scru­tiny shows that a good chunk of the sav­ings is to be spread out over 10 years. And some crit­ics also say they have little faith law­makers are cap­able of stay­ing true to such com­mit­ments to spend­ing caps a dec­ade from now.

“It’s laugh­able,” says Tad De­Haven, an ex­pert on fed­er­al and state budget is­sues for the Cato In­sti­tute. “It’s only been two years and they are go­ing back on the se­quester. It goes to show you how worth­less long-term com­mit­ments are.”¦ Con­gress could change this deal by the time we’re off the phone,” he told a re­port­er Wed­nes­day.

Ac­cord­ing to fig­ures put out by Mur­ray and Ry­an’s of­fices, some of pro­vi­sions pitched as bring­ing in sav­ings to off­set the ad­ded spend­ing in­clude:

  • About $786 mil­lion over 10 years — in­clud­ing $517 mil­lion in in­creased rev­en­ues or pen­al­ties through a crack­down on fraud­u­lently claimed tax re­funds — by block­ing mis­use of the omin­ously named “Dead Mas­ter File.” The Com­merce De­part­ment would im­pose great­er re­stric­tions on ac­cess to the list of dead people and their So­cial Se­cur­ity num­bers;
  • An es­tim­ated $242 mil­lion over 10 years by go­ing after pris­on­ers who il­leg­ally claim fed­er­al be­ne­fits, in­clud­ing $162 mil­lion tied to pre­vent­ing im­prop­er tax re­funds;
  • About $1.4 bil­lion over 10 years by re­in­for­cing Medi­caid’s stand­ing as the pay­er of last re­sort, in­clud­ing al­low­ing states to col­lect med­ic­al child sup­port in cases where health in­sur­ance is avail­able from a non-cus­todi­al par­ent;
  • An es­tim­ated $7.9 bil­lion over 10 years by rais­ing the premi­ums com­pan­ies pay the fed­er­al gov­ern­ment to guar­an­tee their pen­sion be­ne­fits;
  • An es­tim­ated $3.1 bil­lion sav­ings over 10 years by elim­in­at­ing spe­cial carve-outs for non­profit stu­dent-loan ser­vice­rs;
  • More than $1.5 bil­lion over 10 years by per­man­ently can­celing the un­oblig­ated bal­ances of the Justice De­part­ment’s As­set For­feit­ure Fund and the Treas­ury For­feit­ure Fund.

In ad­di­tion, rais­ing the Trans­port­a­tion Se­cur­ity Ad­min­is­tra­tion’s se­cur­ity fees on air­line tick­ets is es­tim­ated to bring in an­oth­er $12.6 bil­lion in sav­ings over 10 years.

An­oth­er $25 mil­lion in sav­ings is pro­jec­ted as a res­ult of ap­prov­ing an agree­ment with Mex­ico to jointly ex­plore and de­vel­op off­shore hy­dro­car­bon re­sources; nearly $6 bil­lion would be saved over 10 years by in­creas­ing fed­er­al em­ploy­ee pen­sion con­tri­bu­tions by 1.3 per­cent­age points; and an­oth­er $6 bil­lion would be gen­er­ated over 10 years by chan­ging the an­nu­al cost-of-liv­ing ad­just­ment for work­ing-age mil­it­ary re­tir­ees.

But are all of these pro­jec­ted sav­ings real?

“Ef­forts to curb waste, fraud, and ab­use in en­ti­tle­ment pro­grams are worth a lot of praise, but they’ve served as pay-fors in a num­ber of [pre­vi­ous] budget plans,” said Pete Sepp, vice pres­id­ent of the Na­tion­al Tax­pay­ers Uni­on. “How will these be dif­fer­ent, in that they’ll ac­tu­ally de­liv­er on the prom­ised sav­ings?”

Sepp and oth­ers also say many of these pro­pos­als are ac­tions Con­gress and fed­er­al agen­cies should have taken already.

“We’ve known about un­oblig­ated bal­ances in vari­ous fed­er­al ac­counts for sev­er­al years now…. Why wait un­til yes­ter­day to an­nounce that something was be­ing done about it, at least for a few agen­cies?” Sepp asked on Wed­nes­day.

Cato’s De­Haven ad­ded: “One of the things is to crack down on fraud — people get­ting un­em­ploy­ment be­ne­fits while in pris­on. Well, why aren’t you do­ing that already?”

Ry­an Al­ex­an­der, pres­id­ent of Tax­pay­ers for Com­mon Sense, com­plained: “The deal’s au­thors are us­ing a patch­work of ques­tion­able off­sets and budget­ary op­tic­al il­lu­sions in­stead of re­spons­ibly re­pla­cing pos­sible across-the-board se­quest­ra­tion cuts with real de­fi­cit re­duc­tion. This is just a thinly veiled at­tempt to hide real spend­ing in­creases that bust the budget­ary caps both cham­bers and the pres­id­ent agreed to only two years ago.”

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