The cost-cutting battles begin

Senate Majority Leader Harry Reid of Nev. is seen during a news conference on Capitol Hill in Washington, Thursday, Feb. 3, 2011, to disucss deficit reduction. (AP Photo/Alex Brandon)

Congressional Republicans say they want to cut federal spending by raiding $45 billion from President Barack Obama‘s politically unpopular economic stimulus program. But they won’t be able to get their hands on most of that money.

At most, only about $7 billion of the $814 billion in economic recovery money awarded under the 2009 federal law hasn’t already been spoken for, according to the latest White House estimates. And Republican leaders now acknowledge they would be lucky to identify as much as $5 billion in stimulus-related spending cuts as part of a plan to save taxpayers $2.5 trillion over 10 years.

Where did the money go?

It’s not that all the stimulus money has been spent; it has been committed for specific projects and programs. In the confusing money flow from Washington to the rest of the country, there’s still about $168 billion in stimulus money that has not actually been paid out, according to the administration. But it says nearly all of that money already is tied up in contracts with companies, obligations with states and local governments, promised taxpayer relief and commitments to government programs.

For states, much of that money for Medicaid and education has been worked into budgets, so if Congress took it back it could leave shortfalls, said Raymond Scheppach, executive director of the National Governors Association. “That would be a serious problem, I think, because they’re depending on that money.”

The unspent money remains in the federal pipeline despite Obama’s promise that recovery spending would occur swiftly to stimulate the nation’s economy after Congress approved the program nearly two years ago.

Even the $7 billion the White House says is not yet obligated can’t readily be yanked back by Republicans as savings because, administration officials said, planning is well under way for the projects expected to benefit.
ANDREW TAYLOR, Associated Press Andrew Taylor, Associated Press Fri Feb 4, 12:15 am ET

WASHINGTON – Republicans now controlling the House promised Thursday to slash domestic agencies’ budgets by almost 20 percent for the coming year, the first salvo in what’s sure to be a bruising battle over their drive to cut spending to where it was before President Barack Obama took office.

“Washington’s spending spree is over,” declared Paul Ryan, the House Budget Committee chairman who announced the plan. “The spending limits will restore sanity to a broken budget process,” he said, returning “to pre-stimulus, pre-bailout levels.”

Republicans won’t get everything they want. Democrats are in charge of the White House and the Senate, and even House Republicans may have second thoughts when the magnitude of the cuts sinks in.

The White House says the GOP effort could cause widespread furloughs of federal employees, force vulnerable people off subsidized housing, reduce services in national parks and mean less aid to schools and police and fire departments.

House Republicans are seeking to keep their campaign promise to cut $100 billion from domestic programs. The initial cuts would win approval over the coming weeks as Congress wraps up the long-overdue 2011 budget. The second stage would come as the House GOP advances a fresh round of spending bills for the 2012 budget year, which begins Oct. 1.

The hardest hit agencies would include the Food and Drug Administration, the Internal Revenue Service and the departments of Commerce, Housing and Urban Development and Agriculture, according to partial details released by the House Appropriations Committee. Foreign aid on an annualized basis would take a 6 percent cut. Congress’ own budget would be barely touched.

Conservative Republicans want even greater cuts, and they’ll be given the chance to impose them in a freewheeling floor debate scheduled for the week of Feb. 14.

In Thursday’s plan:

• The Department of Homeland Security would face a budget freeze instead of the 3 percent increase proposed by Obama.

• Rapidly growing spending on veterans’ health care appears likely to be largely untouched.

• Republicans would scale back Obama’s proposed 4 percent, $23 billion increase for the Pentagon. Instead, the military budget would grow by just $10 billion.

• Popular programs such as health research and federal aid to school districts appear likely to take a hit when lawmakers write the spending bill for the departments of Education, Labor and Health and Human Services. Republicans promise not to cut the minimum $5,550 Pell Grant for low-income college students.

Republicans made a campaign promise to cut $100 billion from Obama’s request for domestic agencies such as the Department of Education, for the budget year that began last October. But that year is under way, and they’re so far falling short, just $58 billion under the plan released Thursday. They promise to try to fully impose the dramatic cuts during what is sure to be a contentious debate.

The $100 billion in reductions was an inflated promise because it was measured against Obama’s budget request for this year. The actual savings would be less because Obama’s budget increases weren’t approved, and the government is operating at 2010 levels. Instead, the savings from domestic programs in making the switch from 2010 to 2008 — if carried out over a full year — would be about $86 billion, imposing cuts on domestic agencies of 19 percent on average.

Republicans acknowledge they can achieve, at best, $35 billion in overall savings by the Sept. 30, the end of the budget year, after the Pentagon receives its small boost.

A stopgap spending bill passed in December expires March 4. Enacting a full-year bill promises to be a difficult test of the new balance of power in Washington. Republicans control only the House, but Democrats acknowledge that — with the deficit on pace to hit $1.5 trillion this year — some spending cuts will have to be made.

“We’re not burying our heads on the sand. We recognize that we have to do something,” said Senate Majority Leader Harry Reid, D-Nev., Obama’s most powerful ally on Capitol Hill.

Chris Van Hollen, ranking Democrat on the House Budget Committee, agreed, but added: “The immediate spending cuts proposed today by House Republicans will harm the economy and put more people out of work.”

Ryan’s numbers illustrate that cutting the discretionary portion of the government passed by Congress each year won’t do hardly enough to dent trillion-dollar-plus deficits. But both parties are wary about tacking rapidly-spiraling benefit programs like Medicare, Social Security and the Medicaid health programs for the poor and disabled.

Republicans say some agencies such as the FBI, the Indian Health Service and NASA are unlikely to be cut all the way back to pre-Obama levels. But that means other agencies, like the Environmental Protection Agency, would have to absorb even bigger cuts.

Returning to 2008 levels would produce dramatic reductions for many agencies: a 41 percent cut for EPA clean water grants; an 8 percent cut to NASA, a 16 percent cut for the FBI and a 13 percent cut in the operating budget of the national parks.

The hard-charging GOP freshman class — especially newcomers from Minnesota, Wisconsin, New York and New Hampshire — may have some second thoughts when confronted with big cuts to the program that provides home heating subsidies to the poor.

Republicans in Texas, Florida and Alabama — where NASA facilities mean thousands of jobs — are sure to fight against cuts to the space agency. NASA could have to abandon the International Space Station, the White House warns.

Lawmakers in both parties from rural districts are likely to resist cuts to a program that subsidizes service by smaller airlines to isolated cities and towns like Scottsbluff, Neb., and Burlington, Iowa. Smaller subsidies or tighter rules would probably mean some communities would lose service.

It’s unclear so far how Republicans will treat particularly sensitive programs such as the Women, Infants and Children program, which provides food for low-income pregnant women, mothers and young children.

Separately, White House budget chief Jacob Lew met with Senate Democrats about the budget, hearing pleas from deficit hawks like Budget panel chair Kent Conrad of North Dakota to be aggressive in taking on the government’s geyser of red ink.

“We we’re having a good conversation about how to think about the challenges of the budget and fiscal policy going forward and that conversation will continue,” Lew told reporters.

Copyright © 2011 The Associated Press

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5 Responses to "The cost-cutting battles begin"

  1. Almandine  February 4, 2011 at 12:29 pm

    Cost-cutting? Horsefeathers.

    We’re phucking doomed.

  2. eve  February 5, 2011 at 1:05 am

    We should cut costs.
    We can no longer afford to have our tax dollars used for foreign aid to any country (including Israel).
    Also, we can no longer afford our tax dollars to pay the salaries of these so called “representatives” who spend us into oblivion.
    Cut their medical benefits and fire those who voted for all of this nonsense that have virtually decimated this (once) great nation.

    Now THAT’S cost cutting that would do some good.

  3. Carl Nemo  February 5, 2011 at 2:44 am

    You know what’s really terrifying Eve is to find yourself in a passenger car on a train to wherever in time and space. All the windows are blacked out, not allowing a view of the countryside or even the time of day. The cars go to and fro, you feel the subtle vibrations of the railbed, you have no knowledge of your surroundings and the conditions outside. Inside you have lighting, heat, access to food and a feeling of both comfort and security…no?

    In the engine cab a ‘mad’ engineer; ie., our President, along with his drunk on power, totally corrupt advisers; ie., the firemen. They all know the bridge across the ravine about a half mile ahead is out, but they continue on with their mad rush onward…eventually into the gorge; the result, oblivion for all.

    Seemingly that’s the plight of the American people. They simply can’t believe that their lives represent a poorly chosen, ill thought, to no thoughts given journey to hell on earth. : |

    Carl Nemo **==

  4. Almandine  February 5, 2011 at 10:12 am

    More than poetic, Carl… linguistic imagery fitting of our sad plight.

    And speaking of… http://neithercorp.us/npress/

    • Carl Nemo  February 5, 2011 at 1:23 pm

      Giordano Bruno writes some incredibly incisive articles for sure. I don’t know if that’s his real name or it’s his web handle to honor the 16th century Dominican monk of the same name who was a brilliant philospher, mathemetician and astronomer far ahead of this time.

      I urge folks to read this article about the insidious, corrosive forces of a society based on debt as opposed to a progressive one on the production and creation of new wealth for all. Seemingly our leaders don’t have a clue and a society running on lies (skewed statistics) and the “smoke and mirrors” of the illusion of progress is where were headed with total and absolute failure of the nation as the end result.

      I’m including a link to help folks out this tax season. Many people since the bust have been receiving 1099C’s which enumerates the amount for the discharge of debt from their CC creditors. What many people don’t realize is the settled amounts are treated as “INCOME” by the IRS and the same goes for far larger amounts when it comes to homes. So settling with creditors other than through bankruptcy can blow up in one’s face bigtime incurring tax ‘debt’ on money they’ve never earned. Since the ‘debt’ has now been transferred as income to the IRS they will be hounded the rest of their mortal lives until this debt is liquidated to our corrupt government. What’s interesting is the creditors were able to write off their losses against their corporate income as a “charge off”, so they win along with the government while the little people are crushed as always.

      http://www.creditcards.com/credit-card-news/forgiven-debt-1099C-income-tax-3513.php

      Who knows where this nation is headed. With the caliber of people we have in Congress and the White House, they’ll probably come up with the idea of labor camps and debtor prisons with people having to work on treadmills to nowhere twelve hours a day. I guess the upside will be that its a great ‘weight loss’ program. / : |

      Carl Nemo **==

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