Is the Federal Budget Cupboard Really Bare?

Commentary by Jonathan Bydlak, the President of the Coalition to Reduce Spending, a non-partisan advocacy organization dedicated to limiting federal spending. His commentary has been published previously in USA Today, National Review Online, The Hill, and Real Clear Policy. He also has appeared on Fox’s STOSSEL, ReasonTV, and TheBlaze’s Wilkow!, and has been profiled by Business Insider and The Fiscal Times.

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Since Sunday, House Minority Leader Nancy Pelosi (D-CA) has come under criticism for making the following statements:

"The cupboard is bare," the California Democrat said in an interview aired Sunday on CNN's State of the Union. "There's no more cuts to make."

"We all want to reduce the deficit," she added. "Put everything on the table, review it, but you cannot have any more cuts just for the sake of cuts. Right now you’re taking trophies."

The fact of the matter is, spending should not continue unabated simply because our representatives do not think they can find cuts. The reality of the situation demands whatever cuts necessary to stave off the ballooning national debt (hardly “cuts just for the sake of cuts”). Spending on credit is not an acceptable answer simply because elected officials declare cuts too hard to find.

But furthermore, Pelosi’s statement is entirely false. For one, there are the hundreds of billions of dollars in fraud, duplication, improper payments, etc., readily discoverable in the federal budget. For another, Pelosi herself supported specific budget cuts only seven months ago.

The silliness of such comments are highlighted by the fact that President Obama – the biggest-spending President in American history – has actually requested spending cuts and reforms of his own. These are cuts that politicians on both sides have generally let fall to the wayside.

In recent weeks, the Coalition to Reduce Spending has gathered every single one of the President’s proposed budget cuts from 2011 through 2014. Below are the Top Ten from his 2014 budget resolution:

- Eliminate direct payments to farmers and reduce subsidies for crop insurance, and better target conservation programs. This would saves $37.8 billion over 10 years.

- Increase employee contribution to retirement; eliminate FERS annuity supplement for new employees; have employers of agencies pay an additional amount for unfunded liabilities. This would save $21 billion over 10 years.

- Reduce bad debt payments in Medicare to 25 percent for eligible providers, to save $20 billion over 10 years.

- Increase efficiency in Medicare for post-acute care by adjusting payment updates for certain providers and equalizing payments for certain conditions commonly treated in inpatient rehabilitation hospitals and skilled nursing facilities. This would save about $81 billion over 10 years.

- Allow similar Medicaid drug rebates for Medicare provided to beneficiaries who receive the Medicare Low-Income Subsidy beginning in 2014. This would save $123 billion over 10 years.

- Curb waste, fraud, and abuse in Medicaid by stopping improper report repayments; tracking high subscribers; enforcing rebate agreements; increasing penalties on drug manufacturers for non-compliance; prohibiting states from using federal funds as the state share of Medicaid and CHIP. This would save $100 billion over 10 years.

- Medicare Benefit Design Restructure and increase income related premiums in Parts B and D until 25 percent of beneficiaries are subject to them; increase Part B deductible by $25 for new beneficiaries; create home health co-payment of $100 for each episode; new Part B premium surcharge of 15 percent on the average Medigap premium (low cost-sharing plans). This would save $57 billion over 10 years.

- Lower specified co-payments for generic drugs by 15 percent to save $7 billion over 10 years.

- Chained Consumer Price Index, which would slow the growth of Social Security spending by changing the calculation of the CPI for seniors and save $230 billion over 10 years (Note: $95 billion, however, is from tax increases).

- Postal Service Reform would save $20 billion over ten years.

President Obama is not on the right path in terms of federal spending: that much is clear. However it is also clear that, at least compared to this latest “throwing up hands” approach Pelosi articulated Sunday, he is the picture of fiscal responsibility.

Republicans and those who say they care about fiscal responsibility should hold Obama to these suggestions. They should be able to at least do that. And those on the other side of the spending issue? Well they should be able to assent, at the very least, to cuts from one of the most prolific spenders in history.

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