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“Operation Offset”

September 21, 2005

RSC Budget Options 2005

(Revised 9/22/2005)

Summary and Explanation of Offsets

“Give us a quiet room, copies of the spending bills, a box of red pencils, and watch what happens.”

 —Constituent from New Mexico

Rep. Mike Pence, RSC Chairman

Rep. Jeb Hensarling, RSC Budget & Spending Task Force Chairman

RSC Budget Options 2005

Operation Offset

Summary and Explanation of Offsets

Title I:     Tough Choices in Tough Times…………………………………………………........1

Title II:    Restraining Foreign Aid…………………………………………………………..….4

Title III:   Reprioritization of Federal Spending………………………………………………...6

Title IV:   Containing the Federal Bureaucracy………………………………………………..17

Title V:    Eliminating Corporate Welfare……………………………………………………..19

Title VI:   Rational Reforms to Defense and Homeland Security……………………………..22

Total Savings…………………………………………………………………………………..23

Title I:  Tough Choices in Tough Times

Table 1:  Summary of Savings in Title I

(Savings from Baseline, in Millions of Dollars)

                                        5-year               10-year

                                                                                          2006               savings             savings

___________________________________________________________________________

Delay the Medicare Prescription Drug Bill for One year	-30,800	-30,800	-30,800
Repeal the Highway Earmarks in TEA-LU	-25,000	-25,000	-25,000
Reduce Medicaid Administrative Spending	-600	-4,230	-12,860
Increase Allowable Co-pays in Medicaid	-90	-1,970	-7,730
Block Grant Medicaid Acute Services	-2,300	-44,000	-225,000
Reduce Farm Payment Acreage by 1%	-31	-452	-941
Eliminate Subsidized Loans to Graduate Students	-840	-4,170	-8,555
Base New Federal Retiree Health on Length of Service	-130	-1,560	-6,330
Increase Medicare Part B Premium from 25% to 30%	-4,650	-33,500	-84,770
Restructure Medicare's Cost-Sharing Requirement	-4,750	-34,230	-87,460
Impose a Home Health Co-payment of 10%	-1,470	-11,800	-31,480
Update the Formula Used for Federal Pension	-50	-1,305	-5,170
SUBTOTAL:  Tough Options	-70,711	-193,017	-526,096

Delay the Medicare Prescription Drug Program for One Year

Under current law, the prescription drug benefit becomes effective on January 1, 2006, and OMB has estimated that it will cost as much as $1.2 trillion over the next ten years.  Anyone with Medicare Part A or Part B may enroll in the prescription drug plan, and will be eligible for prescription drugs at discounted prices.  In light of current budget constraints, it is prudent domestic fiscal policy to delay implementation of the prescription drug benefit for one year while continuing the current drug discount card program.  Savings:  $30.8 billion over ten years 

Repeal the Highway Earmarks in TEA-LU

The recently passed FY06 Highway Bill, also known as TEA-LU, contained more than 6,000 earmarks, worth nearly $25 billion. Some of the most egregious examples include $200 million for the “bridge to nowhere,” a bridge in Alaska that would serve an island with 50 residents, $75 million for metro extension in Washington, D.C., $15 million to purchase three ferries and establish a ferry system from Rockaway Peninsula to Manhattan, New York, and $2.5 million for the Blue Ridge Music Center.  For comparison, the 1998 transportation bill was considered a major budget buster at the time with 1,850 earmarks and a veto threat from President Clinton.   In just seven years, Congress has added over 4,000 earmarks to the bill.  Savings: $25 billion over ten years

Reduce Medicaid Administrative Spending

The federal government currently reimburses states for about 50 percent of the cost of managing their Medicaid programs.  Under this option, the federal government would cap the per-enrollee amount that it pays each state for Medicaid administration. This would give states a stronger incentive to improve the efficiency with which they manage their Medicaid programs. Savings: $12.9 billion over ten years ($4.2 billion over five years)

Increase Allowable Co-payments for Medicaid 

Although states are allowed a great deal of discretion in designing their Medicaid programs, federal rules have traditionally limited cost-sharing requirements for beneficiaries. This option would raise the federal limits on allowable co-payments in Medicaid--from $3 for adults and zero for children to $5 and $3, respectively. The higher co-payments would apply to outpatient hospital visits, prescription drugs, non-emergency visits to emergency rooms, and visits to physicians and dentists. Increased co-payments would encourage a more cost-conscious use of services by beneficiaries, reducing the number of unnecessary medical services provided. Savings: $7.7 billion over ten years ($2.0 billion over five years)

Block Grant Medicaid and Index for Population and Inflation

The Medicaid program funds coverage for two broadly different types of health care: acute care (including services such as inpatient hospital stays and visits to physicians’ offices, and products such as prescription drugs) and long-term care (services such as nursing home care and home and community-based assistance). The program is financed jointly by the states and the federal government, with the federal government’s share determined as a percentage of overall Medicaid spending. That percentage, referred to as the federal matching rate, can range from a floor of 50 percent to a ceiling of 83 percent, depending on a state’s per capita income. This option would convert the federal share of Medicaid payments for acute care services into a block grant, as 1996 legislation did with funding for welfare programs, that would be increased annually for inflation and state population growth.   (Long-term care would continue to be financed using the matching rate.) Funding acute care with a block grant rather than with federal matching payments would strengthen states' incentive to spend money cost-effectively by eliminating the subsidy for each additional dollar spent on health care.  Savings: $225 billion over ten years ($44 billion over five years)

Reduce Farm Payment Acreage by 1%

Farmers are subsidized according to acreage and average yield, regardless of what is actually produced on the farm. Significant savings could be achieved proportionally by using 84% instead of 85% of acreage in the payment formula without adversely affecting producers of a specific commodity.  Savings: $941 million over ten years ($452 million over five years)

Eliminate Subsidized Loans to Graduate Students

The federal government has extensive loan options for financing education.  Students have likely had government help paying for college, if there was financial need.  Graduate students make an informed decision to invest in their own futures and should bare the costs of schooling, especially since private interest rates are currently low.  This reform would allow federal higher education funding to be focused on college students while still allowing graduate students to benefit from unsubsidized federal loans.  Savings: $8.6 billion over ten years ($4.2 billion over five years)

Base New Federal Retiree Health Benefits on Length of Service

Federal retirees are generally allowed to continue receiving benefits from the Federal Employees Health Benefits (FEHB) program if they have participated in the program during their last five years of service and are eligible to receive an immediate annuity. More than 80 percent of new retirees elect to continue health benefits. This option would reduce health benefits for new retirees who had relatively short federal careers, although it would preserve their right to participate in the FEHB program. This could make the government’s mix of compensation fairer and more efficient by improving the link between length of service and deferred compensation, and would also help bring federal benefits closer to those of private companies. Savings: $6.3 billion over ten years ($1.6 billion over five years)

Increase Medicare Part B Premium from 25% to 30%

Medicare provides health insurance coverage for physicians’ services and hospital outpatient services through its Supplementary Medical Insurance (SMI) program, or Medicare Part B. Monthly premiums paid by enrollees partially fund SMI benefits; general federal revenues fund the remainder. Initially, the SMI premium was supposed to cover 50 percent of program costs. But that share declined between 1975 and 1983, eventually reaching less than 25 percent.  This reform would set the SMI premium equal to 30 percent of the cost of Part B benefits, beginning in 2006.  This would reduce Medicare’s costs amid the broader budgetary pressures posed in part by the aging of the baby-boom generation. Savings: $84.8 billion over ten years ($33.5 billion over five years)

Restructure Medicare’s Cost-Sharing Requirements

In the fee-for-service Medicare program—consisting of Part A (Hospital Insurance) and Part B (Supplementary Medical Insurance)—beneficiaries’ cost sharing varies significantly depending on the type of service provided. At the same time, certain Medicare services, such as home health visits and laboratory tests, require no cost sharing. This option would replace the current complicated mix of cost-sharing provisions with a single combined deductible covering all services in Parts A and B of Medicare, a uniform coinsurance rate of 20 percent for amounts above that deductible (including inpatient expenses), and an annual cap on each beneficiary’s total cost-sharing liabilities. This would provide greater protection against catastrophic costs while reducing Medicare’s coverage of more predictable expenses. Savings: $87.5 billion over ten years ($34.2 billion over five years)

Impose a Home Health Co-payment of 10%

Medicare’s spending for home health care dropped during the late 1990s following passage of the Balanced Budget Act of 1997, which introduced a prospective payment system (PPS) for home health services. But the Congressional Budget Office projects that the use of home health services, and the resulting costs to the Medicare program, will grow rapidly over the next 10 years. One reason for the projected rapid growth is that Medicare beneficiaries are not currently required to pay any of the cost of home health services covered by the program. This reform would charge beneficiaries a co-payment amounting to 10 percent of the total cost of each home health “episode”—a 60-day period of services—covered by Medicare, starting on January 1, 2006. This would directly offset a portion of Medicare’s home health outlays and encourage beneficiaries to be cost-conscious in their use of home health services. Savings:  $31.5 billion over ten years ($11.8 billion over five years)

Update Formula Used for Federal Pensions from Three Years to Five Years

The government’s major retirement plans for civilian employees, the Federal Employees Retirement System (FERS) and the Civil Service Retirement System (CSRS), provide initial benefits that are based on average salary during an employee’s three consecutive highest-earning years. Switching to a five-year average for new retirees would align federal practices with those in the private sector, which commonly uses five-year averages to calculate a worker’s base pension.  Savings: $5.2 billion over ten years ($1.3 billion over five years)

Title II:  Restraining Foreign Aid

Table 2:  Summary of Savings in Title II

(Savings from Baseline, in Millions of Dollars)

                                        5-year               10-year

                                                                                                2006         savings              savings

___________________________________________________________________________

Eliminate US Subscriptions to the European Bank	-36	-184	-386
Reduce Economic Assistance to Egypt	-12	-400	-1,200
Eliminate Millennium Challenge Accounts	-1,750	-9,415	-24,352
Level Funding for Peacekeeping Operations	-93	-500	-1,294
Eliminate International Fund for Ireland	-14	-75	-195
Level Funding for Global AIDS Initiative	-546	-2,938	-7,598
Level Funding for Inter-American Foundation	-2	-11	-28
Level Funding for the African Development Foundation	-2	-11	-28
Level Funding for the Peace Corps	-8	-43	-111
Level Funding for Andean Counter-Drug Initiative	-9	-48	-125
Reduce USAID Operating Expenses	-57	-307	-793
Level Funding for the International Development Assoc.	-107	-576	-1,489
Level Funding for Asian Development Bank	-16	-86	-223
SUBTOTAL:  Restraining Foreign Aid	-2,652	-14,594	-37,822

Eliminate U.S. Subscriptions to the European Bank for Reconstruction and Development

These loans to Central and Eastern European nations, which overwhelmingly end up in private hands, are not the responsibility of the U.S. Government. 2005 is the final year of an eight-year subscription and a sensible time to end our participation in propping up organizations with loans considered unwise by the private sector. Again, internal financial industry reforms are needed.  Savings: $386 million over ten years ($184 million over five years)           

Reduce Economic Assistance to Egypt

Since 1979, Congress has provided foreign aid to Egypt, as many other nations do.  However, Egypt has been unable to spend all our funds and delayed internal reforms needed to foster self-sustaining growth.  Despite being the second largest recipient of U.S. foreign assistance, Egypt’s democratic development has been extremely limited and its human rights record remains poor, according to the Department of State’s Country Reports on Human Rights Practices for 2004. Egyptian authorities continue to mistreat and torture prisoners, arbitrarily arrest and detain persons, hold detainees in prolonged pretrial detention, and occasionally engage in mass arrests without charge.  Savings:  $1.2 billion over ten years ($400 million over five years)

Eliminate Millennium Challenge Accounts

President Bush’s initiative to restructure foreign aid to reward and therefore provide incentives to countries taking steps towards economic independence has been added on top of, instead of replacing, the still growing USAID budget.  Savings: $24.4 billion over ten years ($9.4 billion over five years)

Level Funding for U.N. Peacekeeping Operations

The United States is the largest financial contributor to the U.N. peacekeeping budget.  Current military obligations in Iraq and Afghanistan, including U.S. peacekeeping efforts in the region, are not deducted from what the U.N. assesses the U.S. in dues.  Freezing the account maintains current commitments, while recognizing the need for other countries to support additional peacekeeping expenses. Savings: $1.3 billion over ten years ($500 million over five years)

Eliminate International Fund for Ireland

This is a targeted economic development grant program for Northern Ireland, an economy that has seen marked improvement and an area that has lower unemployment than the U.S.  Savings:  $195 million over ten years ($75 million over five years)

Level Funding for Global AIDS Initiative

In FY05, Congress appropriated $1.37 billion for the new Global HIV/AIDS Initiative, which exceeded the previous year’s funding and the President’s funding request.  Level funding the program would save billions of dollars, while still funding international HIV/AIDS programs of prevention, treatment and care at record levels. Savings: $7.6 billion over ten years ($2.9 billion over five years)

Level Funding for the Inter-American Foundation

IAF makes approximately 60 new grants each year to non-profit and community-based programs in Latin America and the Caribbean to organizations that promote entrepreneurship, self-reliance, and economic progress for the poor. Latin American countries are getting stronger and the public and private sector in Latin America should fund their own nonprofit organizations.  Savings: $28 million over ten years ($11 million over five years)

Level Funding for African Development Foundation

ADF makes small grants directly to African cooperatives and self-help organizations for between $20,000 and $250,000, and supports grassroots African development research and community projects.  This type of work could be funded by other organizations, including those in the international community.  Savings: $28 million over ten years ($11 million over five years)

Level Funding for the Peace Corps

This organization sends Americans to serve at the grassroots level in villages and towns in poor countries.  This program’s long-term benefits to the federal government are limited and keeping volunteers safe is becoming more and more difficult and expensive.  Freezing funding would continue current commitments.  Savings:  $111 million over ten years ($43 million over five years)

Level Funding for Andean Counter-Drug Initiative

In 2001, the Bush Administration proposed $882 million in FY2002 economic and counter-narcotics assistance, as well as extension of trade preferences and other measures, for Colombia and regional neighbors in an initiative called the “Andean Regional Initiative” (ARI).  The program focuses on military and counter-drug assistance. Savings: $125 million over ten years ($48 million over 5 years)

Reduce USAID Operating Expenses

USAID provides grants to foreign entities in various areas of assistance.  For example, USAID funds have been used to send employees on expensive, oversees conferences, such as to Barcelona and Thailand.  Savings: $793 million over ten years ($307 million over five years)

Level Funding for the International Development Association

The IDA is a member of the World Bank Group and provides development financing in the form of grants and no-interest loans to the world’s poorest nations.  IDA’s gross disbursements were $6.9 billion in 2004, and the U.S. provides approximately 14 percent of donor contributions.  The U.S. is working on a results oriented framework to ensure these loans to poor countries are effective.  Level funding will produce significant overall savings while having minimal negative impact of this program.  Savings:  $1.5 billion over ten years ($576 million over five years)

Level Funding for the Asian Development Bank (ADB)

Based in Manila, ADB is a multilateral development finance institution focusing on reducing poverty in Asia and the Pacific.  The vast majority of the member countries providing funding are from the region.  Level funding will produce significant overall savings while having minimal negative impact on this program.  Savings:  $223 million over ten years ($86 million over five years)

Title III:  Reprioritization of Federal Spending

Table 3:  Summary of Savings in Title III

(Savings from Baseline, in Millions of Dollars)

                                             5-year               10-year

                                                                                                2006              savings             savings

Eliminate the National Science Foundation Math and Science Program	-188	-973	-2,036
Cancel NASA's New Moon/Mars Initiative	-1,493	-11,511	-44,042
Eliminate State and Community Grants for Energy Conservation	-36	-223	-479
Eliminate Money-Losing Timber Sales	-130	-710	-1,550
Scale Back the Conservation Security Program	-58	-2,216	-6,676
Limit Future Enrollment in the Conservation Reserve Program	-14	-1,910	-5,285
Eliminate the National Parks Heritage Areas and Statutory Aid	-26	-134	-280
Eliminate Federal Grants for Wastewater Infrastructure	-950	-9,899	-23,332
Eliminate the Energy Star Program	-75	-391	-835
Eliminate the Science to Achieve Results Program	-90	-472	-1,007
Eliminate Payments to Socially Disadvantaged Farmers and Ranchers	-6	-32	-83
Reduce Federal Subsidies for Amtrak	-250	-1,250	-2,500
Eliminate the Next Generation of High-Speed Rail	-20	-105	-220
Eliminate the New Starts Transit Program	-1,204	-6,055	-12,200
Eliminate the Essential Air Service	-103	-525	-1,075
Drop Wealthy Communities from CDBG	-837	-4,330	-9,064
Convert Rural Community Advancement Program to State Revolving Funds	-12	-194	-4,517
Eliminate the Neighborhood Reinvestment Corporation	-116	-600	-1,257
	2006	5-year	10-year
		savings	savings
Eliminate the Community Development Financial Institutions Fund	-52	-270	-566
Eliminate the Economic Development Administration	-201	-1,081	-2,797
Eliminate the Minority Business Development Agency	-30	-161	-417
Eliminate State Grants for Safe and Drug-Free Schools	-444	-2,298	-4,810
Eliminate the Even Start Program	-114	-592	-1,238
Eliminate Teen Funding Portion of Title X Family Planning	-95	-511	-1,322
Eliminate the Administration Fees to Schools	-144	-744	-1,557
Eliminate the Leveraging Educational Assistance Program	-67	-345	-722
Eliminate Funding for the National and Community Service Act	-560	-3,000	-6,480
End the Redistribution of Unused Federal Funds from SCHIP	-20	-350	-1,140
Eliminate Childless Adult Coverage in SCHIP	n/a	-330	-660
Eliminate Funding for Penile Implants Under Medicare	n/a	-4	-8
Tie Rent Subsidies for One Person to Cost of Efficiency Apartments	-62	-894	-3,146
Eliminate School Lunches for Students Above 350% of Poverty	-125	-3,150	-6,690
Remove Ceiling for Collecting Overpayments from SSI	-70	-425	-920
Verify Income of Earned Income Tax Credit Participants	-8,500	-42,500	-85,000
Eliminate Fiscal Assistance to District of Columbia	-154	-800	-1,675
Require IRS to Deposit Fees Collected by Treasury	-91	-473	-989
Eliminate Presidential Election Campaign Fund	-55	-275	-550
Eliminate the Federal Anti-Drug Advertising	-122	-631	-1,320
Eliminate Federal Funding for the Corporation for Public Broadcasting	-400	-2,152	-5,566
Raise the Threshold for Davis-Bacon Coverage	-200	-1,025	-2,130
Charge Federal Employees for Parking	-140	-720	-1,540
Eliminate Legal Services Corporation	-331	-1,781	-4,606
Eliminate High Intensity Drug Trafficking Area Program	-227	-1,221	-3,159
United States Postal Service Foregone	-43	-231	-598
Decline Member Pay Raise	-2	-9	-24
Reduce Bureau of Land Management Construction	-6	-32	-83
Reduce Fish and Wildlife Construction	-26	-140	-362
Eliminate Funding for the National Endowment for the Arts	-126	-678	-1,753
Eliminate Funding for National Endowment for Humanities	-143	-769	-1,990
Eliminate Funding for the Forest Service’s Economic Action Program	-10	-54	-139
Reduce Funds for the Water Quality Cooperative Agreement	-15	-81	-209
Reduce Funds for Bureau of Indian Affairs School Construction	-36	-194	-501
Reduce Funds for Forest Service Capital Improvements	-60	-323	-835
Reduce Funds for the NCRS Operations	-26	-140	-362
Reduce Funds for Waste Disposal Grants	-116	-624	-1,614
	2006	5-year	10-year
		savings	savings
Reduce Funds for Cooperative State Research and Education	-110	-592	-1,531
Eliminate Rural Empowerment Zone Grant	-10	-54	-139
Eliminate Citrus Canker Compensation	-10	-54	-139
Reduce DOE Environmental Management	-400	-2,152	-5,566
Eliminate the Appalachian Regional Commission	-39	-210	-543
Eliminate the Denali Commission	-3	-16	-42
Eliminate Native Hawaiian Funding	-40	-215	-557
Level Funding for Community Health Centers	-100	-538	-1,392
Reduce Funding for the Centers for Disease Control	-1,797	-9,668	-25,006
Reduce Funding for the Airport Improvement Program	-600	-3,228	-8,349
SUBTOTAL:  Reprioritization	-21,530	-127,265	-307,180

Eliminate the National Science Foundation Math and Science Program

The NSF promotes math and science education by improving teacher training and developing instructional material.  However, the program is now duplicative of programs at the Department of Education, including the Math and Science Partnership authorized by No Child Left Behind.  Savings: $2 billion over ten years ($973 million over five years)

Cancel NASA’s New Moon/Mars Initiative

In 2004, the President announced a new initiative to explore the Moon and Mars with the goal of returning humans to the Moon by 2020.  NASA currently intends to use the savings from phasing out the space shuttle in 2012 to fund this program.  Savings:  $44 billion over ten years ($11.5 billion over five years)

Eliminate State and Community Grants for Energy Conservation

The Department of Energy provides grants to state and local governments for energy conservation efforts, including grants to help educational and health care institutions reduce their energy use.  In addition, grants are provided to state and municipal programs to establish energy efficiency standards and promote car pooling.  However, this program is duplicative of other federal efforts, including LIHEAP and the Clean Air Act.  Savings:  $479 million over ten years ($223 million over five years)

Eliminate Money-Losing Timber Sales

Timber sales in the National Forest System, under the direction of the Forest Service, are incurring more administrative costs then revenues collected from harvesting the timber.  According to CBO, in 2002, program costs exceeded timber sales by $146 million.  Eliminating timber sales in four regions where expenditures were more than twice the receipts would save money and lessen the depletion of timber resources.  Savings: $1.6 billion over ten years ($710 million over five years)

Scale Back the Conservation Security Program

CSP provides farmers with financial and technical assistance to promote energy, soil, water and plant conservation.  However, many of the farmers to whom financial assistance is given have already adopted conservation practices, and often times adoption of the practices costs less than the  assistance subsidy itself.  The program could be scaled back by simply eliminating new enrollments and by eliminating certain “bonus” payments (for additional conservation efforts), leaving intact existing contracts.  Savings: $6.8 billion over ten years ($2.2 billion over five years)

Limit Future Enrollment in the Conservation Reserve Program

CRP pays farmers not to farm their land.  Setting a cap on future enrollment (such as 36.4 million acres) and prohibiting new enrollees would scale back the program’s expenses while allowing current enrollees to re-enroll.  Savings: $5.3 billion over ten years ($1.9 billion over 5 years)

Eliminate the National Parks Heritage Areas and Statutory Aid

Both of these programs assist local communities in preserving and establishing areas of natural, historical, or cultural significance.  These funds were meant to be “seed” money, and the local communities intended to self-finance at a certain point.  This has not yet occurred.  Savings: $280 million over ten years ($134 million over five years)

Eliminate Federal Grants for Wastewater Infrastructure

The federal government assists states in achieving federally mandated water quality standards by providing wastewater grants.  Although congressional authorization for these grants has expired, Congress continues to provide the necessary funding. Some contend that by providing failing states with these grants, the federal government is giving the states an incentive to retain poor wastewater treatment infrastructure. Savings: $23.3 billion over ten years ($9.9 billion over five years)

Eliminate the Energy Star Program

The Energy Star Program encourages consumers and organizations to produce and purchase energy saving items for their home or business with its label and certification.  For example, if a company’s products meet a certain energy efficiency standard, they may place the Energy Star label on their product.  Some contend the program does not actually yield any energy savings, and that the labels are too vague to share any educational information with the consumer.  Savings: $835 million over ten years ($391 million over five years)

Eliminate the Science to Achieve Results Program

The STAR program is a competitive grant program designed to fund science research that relates to the mission of the EPA.  A recent OMB report stated the much of the research funded under this program is highly duplicative of research already being conducted at other agencies.  Additionally, a National Research Council study of the program concluded the EPA does not efficiently utilize outside experts in planning its research agenda.  Savings: $1 billion over ten years ($472 million over five years)

Eliminate Payments to Socially Disadvantaged Farmers and Ranchers

The Socially Disadvantaged Farmers and Ranchers Competitive Grant Program provides funds to land-grant, Hispanic-serving, and Native American-serving institutions, to assist “socially disadvantaged farmers” who own and operate farms.  This program is duplicative since these same farmers are eligible for all other farm programs.  Savings: $84 million over ten years ($32 million over five years)

Reduce Federal Subsidies for Amtrak

When Amtrak was founded in 1970, Congress only intended to subsidize passenger rail until it could become self-sufficient.  30 years of funding history suggests that end is unrealistic, and travelers have many other modes of transportation available.  Significant savings could be achieved by ceasing to operate a few very expensive long-distance routes, which serve a limited ridership, and continuing to offer only profitable services as a business would.  Savings: $2.5 billion over ten years ($1.3 billion over five years)

Eliminate the Next Generation of High-Speed Rail

Since 1994, Congress has funded research to facilitate passenger rail above 125 miles per hour, but little progress has been made.  Existing trains and tracks are not suitable for such high speeds, and incremental improvements to infrastructure are currently a better investment than new technology.  The private sector has largely chosen to wait and see if other countries can make a profit off this technology.  Savings: $220 million over 10 years ($105 million over five years)

Eliminate the New Starts Transit Program

This program funds new light rail (subway-type) projects, but research shows that buses transport urban populations more cost-effectively and are more flexible.  State and local governments could still use federal aid distributed by formula grants for new rail projects, at the discretion of local officials who best know the community’s needs.  Savings:  $12.2 billion over 10 years ($6.1 billion over five years)

Eliminate the Essential Air Service

Essential Air Service subsidizes air service in communities with federally mandated service before deregulation in 1978. The cost per passenger has gone as high as $500, but averages around $200. Given the proliferation of options, many travelers prefer to drive to a larger airport where they can find an even better fare than a subsidized flight from the small community. If small communities consider air service important, they could provide these subsidies themselves. Savings: $1.1 billion over 10 years ($525 million over five years)

Drop Wealthy Communities from CDBG

The Community Development Block Grant (CDBG) program provides annual grants to communities to help eliminate slums and promote economic development. CDBG is open to all urban areas with a population of 50,000, regardless of how many residents are in poverty. The existing formula actually favors wealthier areas, so this reform would refocus CDBG grants on needier areas, given that federal funding of community development may be inappropriate and should certainly be limited. Savings: $9.1 billion over ten years ($4.3 billion over five years)

Convert the Rural Community Advancement Program to State Revolving Funds

The Department of Agriculture’s Rural Community Advancement Program (RCAP) helps poor rural communities by providing loans and grants for water projects and economic development. Establishing state revolving funds instead would eventually eliminate the need for annual appropriations, and states could increase their capital by leveraging the initial federal funding in the private sector.  These projects should be orchestrated by state and local governments, and phasing out federal funding would ensure needs are met and savings can be achieved in the long run.  Savings: $4.5 billion over ten years ($194 million over five years)

Eliminate the Neighborhood Reinvestment Corporation

This public, nonprofit organization to revitalize distressed neighborhoods oversees a network of locally operated groups engaged in housing and community-building activities. Not only do similar federal programs exist under HUD, but communities themselves should be funding the startup and operation of these purely local entities.  Savings: $1.3 billion over ten years ($600 million over five years) 

Eliminate the Community Development Financial Institutions Fund

This Treasury Department fund was created in 1994 to expand credit, investment capital, and financial services in distressed communities. This is another program that is redundant within the federal government and belongs at the state and local level. Savings: $566 million over ten years ($270 million over five years)

Eliminate the Economic Development Administration

EDA provides assistance to rural and urban regions to help generate job growth in “distressed communities.”  The President’s FY06 Budget called for cutting EDA funding and consolidating the program with over 15 others that are a duplication of federal economic and community development programs. Savings: $2.8 billion over ten years ($1.1 billion over five years)

Eliminate the Minority Business Development Agency

MBDA provides funding for various Minority Business Development Centers, designed to assist minority entrepreneurs get businesses up and running.  This program is duplicative of several other business development assistance programs offered to all business owners. Savings: $417 million over ten years ($161 million over five years)

Eliminate State Grants for Safe and Drug-Free Schools

These grants to states are to discourage violence and the use of illegal substances such as alcohol, cigarettes, and drugs. States receive SDFSCA funding on the basis of their school-age population and number of poor children but statistics suggest programs are ineffective.  In addition, studies show that schools are among the safest places in the country and relatively drug free.  Savings: $4.8 billion over ten years ($2.3 billion over five years)

Eliminate the Even Start Program

The Even Start program funds educational services to parents who have not finished high school. However, the administrative fees are extremely high, the program is duplicative and there is no evidence of meaningful success. This reform would eliminate grants to states and redirect half of those funds to other federal early childhood education programs. Savings: $1.2 billion over ten years ($592 million over five years)           

Eliminate Teen Funding Portion of Title X Family Planning

HHS reports that 1/3 of Title X clients are teens. The program was designed in the 1970s to pay for family planning for the poor.  Federal regulations allow teenagers to qualify on their own income as “poor” and thus qualify for free and reduced-priced contraceptives, including the IUD, the injection drug Depo-Provera, and the morning-after pill to teenagers, without any parental involvement or consent. $286 million is spent on the program each year, and if 1/3 of funds spent are spent on teens, that totals $95 million per year. Savings: $1.3 billion over 10 years ($511 million over five years)

Eliminate the Administrative Fees to Schools

For some college loan programs, the government pays each school to administer its program and determine the recipients.  Schools will continue to benefit from participating in federal student aid programs even without the payments, because the aid makes attendance at those schools more affordable.  Costs could alternatively be passed along to students at around $5 per loan.  Savings: $1.6 billion over ten years ($744 million over five years)

Eliminate the Leveraging Educational Assistance Program

This program helps states provide matching grants for needy college students, but is no longer necessary since almost all states operate programs far larger than the federal contribution.   Savings: $722 million over ten years ($345 million over five years)

Eliminate funding for the National and Community Service Act

AmeriCorps and similar organizations, through federal, state local and private funding, perform community services like assisting in schools. Many participants receive a living stipend, health insurance and child care, making it more like a job than volunteerism.  In addition, there is no income requirement, potentially depriving needy college-bound students of aid.  Savings: $6.5 billion over ten years ($3 billion over five years)

End the Redistribution of Unused Federal Funds from SCHIP

The State Children’s Health Insurance Program (SCHIP) provides health care coverage to certain uninsured low-income children whose annual family income is too high for them to qualify for Medicaid.  Depending on the per capita income in a given state, the federal government reimburses between 65 percent and 85 percent of the state’s total SCHIP spending.  This option would leave the basic SCHIP program intact but would end future redistributions of unspent funds.  Recovering unspent funds from SCHIP would produce budgetary savings for the federal government with little disruption to most states’ plans for providing health insurance to children from low-income families. Savings: $1.1 billion over ten years ($350 million over five years)

Eliminate Childless Adult Coverage in SCHIP

The State Children’s Health Insurance Program provides federal matching funds to help states expand health care coverage to uninsured children. Each State administers and sets its own eligibility guidelines for the program. As of 2003, SCHIP was insuring childless adults in two states costing at least $330 million. The program was enacted to provide health insurance to uninsured children.  Savings: $660 million over ten years ($330 million over five years)

Eliminate Funding for Penile Implants Under Medicare

According to the Medicare National Coverage Determinations Manual, Medicare will cover the costs of penile implantations under certain circumstances.  Congress should eliminate funding for penile implants.  Savings: $8 million over ten years ($4 million over five years)

Tie Rent Subsidies for One Person to Cost of Efficiency Apartments

Recipients of federal housing assistance typically live either in subsidized-housing projects or in rental units of their own choosing found on the open market. This option would link the rent subsidy for new applicants from one-person households to the cost of an efficiency apartment rather than a one-bedroom unit (current law). Savings: $3.1 billion over ten years ($894 million over five years)