Taxpayers for Common Sense staff will be combing through the budget over the next several hours and days and bringing to light various issues hiding behind the numbers, so check back often.
Links into our live-stream analysis:
April 18, 3:45 PM Hardrock Mining Royalty and Abandoned Mine Land Fee
April 12, 3:30 PM No Additional Authority for Loan Guarantee Program
April 12, 11:45 AM Advanced Biofuels Receive Spending Carve-outs in DOE & USDA Budgets
April 12, 11:00 AM Dr. Seuss and the Budget
April 11, 4:30 PM Nuclear Weapons Get Another Break?
April 11, 3:00 PM Fossil Fuel Tax Breaks on the Chopping Block Again
April 10, 7:50 PM Big Weapons Still Collecting Big Dollars
April 10, 7:20 PM Perennial Crop Insurance Cuts Yield Little Annual Savings
April 10, 6:10 PM Doing the Same Thing and Expecting a Different Result
April 10, 5:24 PM President's Budget Uses Billions from So-Called "War Savings" to Fund Transportation
April 10, 5:00 PM Improvements to Oil and Gas Collections
April 10, 3:20 PM Fossil Energy Budget: Unconventional Fossil $ Cut, Increased Funding for “Clean” Coal Technology
April 10, 3:00 PM Pentagon Playing Ostrich Again
April 10, 2:30 PM Reforming Food Aid
April 10, 2:20 PM Wasteful Essential Air Service Spending Levels: Up, Up, and Away
April 10, 2:00 PM Support for Small Modular Nuclear Reactors Continues
April 10, 1:55 PM War Savings Again Proposed for Infrastructure Spending
April 10, 1:50 PM Agriculture Savings Leave a Lot on the Table
April 10, 1:30 PM MOX Facility on Track for Slowdown
April 10, 12:30 PM Trimming the Trimmings
April 10, 11:30 AM Statement by TCS President Ms. Ryan Alexander
April 10, 11:15 AM FY14 President's Budget Request Documents
Hardrock Mining Royalty and Abandoned Mine Land Fee
As with other recent budget requests, the President’s FY14 Budget calls for several public land management reforms including a royalty for hardrock mining and related abandoned mine land fee. The budget calls for a minimum five percent royalty for hardrock mining and an abandoned mine land fee to help cover the costs associated with cleanup efforts. These proposals are estimated to generate $80 million and $1.8 billion, respectively, over the next ten years.
Under the General Mining Law of 1872, the hardrock mining industry is able to extract valuable taxpayer-owned hardrock minerals such as gold and silver from public lands for free. Making matters worse, companies often abandon their mining sites once they are no longer profitable—forcing taxpayers to pay for reclamation costs.
Legislation proposing a royalty rate for the hardrock mining industry has been introduced in previous Congresses but has yet to be enacted into final law. Many of these proposals have included a significantly higher royalty rate than included in the President’s budget request. A 12 percent royalty, as has been proposed in various bills, would be in line with other onshore extractive industries (i.e. coal, oil, and gas) and represent a far better step forward for federal taxpayers.
No Additional Authority for Loan Guarantee Program
The President's FY2014 budget request calls for no additional loan guarantee authority or credit subsidy appropriations for the Title XII Innovative Technology Loan Guarantee Program. For the second year, the Administration has left their $36 billion proposed increase for nuclear loan guarantees by the wayside.—In both the FY11 and FY12 budget requests the Administration asked for the massive increase, despite $18.5 billion in nuclear loan guarantee authority already on the books unused.
It’s not surprising this year’s request mirrors last year’s, the program has come under increased scrutiny since the first default to solar panel manufacturer Solyndra. In that case taxpayers lost $500 million but the losses could be much higher if DOE continues with the program. One sitting commitment could risk more than $8 billion taxpayer dollars on a nuclear reactor that has already experienced significant cost overruns.
Currently, the loan guarantee program has $34 billion in existing authority for all eligible energy technologies and the authority has no expiration date. Among the 13 applications valued at $15.1 billion that are considered active by DOE, four have received conditional commitments and could move this year. Three of the conditional commitments are for one project: Southern Company’s Plant Vogtle nuclear reactor project in Burke County, Georgia—valued at $8.33 billion. The other conditional commitment is for AREVA’s Eagle Rock uranium enrichment project in Bonneville County, Idaho—valued at $2 billion. It was recently revealed that the program will offer a second solicitation for applications for the fossil sector in the near future.
Although no new authority was requested, this year’s budget included $48 million for operational costs—$10 million above the FY13 request for the program’s administration.
Advanced Biofuels Receive Spending Carve-outs in DOE & USDA Budgets
The President’s FY14 budget includes numerous pots of spending for advanced biofuels - renewable fuels intended to be produced from so-called second generation feedstocks. Advanced biofuels include the production of ethanol from sugarcane, biodiesel from vegetable oils and other feedstocks, and cellulosic biofuels derived from perennial grasses, algae, or wood or agricultural residues. Even though the federal Renewable Fuel Standard (RFS) requires 21 billion gallons of advanced biofuels to be produced by 2022, the industry has been slow to get off its feet since it faces numerous economic and technological challenges. In fact, a 2011 National Academy of Sciences study found that advanced biofuel production was unlikely to meet its government mandates or reduce greenhouse gas emissions, as required by law.
U.S. Dept. of Agriculture (USDA)
- Biomass Research and Development Initiative (BRDI): $26 million for the Biomass Research and Development Program which provides grants to companies, universities, and government research centers to research, develop, and demonstrate new ways to refine various types of feedstocks and crops into biofuels or biobased chemical and products. As USDA’s budget acknowledges, BRDI supports “corn grain ethanol.” For more information on BRDI, see our recent fact sheet.
- Rural Energy for America Program (REAP): $238 million in program level funding to primarily promote solar, wind, hydropower, geothermal, and similar projects in rural areas. To date, REAP has funneled nearly $3 million to the mature corn ethanol industry. For more information on REAP, see our recent fact sheet.
Department of Energy (DOE)
- Advanced Research Projects Agency-Energy (ARPA-E): $350 million “to support transformational research in clean energy in areas such as solar energy and advanced biofuels.”
- Energy Security Trust: $2 billion over the next decade from “Federal oil and gas development revenue [to be invested] in a new Energy Security Trust…[in technologies] that will allow us to run our cars and trucks on electricity, homegrown biofuels, renewable hydrogen, and domestically produced natural gas.”
- Long-term research and Bioenergy Research Centers: long-term research funding “to promote advanced vehicles, including a battery and energy storage hub, continued fuel cell research, and three Bioenergy Research Centers aimed at developing the scientific understanding underpinning new technological solutions that will enable increased production of advanced biofuels.”
- Office of Energy Efficiency and Renewable Energy – technology development: $282 million – increase from $200 million in FY13 - “to develop and demonstrate conversion technologies to produce cellulosic ethanol and other advanced biofuels, such as algae-derived biofuels and “drop-in” replacements for diesel and jet fuel, for civilian and military uses.”
Dr. Seuss and the Budget
As you peruse the budget appendix (what you don’t?!) you’ll find a multitude (well 193) of line items for “Transportation of Things.” Considering the federal government is budgeting to spend $21.6 billion transporting “things” in FY14, you can be sure Conrad and Sally are not the only ones being visited by Thing 1 and Thing 2. Yup, Uncle Sam is aiding and abetting the Cat in the Hat. Thankfully the funding level is down from $30.0 billion in FY12. Who says budgets can’t be fun and educational.
Okay, okay. “Transportation of Things” isn’t really non-seussical, it’s the object class assigned to government spending moving goods and materials around, for example military equipment and mail. But it’s still a very vague area of spending and according to an analysis by GSA last year, it has grown 40% since 2000. That’s a lot of stuff, err… things.
Nuclear Weapons Get Another Break?
The nuclear weapons budget is an important contributor to the part of the federal budget known as “National Defense.” National Defense is mostly comprised of funding for the Defense Department and nuclear weapons functions of the National Nuclear Security Agency (NNSA), which oversees our nuclear weapons stockpile and the facilities where they are maintained. Modernizing these weapons and facilities, otherwise known as the nuclear weapons “complex,” is a major topic in Washington right now. So how could NNSA fail to get its FY14 budget details out at the same time as the White House? We know from those documents that NNSA received $7.87 billion for weapons-related functions, a $300 billion increase from FY13. But the web site of the Department of Energy (DOE), in which NNSA is located, says only that budget justification documents are “not available at this time.” And the NNSA web site just provides an optimistic press release with few details, an exception being the fact that a uranium processing facility at the Y-12 national security complex (which we recommended eliminating) will receive some $300 million.
Since the nuclear weapons complex is one part of government that both Congress and the Oval Office seem keen on growing—nuclear weapons dodged sequestration last month when Congress added money back for them in the CR—we think NNSA should be a little more conscientious. This is particularly true when you consider NNSA's terrible record of cost and schedule overruns. Looks like their past is catching up with their present.
Fossil Fuel Tax Breaks on the Chopping Block Again
In line with previous budget requests, the President's FY2014 request calls for the repeal of twelve subsidies in the tax code for the fossil fuel industry. The budget proposes the elimination of four coal and eight oil and gas tax preferences totaling approximately $44 billion in revenue over the next ten years.
Among the four coal subsidy cuts, the elimination of the percentage depletion allowance for coal and hardrock mineral fossil fuels brings in the highest total at nearly $2 billion over the next ten years.
Three significant oil and gas industry subsidies make up the majority of remaining taxpayer revenue earned by ending these unnecessary giveaways--the elimination of the expensing of intangible drilling costs (about $11 billion), percentage depletion allowance for oil and natural gas wells (just shy of $11 billion), and domestic manufacturing tax deduction for oil and natural gas companies (more than $17 billion).
|Proposed Cuts to Fossil Fuel Tax Breaks|
|Tax Preference||Amount (millions)|
|Coal||Domestic Manufacturing Deduction for Hard Mineral Fossil Fuels||$409|
|Expensing of Exploration and Development Costs||$432|
|Percent Depletion for Hard Mineral Fossil Fuels||$1,982|
|Royalty Taxation (Capital Gains Treatment for Royalties)||$432|
|Oil and Gas||Geological and Geophysical Amortization Period for Independent Producers to Seven Years||$1,393|
|Credit for Oil and Gas Produced from Marginal Wells||$0|
|Deduction for Tertiary Injectants||$107|
|Domestic Manufacturing Tax Deduction for Oil and Natural Gas Well Companies||$17,447|
|Enhanced Oil Recovery Credit||$0|
|Exception to Passive Loss Limitations for Working Interests in Oil and Natural Gas Properties||$74|
|Expensing of Intangible Drilling Costs||$10,993|
|Percentage Depletion for Oil and Natural Gas Wells||$10,723|
Big Weapons Still Collecting Big Dollars
Our 2012 report Spending Even Less, Spending Even Smarter detailed how we can save nearly $700 billion from defense over the next decade by eliminating or delaying programs not essential to our national security. From the looks of the FY14 request, the White House disagrees with many of our suggestions. Here are the amounts requested for the major weapons programs listed in our report.
Our savings: $61.7 billion by replacing two of the three F-35 variants with the F/A-18 E/Fs which are less expensive and have comparable capabilities.
FY14 Request: $8.4 billion for the F-35 program, essentially full funding for 29 aircraft.
Our savings: $18.4 billion by cutting aircraft carriers from 11 to 10 and Navy wings from 10 to 9.
FY14 Request: $1.7 billion for the CVN-21 Ford Class Carrier. This is more than double the most recent request.
Our savings: $18 billion by cutting four submarines from the next-generation fleet.
FY14 Request: $1 billion for the Ohio Replacement Program, double last year’s request.
Our savings: $17.1 billion by replacing the V-22 Osprey with less expensive, more reliable alternative helicopters.
FY14 Request: $1.8 billion to continue procurement of 21 aircraft.
Our savings: $6 billion by freezing development of unproven Ground-Based Midcourse Defense System (GMD)
FY14 Request: More than $1 billion, $100 million more than last year. This includes a down payment on a $1 billion increase in GMD spending recently announced by Defense Secretary Chuck Hagel in response to provocations by North Korea.
Our savings: $6 billion by canceling future satellites of the Space-Based Infrared System (SBIRS).
FY14 Request: $935.7 million, more than $30 million over last year’s request.
Our savings: $230 million by eliminating unrequested funding for the M1 tank.
FY14 Request: $280 million for M1 Abrams upgrades, roughly what the Pentagon asked for in FY13.
Our savings: $187.2 million by canceling the Lockheed Martin variant of the Littoral Combat Ship.
FY14 Request: $2.4 billion, roughly equal to last year’s request. The Pentagon is pushing ahead with the program even though its cost has doubled because it wants to deploy them to the Asia-Pacific.
Perennial Crop Insurance Cuts Yield Little Annual Savings
After being knocked down last year by the House and Senate Agriculture Committees, the President’s detailed changes to the federally subsidized crop insurance program have popped back up. We’ve written at length about federal crop insurance and are glad anytime we see efforts to trim instead of expand its price tag. But this is another area where it begs the question of how much effort the administration will put into realizing these changes.
Most of the suggested cuts aren’t new plantings, but ones that failed to bear any fruit last year. (See the Pruning Crop Insurance section of last year’s budget analysis).
|Crop Insurance Savings Proposed in President’s Budget Requests||Savings in FY2013 Request||Savings in FY2014 Request|
|Reduce Taxpayer Subsidy for Company Rate of Investment||$1.2 billion||$1.2 billion|
|Reduce Crop Insurance Company Subsidies for Managing Individual Policies||$2.9 billion||$2.8 billion|
|Decrease by 3 percentage points the subsidy for buying highly subsidized crop insurance policies (was a 2% cut in FY2013 request)||$3.3 billion||$4.2 billion|
|Decrease the subsidy on basic catastrophic crop insurance policies||$0.255 billion||$0.292 billion|
|Decrease by 2 percentage points the subsidy for buying crop insurance for producers who elect the automatic recalculation option*||Not Proposed||$3.2 billion|
|Total Proposed 10-Year Savings||$7.5 billion||$11.8 billion|
|Note: *This option recalculates insurance payouts if the price of the crop at harvest is higher than what the policy was based on when it was bought at planting. This means that if crop prices are higher at harvest time and producers experienced a loss of crops during the year, they will be paid for lost crops at the higher crop price. This provision ultimately increases costs to taxpayers.|
Taxpayers can save billions more through other common sense reforms to crop insurance. But we’ll harvest no savings unless the administration, and Congress, get serious.
Doing the Same Thing and Expecting a Different Result
This Administration is hardly the first to trot out previously rejected ideas budget after budget. But after a while you have to ask: is this just budgetary muscle memory, is something different this time, or is this just an easy way to make the numbers look a little better because these policy proposals save money or raise revenue? If it’s the latter, then it’s a problem. Because the savings or revenue won’t be there at the end of the budget process, but you can bet at least some of that additional spending they offset will be.
So you have the President proposing to collect fees from the inland navigation industry. Or consolidating all the business and trade agencies into the Commerce department. Or reducing agriculture subsidies. Or cutting large airports out of the Airport Improvement Program. Yes, Mr. President we agree! But Congress doesn’t. So unless you are willing to put your shoulder to the wheel and fight for these cuts, they aren’t worth too much. They just end up in the round file of some Congressional office.
We want to work to make these and other smart cuts and policy changes happen, but there has to be effort from the White House to see it through.
President's Budget Uses Billions from So-Called "War Savings" to Fund Transportation
In addition to the $50 billion in immediate infrastructure spending (see earlier post) “paid for” with savings from the reduction in military operations in Iraq and Afghanistan, the president’s budget relies on this gimmick for billions more in infrastructure spending in coming years.
In future years, fuel tax revenues will lag far behind even current surface transportation program spending levels. Instead of coming up with sustainable solutions that will shore up the program into the future, the president’s budget relies on a so-called “reauthorization reserve” of $88 billion funded with “war savings” between now and 2020 to cover the shortfall and even allow for a 25 percent increase from current levels. In addition to the $18.8 billion transferred by Congress from the Treasury into the transportation program, the president proposes an additional $2.55 billion transfer in FY14. It also appears that this budget intends to cover a full ten years (until 2024) of this reauthorization reserve, for spending that is approved under the next reauthorization by occurs after the reauthorization has expired, though it does not indicate if this will cost anything additional in the out years.
In addition, the president would make the rail program part of a broader Transportation Trust Fund, and fund it for five years at $40 billion, also derived from the drawdown in war spending.
|Immediate Infrastructure Spending||$50B|
Improvements to Oil and Gas Collections
The President’s budget for the Department of the Interior for FY14 includes a number of retreads for oil and gas royalty reform, but also adds a couple of new proposals that could help in the administration of oil and gas leases and royalty collection. First, it would charge a fee to offset the cost of inspections at oil and gas wells on public lands. Similar inspection fees have been charged for the last several years for offshore oil and gas wells – extending this fee to onshore wells is a step in the right direction. Second, the budget would stop the accrual of interest on royalty overpayments by oil and gas companies. The current policy encourages the companies to overpay and increases administrative costs for the agency, which must calculate refunds with interest on a huge number of royalty accounts.
Fossil Energy Budget: Unconventional Fossil $ Cut, Increased Funding for “Clean” Coal Technology
Overall the budget request would provide $429 million for fossil energy research and development—slightly higher than its FY2013 budget request of $421 million. The FY2013 Continuing Resolution included $537 million for the program. In line with previous year priorities, the Administration has included increased funding for Carbon Capture and Storage (CCS) and Power Systems—or “clean” coal—technologies and cut funding for Unconventional Fossil Fuel Technologies in its FY2014 Office of Fossil Energy Budget Proposal.
For CCS technologies, the budget request includes $276.6 million for fiscal year 2014. Among the four CCS sub-programs, the budget would provide $112 million for carbon capture technology—a 62 percent increase from $69 million provided in FY2013 and $61 million for carbon storage technology—down from $115 million in FY2013.
Funding for Unconventional Fossil Energy Technology was cut entirely. In the Continuing Resolution the program received $5 million.
For decades, billions of taxpayer subsidies for fossil energy R&D have gone out the door. CCS and unconventional fossil fuel development have proven little more than a waste of taxpayer dollars time and time again. Whether its oil shale, liquid coal or “clean” coal these next generation fossil technologies are nothing more than money losers.
Pentagon Playing Ostrich Again
The Defense Department, which maintains its status as the largest consumer of discretionary spending with $526 billion for base FY14 funding, is once again taking the ostrich approach to budgeting. Rather than keeping its budget under the caps set by sequestration, the Pentagon is riding on the White House claim that proposed savings in other areas such as entitlements will help agencies like DOD dodge the knife.
This is folly for many reasons. The one criticism that echoed from both sides of the political aisle during recent hearings about sequestration’s impact on the defense budget was that DOD’s refusal to plan for sequestration only pushed hard choices down the road, ultimately making them even more difficult by allowing DOD to spend money it didn’t really have. The Continuing Resolution passed last month to fund the federal government through October barely saved DOD’s bacon by allowing it more flexibility in the way it allocated reductions. But by maintaining sequestration-level budget caps, the legislation made Congressional intent clear: Hard times are here, and the Pentagon has to face them just like everyone else.
Military chiefs argue that sequestration prevents strategic cuts. But by refusing to make the reductions necessary to avoid it again, DOD is effectively ceding budgetary decision-making to Congress, which is hardly strategic when it comes to military spending. Even the relatively mild savings efforts DOD has proposed so far have been largely rolled back by lawmakers, and new reduction proposals—such as ending some drone programs and keeping older cargo planes—will probably meet the same fate. In fact, fear of going on record as "cutting defense" was one of the primary reasons lawmakers allowed sequestration to happen.
Meanwhile, some of the biggest money-guzzlers in the Pentagon are allowed to live on in the FY14 budget proposal, such as the F-35 Joint Strike Fighter. We'll be posting updates on all of the savings proposals in Spending Even Less, Spending Even Smarter, our report with the Project on Government Oversight on how to save nearly $700 billion in defense expenditures over the next decade.
Reforming Food Aid
In one of the major reforms where the Administration tipped its hand leading up to the budget release, the FY14 request includes long overdue reforms in international food aid. The proposal would shift a large percentage of the food aid from being in-kind (food purchased domestically and shipped overseas) to cash and vouchers for local purchase, which is more cost-effective and yields aid sooner. This would shift funding out of USDA and into USAID.
In addition, it would end the monetization programs to support private volunteer organizations overseas. These programs would give organizations food to sell and use that money to fund relief efforts. The GAO has estimated at least 25 percent waste from this type of aid.
While we would like a bolder approach (this proposal still retains 55 percent in-kind aid in the International Disaster Assistance program, for instance), the more efficient nature of this approach coupled with $500 million in savings over ten years is a good first step.
Wasteful Essential Air Service Spending Levels: Up, Up, and Away
When Congress last year passed the Federal Aviation Administration reauthorization, one area of focus was the Essential Air Service (EAS), a relic of airline deregulation in the 1970s. One much ballyhooed “successes” of the bill was a restructuring of this program to reduce the amount taxpayers are forced to invest on an annual basis. (Read more about EAS and the changes to the program here).
Well, things are headed in the wrong direction.
Though the program has hovered around $200 million for a couple of years, the president’s FY14 budget would increase this to $246 million. While we know that what the president asks for isn’t necessarily what he’s going to get, there is a footnote in the DOT budget justification that gives us pause: “The Payments to Air Carriers/Essential Air Service estimated obligations reflect the FY 2014 program level needed to continue this program.” In other words, the $246 million request is what DOT believes will be required to continue the program through the next fiscal year.
We were critical of the modifications Congress made to the EAS program last year. In part because we believed they didn’t go far enough, but more relevant here was our concern that the changes could actually result in higher spending levels on this program (see our analysis here). It appears those chickens are coming home to roost.
Support for Small Modular Nuclear Reactors Continues
Similar to last year’s request, the President’s FY14 budget includes funding for small modular reactors within the Office of Nuclear Energy. The budget request would provide $70 million for DOE’s SMR design certification and licensing support program—an increase of $5 million from what was provided in FY2012. The budget would also provide $20 million to SMR research, development, and demonstration (RD&D) through the Reactor Concepts RD&D program.
In March 2012, DOE committed up to $452 million in grants for design certification and licensing support, dependent on Congressional appropriations. Yet, the commercial viability of these modular reactors remains in question. Recently, DOE announced a second solicitation for applications to receive cost-shared funding through the SMR program.
TCS gave the SMR program our Golden Fleece award in February 2013 for handing out hundreds of millions to the profitable nuclear industry.
Click here to view our recent press release on continued funding for small modular reactors.
War Savings Again Proposed for Infrastructure Spending
The president’s budget includes $50 billion in funding for “immediate transportation investments to support critical infrastructure projects.” Of this, $40 billion would go to “Fix it First” projects and $10 billion for “competitive programs to encourage innovation in completing high value infrastructure projects.” (see chart below)
To pay for this massive outlay, the president’s budget assumes it will use war “savings.” Money that we would have spent in Iraq and Afghanistan, that now won’t be spent there, can magically be used to pay for infrastructure investments. It’s a little like carrying a massive credit card debt, but going out to party when the car is paid off. The responsible move is to use the money that would have gone to the car payment and pay down the credit card.
If this all sounds familiar, it should. Since passage of the original stimulus package in February 2009, there have been four very similar propsals, including this one, in which President Obama seeks to commit $50 billion to additional infrastructure funding. You can read our analysis of last year's proposal here. And the war savings proposal is not new either, having showed up in several iterations for several years now, though last year was the first time it was proposed that a portion of those savings would be committed specifically to infrastructure.
|Proposed Spending||Amount ($B)||Type|
|Highway Restoration, repair, and construction||27.0||Fix it First|
|Critical highway and bridge projects||[25.0]|
|National Highway Performance Program||[[16.6]]|
|Surface Transportation Program||[[7.7]]|
|Federal Lands Programs||[[0.24]]|
|Tribal Transportation Program||[[0.31]]|
|Territorial and Puerto Rico Highway Program||[[0.15]]|
|Border crossing infrastructure improvements||[2.0]|
|Airport Development Grants||2.0||Fix it First|
|R & D to advance Next Gen||1.0||Innovation|
|Improve intercity rail service, or develop new intercity passenger rail corridors||3.0||Innovation|
|Amtrak, for repair, rehab and upgrades||2.0||Fix it First|
|Formula-based transit capital assistance grants||2.5||Fix it First|
|Transit capital investment grants in core capacity projects||0.5||Fix it First|
|Modernize exisiting fixed guideway systems||6.0||Fix it First|
|Credit assistance and grants on a competitive basis available for all surface modes||4.0||Innovation|
|Competitive grant program to encourage best practices and innovations||2.0||Innovation|
Agriculture Savings Leave a Lot on the Table
The President’s budget request for the Department of Agriculture includes a number of positive, but timid reforms to the agriculture safety net that, if enacted, would save taxpayers $38 billion over the next decade ($6 billion more than was proposed last year). However, the President’s level of savings leaves a lot on the table. Taxpayers could save tens of billions more if bolder high-level reforms were proposed and savings weren’t left to whither on the vine. While some of the reforms are long overdue, more detail is needed to see exactly how he plans to cut $11.8 billion from the highly subsidized crop insurance program, for instance (see update entitled "Perennial Crop Insurance Cuts Yield Little Annual Savings" in this post). Hopefully the U.S. Department of Agriculture will put more meat on the bones when it releases its budget plan this afternoon, so stay tuned (again, see aforementioned post).
Since billions more can be saved while still providing agricultural producers an adequate safety net, the President’s budget request common sense reforms should be expanded. These changes would reform the outdated maze of agricultural subsidies which rewards a handful of agribusinesses growing favored crops:
- Eliminating direct payments: a “temporary” subsidy introduced in 1996 that is paid regardless of need, crop prices, or whether a producer is even planting a subsidized crop. (President’s stated savings = $29.7 billion. It would be closer to $50 billion if the Average Crop Revenue Election program was eliminated as well)
- Reducing subsidies for crop insurance companies and farmer premiums: the federal crop insurance program is unlike the home, car, or health insurance policies that are familiar to most people. Instead of individuals or companies covering the full cost of their insurance protection, the federal taxpayer significantly subsidizes insurance policy holders, agents, and companies. Beneficiaries, on average, pay only 40 percent of the cost of their insurance policies. The program quadrupled in cost over the past decade, costing taxpayers an estimated record $14 billion in FY12. (President’s stated savings = $11.8 billion. By rolling premium subsidies back to the still generous levels available in 2000 the savings would be $40 billion)
- Better targeting conservation programs: several agricultural conservation programs could be better targeted to reduce risks and downstream costs for not only producers, but also the public. Some programs, such as the Environmental Quality Incentives Program, shovel subsidies to large agribusinesses to help them comply with the inevitable costs of doing business. These funds could be better spent on targeted programs that provide taxpayers the best return on investment. (President’s stated savings = $1.7 billion)
(Note that the President also proposes to “spend” $5 billion of these savings on disaster assistance for dairy and livestock producers and programs for specialty crops, bioenergy, and beginning farmers; hence, the overall savings drop from $43 billion to $38 billion.)
As the President acknowledges, the agriculture sector “continues to be one of the strongest sectors of the U.S. economy, with net farm income expected to increase 13.6 percent to $128.2 billion in 2013,” which would be the highest level of farm profits in history. For these and other reasons, now is the time to scale back wasteful and duplicative agricultural subsidies, save at least $100 billion for taxpayers, and create a more cost effective, accountable, transparent, and responsive farm safety net.
MOX Facility on Track for Slowdown
The FY14 budget request includes $503 million for the Fissile Materials Disposition (FMD) program, which includes the MOX Fuel Fabrication Facility, but also notes that the facility is becoming too expensive. The Administration plans to examine “the feasibility of alternative plutonium disposition strategies.” According to budget documents, this examination could in result in a slowdown of construction at the facility.
The FMD program received $708 million in the Continuing Resolution for Fiscal Year 2013 and $667 million in fiscal year 2012. So the request would represent a nearly 30 percent reduction from FY13 funding levels.
Trimming the Trimmings
The President’s budget again includes a Cuts, Consolidations, and Savings document that is a perennial favorite of TCS. We wrote about this in our U.S. News Blog post yesterday. But this year the document itself is substantially cut and consolidated. While the President identifies 215 programs for savings of $539 billion over 10 years, he does so in only 10 pages, most of which are simply tables. Last year’s was 213 pages long.
What is missing is the detailed explanation for why or how these changes will be made. We’re happy to again see the President listing where cuts can be made, but think he needs to give the American public more details. For example, what steps will be taken to shave $11.8 billion from crop insurance? What’s meant by multi-agency food aid reform? And even before you detail how you're consolidating it, what is the Department of Energy’s W 78/88 Life Extension Program?
We know what these things mean –trimming subsidies to farmers and insurance companies, injecting some common sense into our food aid programs, and the W78/88 is a nuclear warhead, but we’re nerds. Your average taxpayer looking for common sense ways to make government work probably isn’t spending their free time investigating all of these details.
With some of the programs, inquisitive minds are directed to “the respective agency’s Congressional Justification submission” or another table in the President’s budget to find more details. But many just seem to be on the list. We’ll keep looking, but now is a time for more details, not less.
Statement by TCS President Ms. Ryan Alexander
The President’s budget is late getting to the starting gate, but is still an important part of the puzzle. It provides detail to many spending provisions that are glossed over in the House and Senate budgets. The $3.77 trillion package includes new revenue and changes to entitlement spending. It also includes gimmicks like tapping the predicted overseas troop reductions to offset shortfalls in the highway trust fund. Now that the President, House, and Senate have spoken with their budgets, it’s up to our elected officials to get to work hammering out fiscal year 2014 spending bills so we don’t end up in the same budgetary debacle we’ve seen in recent years.
FY14 President's Budget Request Documents
After a two month delay, the President released his fiscal year 2014 budget proposal today. The tome, weighing in at $3.77 trillion, details everything from Pentagon spending to the funding levels for the National Institute for Standards and Technology. Taxpayers for Common Sense staff will be combing through the budget over the next several hours and days and bringing to light various issues hiding behind the numbers, so check back often.
- The Budget
- Full Cuts, Consolidations, and Savings
- Analytical Perspectives
- Historical Tables