Where to find $200 billion to pay for Katrina

A little 'pork' here, a little there, and pretty soon we're ... not even close.

Postponing the new Medicare prescription-drug benefit for one year could save the US government $30 billion.

Cutting controversial bridges and bikeways from the highway funding bill might reduce spending by $6 billion per year.

Farm subsidies? Eliminate them and that's upwards of $30 billion a year back in Uncle Sam's pocket.

As these examples show, it's easy to find potential cuts to offset Washington's spending on recovery from hurricane Katrina, as President Bush has vowed to do. A $2.6 trillion annual budget provides lots of targets.

But actually making those cuts? That's another story. One person's unnecessary program is often vital to another. It's difficult to save big bucks without infuriating powerful constituencies, such as the elderly, farmers, or the Pentagon.

The bottom line: Even longtime budget hawks aren't optimistic. They don't foresee many actual reductions in months ahead.

"Congress continues to resist cutting even one program," says Brian Riedl, a budget expert at the Heritage Foundation in Washington.

The Medicare drug benefit is a case in point. It's Item 1 on the "to cut" lists of fiscal conservatives, given that its cost is projected to escalate into the trillions over the coming decades. If the benefit is eliminated, low-income seniors could still be helped by extending the existing federally supported drug discount-card program, says Mr. Riedl. He estimates that would cost about $5 billion annually.

But soaring prices of prescription drugs have led seniors of all income levels to cry for relief, and passage of the drug benefit remains one of Mr. Bush's foremost domestic policy achievements. Thus the White House and GOP congressional leadership have ruled it off-limits. Prior to his resignation Wednesday as House majority leader, Rep. Tom DeLay (R) of Texas declared such a cut a "nonstarter."

From a budgeteer's green-eyeshade point of view, the problem is that federal relief promised in the aftermath of hurricanes Katrina and Rita is growing more expensive by the day. Costs could reach $200 billion for fiscal 2006 alone.

That's real money, even by Washington standards. Offsetting it via frugality would require deep cuts.

Thus, aiming at easy targets might not help. Take so-called "earmarks" - individual projects inserted into bills by members of Congress eager for federal spending in their districts. Critics deride many of these as "pork." But eliminating them one by one is a tough way to save money. Axing the derided "bridge to nowhere," a project that would build a link between the Alaskan city of Ketchikan to an island with only 50 residents, would save but $223 million.

This year's highway bill contains $24 billion in earmarks, but that's spread out over four years. Eliminating all of them - and earmarks from other bills - could indeed save billions. But the political warfare it would spark, as members hotly defend their local projects, could well hold up Katrina relief legislation, notes Stan Collender, a budget expert in the Washington office of Financial Dynamics Business Communications.

Overall, it would be next to impossible to offset $200 billion in Katrina costs in one year's budget, says Mr. Collender. Federal spending is $2.6 trillion a year - but take away Social Security and other entitlements, debt interest, defense spending, and supplemental war appropriations, and only about $500 billion remains. Finding $200 billion in savings would require almost a 50 percent cut in this remaining portion - which includes food safety programs, National Park Service salaries, and salaries for White House staff.

Budget hawks say it is still worth trying to trim the US budget. Earlier this month a group of fiscally conservative House Republicans proposed more than $500 billion in savings over 10 years. Among their reductions: end taxpayer support for the Corporation for Public Broadcasting, saving an estimated $4 billion over the decade; and eliminate NASA's Moon-Mars initiative, for $44 billion in savings.

"Budget Options," a publication of the Congressional Budget Office (CBO), is another place to find the budgetary implications of eliminating some government operations. This year's edition states that eliminating the Air Force's F/A-22 warplane program would save $4 billion next year, and $11.3 billion through 2015.

Cutting the number of ships built under the Navy's new DDX destroyer program could save $29 billion by 2015, notes the CBO, though it would actually cost $1.3 more in '06 due to termination expenses.

In the area of US foreign aid, reducing allotments to Egypt and Israel could save $11.4 billion through 2015, the CBO estimates. In the science category, cancelling research on Project Prometheus, slated to develop nuclear reactors for use in space, could eliminate $5 billion over 10 years.

Reducing the cost-of-living adjustment for Social Security could save a whopping $93 billion over 10 years, notes the CBO - though it almost goes without saying that would be a controversial move.

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.

Loading...

Loading...

Loading...