Life after 'sequester': Does federal budget have $1 trillion in fat to cut?
Deficit hawks say that, 'sequester' or not, federal spending needs to come down by at least $1 trillion during the next decade. But finding that money just in government waste is hard.
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In “just the past two years, the Government Accountability Office (GAO) has identified more than 1,362 duplicative programs accounting for at least $364.5 billion in federal spending every single year,” he wrote in a February letter to the White House Office of Management and Budget.Skip to next paragraph
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That doesn’t mean $365.5 billion can be a quick and easy annual savings. Rather, policy experts say it means some of the programs could be consolidated and some eliminated.
Improving worker productivity, such as through smartphone apps and other technology, could cut federal payroll costs substantially. Even President Obama’s own budget director agreed about that in a 2010 speech.
But unlike the typical business, like a restaurant, vast amounts of federal spending have nothing to do with personnel. Vast sums in the budget simply pass through to individual beneficiaries of programs like Social Security, to others who provide benefits (hospitals and doctors under Medicare), or go to states in grants.
For example, spending on discretionary programs – which include national security and a range of domestic programs from transportation to education – would total $12.6 trillion during the next decade if the sequester remains in effect. If you wrap in mandatory programs like Social Security, total federal spending during those years rises to about $45 trillion, according to the CBO.
In sum, most budget experts say taming deficits in the long run will have to mean tackling growth in mandatory programs (especially Medicare, Medicaid, and Social Security), as well as economizing in the discretionary side of the budget.
Many economists warn against imposing budget austerity too fast, lest it harm an economic recovery in which unemployment still hovers near 8 percent of the work force.
At the same time, many others say budget discipline is needed, and can start now at least to some degree.
Senator Coburn, for his part, has offered one detailed path toward trillions of dollars deficit reduction. His plan warns of "tough choices," beyond just cutting waste and inefficiency.
The nonpartisan Committee for a Responsible Federal Budget says that setting an ambitious goal for fiscal discipline would pay dividends in economic growth.
“An additional $2.3 trillion of deficit reduction would not only put debt on a downward path toward 68 percent of GDP in 2023, but would also increase the size of the economy by almost 1 percent in that year,” the group says, citing CBO numbers.
By contrast, the sequester cuts, by themselves, won’t be enough to keep the national debt from rising as a share of gross domestic product – from about 73 to 77 percent by 2023.