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  • While Debt Crisis Looms, Washington Still Focused on Undoing Sequestration

    Lawmakers are on track to bargain away the one spending cut they got.

    The Washington Post reports that President Obama and a group of Republican Senators stalled on a budget deal on Thursday that revolved in part around the question of how to best renege on sequestration. Republicans want to offset the spending cuts in discretionary spending with “narrow” reforms to entitlement programs, while the Obama Administration insists on more tax increases.

    Instead of trying to find an agreement to reverse the minuscule reductions (2.5 percent of projected spending over the next decade) to spending they already traded for a massive increase in the national debt, lawmakers should focus on fixing the real and worsening problem that has brought Washington to reach the debt limit yet again.

    When lawmakers return to Washington on September 9, they will have nine days to come to an agreement on the spending level for the discretionary budget that funds government agencies. Lawmakers can protect national defense from bleeding further because of sequestration without putting taxpayers on the hook for even more discretionary spending. As the accompanying chart shows, discretionary spending will grow 17 percent—even with sequestration in place.

    There is plenty Washington can cut out of its budget. To name just a few examples:

    • Close empty bank accounts. Washington spends $890,000 a year to keep 13,712 empty bank accounts open. That number is down from an even more egregious $2.1 million the year before. But agencies still have a long way to go.
    • Eliminate the International Trade Administration. Its activities subsidize the export activities of private businesses that are perfectly capable of handling their export interests without taxpayer assistance. Lawmakers could save $442 million based on the House-proposed spending bill.
    • Move the Food for Peace Program to USAID. There are vast inefficiencies in providing food aid through the U.S. Department of Agriculture, which requires the food to be purchased in the U.S. and then shipped in expensive U.S.-flagged vessels that are protected from competition. The U.S. Agency for International Development should handle this food aid with existing funding to save $1.15 billion based on the House-proposed spending bill.

    A new Heritage report shows how Congress can save $42 billion by eliminating bad government programs.

    The spending cuts required by the Budget Control Act came in exchange for the additional deficit spending lawmakers allowed by lifting the debt ceiling in 2011 by $2.1 trillion. While that money was spent in less than a year and a half, the spending reductions were to be phased in over the course of 10 years in two phases—through caps on discretionary spending and sequestration—in the event that lawmakers failed to find offsetting spending cuts in the entitlements.

    Lawmakers had plenty of time to ward off sequestration with mandatory reforms, but they chose not to. They did, however, manage to add $2.1 trillion to the national debt, which, at $16.7 trillion, hangs like a dark shadow over the economy. No doubt spending was the easy part. Now it’s time to accomplish the cuts.

    It is irresponsible for lawmakers to spend valuable negotiating time on how they can spend more of taxpayers’ money on discretionary programs when they should be pushing for an agreement to resolve the spending and debt crisis brought about by entitlement programs. Defunding Obamacare should be their first priority. Congress should cut spending and fix the real debt crisis—out-of-control entitlement spending—before or as part of any increase in the debt ceiling.

    Posted in Front Page, Obamacare [slideshow_deploy]

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