The budget stalemate seems to be reducing somewhat government spending on "discretionary" items -- much of which is what is also known as "pork barrel" spending.
The Republican budget proposed reducing discretionary spending by $23 billion; but under the provisions of the continuing resolutions passed to keep the government running an additional $7 billion has been saved. This means the Congressional committees can claim savings of $30 billion for fiscal 1996.
But budget cutters are not yet dancing in the aisles. In eight of this year's 13 appropriations bills, budget experts identified $12.5 billion in pork barrel projects.
Some states have really brought home the bacon in the first six months of this fiscal year, receiving far above the national average of $5.96 per person :
Sources: Tom Schatz (Citizens Against Government Waste), "Still Feeding at the Trough," Washington Times, March 7, 1996.
Last summer, congress passed a budget resolution that called for the elimination of three cabinet departments and the termination of some 300 programs and agencies. But by the time Congressional appropriations bills were finalized, all three departments and many agencies had been spared the budget ax.
Corporate welfare programs fared quite well, with only two out of the 25 most egregious programs being chopped -- the Advanced Technology Program and the U.S. Travel and Tourism Administration.
On average, Congress did cut the remaining 23 programs by 12 percent, but it also gave substantial budget increases to several other programs:
As disappointing to critics of government spending as the 1996 Congressional budget has proven to be, things could have been worse. The Clinton administration's 1996 proposed budget called for spending nearly $2 billion more than Congress' budget on 24 of those 25 major corporate pork programs -- with an average increase in funds of four percent.
Source: Dean Stansel (Cato Institute), "Corporate Welfare Survival Index," Washington Times, March 10, 1996.
Each year, some of America's largest firms dip into the pockets of U.S. taxpayers for handouts administered through more than 100 federal programs. Because it is politically difficult to cut corporate subsidies, critics have called for establishment of an independent panel -- along the lines of the base-closure commission -- to recommend their demise.
Critics point to some glaring examples of corporate welfare:
Estimates vary on what these subsidies cost taxpayers -- from $28 billion to $75 billion a year, or even more. Some claim that special tax breaks amount to an additional $22 billion a year.
Latest to line up at the trough are the television networks which are fighting a move to have them bid at auction for valuable parts of the broadcast spectrum. The networks have launched a scare public relations campaign warning that the auction plan would mean the end of "free TV." But auction advocates doubt that claim, and estimate that requiring bidding would pump anywhere from $11 billion to $70 billion into the Treasury.
Economists claim the subsidies are not only costly, but that they distort and lower economic performance.
Source: John Merline, "Corporations at the Trough?" Investor's Business Daily, March 12, 1996.
Critics say the U.S. Department of Energy has abandoned its original goal of ensuring energy security and is riding off in all directions pursuing questionable objectives.
Now Critics are confounded by Energy Secretary Hazel O'Leary's foray on behalf of "victims" of federal radiation experiments conducted between the 1940s and the 1970s.
In other words, not only will small amounts of radiation not kill you, they may even improve your health.
Yet the efforts to scare American citizens into filing suit against their government proceed -- and contribute to the Department's $21 billion annual budget.
Source: Tony Snow, "Department Wastes a Lot of Energy," USA Today, March 18, 1996.
According to Federal Reserve Chairman Alan Greenspan, the stability of the savings and loan industry could again be undermined. The S&Ls and their commercial bank competitors are arguing over how much responsibility each industry has to make up a share of the losses experienced in the late 1980s.
While no one expects another crisis on that scale, there is the growing possibility of default on $8.2 billion in bonds issued by an agency called the Financing Corporation established in 1987 to help pay for an early bailout package.
Regulators say savings institutions are required to pay hefty premiums into the industry's depleted deposit insurance fund, while banks pay little or nothing into their industry's fund.
As a result, healthy savings institutions are moving deposits into affiliates that qualify as banks.
Not only is the fund badly undercapitalized, but because nearly half of the premium income is used to pay holders of the Financing Corporation bonds, regulators say that the risk of the fund defaulting on the bonds was also increasing.
A measure attached to the vetoed budget bill would have charged savings institutions a one-time assessment of $6 billion to lift the insurance fund to its required level. It would also have spread responsibilities for paying interest on the bonds across both the banking and savings industries.
Bankers say that -- having rebuilt their own fund at no cost to taxpayers -- they should not be required to ante up about $12 billion to help relieve an obligation of a principal competitor.
Source: Richard W. Stevenson, "Fight Over Picking Up Tab for S&L Bailout Renewed," New York Times, March 20, 1996.
Many of those who have studied the 1997 budget President Clinton recently presented to Congress are questioning his verbal commitments to "the end of big government." The budget calls for higher government spending and higher taxes over seven years.
Compared to the GOP's 1995 Balanced Budget Act, the president's new budget actually adds $125 billion more to the deficit through 2002. Critics note that most of the "savings" in expenditures are scheduled to take effect after his second term in office, if he has one.
The Clinton budget contains a sweeping agenda of new initiatives favoring special interest groups -- such as teachers unions, favored corporations and environmental activists.
Source: Scott Hodge (Heritage Foundation), "Clinton's New Budget," Washington Times, March 22, 1996.
A number of federal budget analysts are jumping on President Clinton's latest 2,195 page, $1.6 trillion list of spending suggestions. They contend that he is only intent on protecting the status quo, not reducing government spending.
While the budget contains nearly $100 billion in tax cuts, they would be offset by nearly $60 billion in increases on businesses, investors, travelers and auto buyers, among others. The net tax cut of $39 billion works out to 3 cents for every $1,000 taxpayers will give to the government over the next seven years.
Under the Clinton budget, federal taxes would consume 19.25 percent of gross domestic product -- the highest amount ever.
Source: Donald Lambro, "Overstuffed With Status Quo," Washington Times, March 25, 1996.
Republican reforms in the House of Representatives have gone a long way toward sweeping away 205 years of "tradition-bound stagnation," according to management consultants.
When Price Waterhouse conducted a first-ever audit of the House last year, it found "one of the worst-run organizations ever reviewed in the history of the company."
But following GOP reforms, here is how the situation has improved:
Moreover, the barber shop, beauty parlor, shoeshine and mail services have all been privatized.
The former system was one of political patronage, exemplified in the House Folding Room.
Professionals involved in the reforms say it will be another year before true efficiency is achieved.
Source: Jeff A. Taylor, "The Republican House-Cleaning," Investor's Business Daily, March 26, 1996.
Legislation to let the President veto parts of spending bills is expected to pass Congress and be signed by President Clinton, who supports the measure.
Although the "enhanced recission" bill would let the President reject some specific spending and tax items, congress would have 30 days to override the rejection by a simple majority -- but its rejection would then be subject to a regular presidential veto. The law would become effective January 1, 1997 and run for only nine years.
Many legal scholars of all persuasions say that giving the president the line-item veto requires a Constitutional amendment. Some experts contend that enhanced recission is unconstitutional.
Supporters say a line-item veto would allow the president to scrap pork-barrel projects in spending bills, fight special interests, increase government accountability and save the taxpayers billions. They point to the examples of 43 states which already have some form of line-item veto.
While neither form has prevented state spending from increasing, spending in states with an item-reduction veto has grown at a slower rate than in states without it.
Presidents already have the option of sending back to Congress lists of expenditures they think should be cut from bills. Congress can enact these cuts by a simple majority vote.
Legal opinion is split on the issue of the constitutionality of granting such powers to the president. So even if Congress passes some form of line-item veto and it is signed by President Clinton, as expected, a later Supreme Court test is a virtual certainty.
Source: Claude R. Marx, "Line-Item Veto: Fact and Fiction," Investor's Business Daily, March 28, 1996.
Public mass transit has failed to deliver fully on its promised benefits of reduced traffic congestion, air pollution and energy consumption and better transportation for the needy. These benefits are still possible, but new ideas about how to operate and pay for them are needed.
Reasons for this trend include suburbanization and higher automobile use. But mass transit resources have often been used inefficiently.
One innovative concept is competitive contracting, in which service is provided by the lowest-cost, responsible and responsive public or private bidders. Entire public systems have been competitively contracted in London, Copenhagen, Stockholm, Goteborg, Helsinki, Melbourne, Adelaide, Perth and Auckland. Unit cost savings are typically 20 to 40 percent.
Source: Wendell Cox and Jean Love, "Driving Mass Transit Ridership Trends in the Right Direction," Michigan Privatization Report, Winter 1996, Mackinac Center for Public Policy, 119 Ashman Street, P.O. Box 568, Midland, MI 48640, (517) 631-0900.