Let's play Scrooge. The game is suggested by the large numbers of representatives and senators who say they want to cut the proposed $616 billion 1981 federal budget. But they seem to choke on specific spending reductions.
Really, fellas, it's not so difficult. With a little assistance from a swell report by the Congressional Budget Office (Reducing the Federal Budget: Strategies and Examples), here are 10 helpful suggestions for the conscientious budget surgeon.
1. Eliminate excessive benefit increases for about 35 million to 40 million recipients of Social Security and other federal pensions. These programs are tied to changes in the consumer price index. In July Social Security benefits will rise about 13 percent after a 9.9 percent increase last year -- far greater than the average 15 percent to 18 percent rise in worker earnings in 1978 and 1979. Why should retirees be better protected afainst inflation than current workers? Change the law to index benefits either to the consumer price index or the increase in average earnings, whichever is lowest. The fiscal 1981 savings would be $4 billion to $6 billion.
2. Eliminate the MX missile program. Increased defense spending may be desirable, but would we really be safer with a lot of missiles running around on flat cars in the desert? Probably not. Developing a bigger submarine-based Trident missile sounds more sensible. The CBO estimates the savings of that approach at nearly $900 million in fiscal 1981.
3. Eliminate Amtrak. ythe government subsidizes about 60 percent of the ticket cost for the average rider. Fuel savings are minimal, and the subsidized trains siphon traffic from buses. In fiscal 1981, Amtrak will cost the federal government nearly $1 billion. Eliminating service now for fiscal 1981 (which begins in October) would give states the opportunity to decide whether trains are worth preserving. About half of Amtrak's passengers ride in the Northeast Corridor.
4. Eliminate the National Endowments for the Arts and the Humanities, along with the Corporation for Public Broadcasting. Do we really need the government to subsidize high-brow entertainment -- theater, ballet, opera and television drama -- and to promote vacuous ideals such as better "public understanding of the humanities?" Let people decide for themselves whether they want to spend their money to be entertained by the Pittsburgh Steelers or the local symphony. The art being cultivated by many of the beneficiaries of these programs is a corupting one: grantsmanship. These agencies will spend nearly $500 million in 1981.
5. Let the owners of small planes pay their own way. In 1978, the Federal Aviation Administration estimated that general aviation (small, private planes) paid only 14 percent of its share of the costs of maintaining the nation's airport and airways system. By undercharging, the government encourages more general aviation and makes the skies less safe for everyone. Between 1979 and 1990, the FAA expects the number of general aviation "operations" to rise from 17 million to 31 million. Imposing adequate user fees would slow this growth and provide nearly $1 billion in extra revenues in 1981, says the CBO.
6. Cut back child nutrition programs sharply. If you think federal food subsidies go only to the poor, you're wrong. In 1981, about 17 million of the estimated 26 million children in the school lunch program will come from families with incomes exceeding 125 percent of the poverty line (that's about $10,000 in 1981 for a family of four). The estimated cost for these children is about $1.2 billion. Eliminate it. If pareens can't take responsibility for feeding their children, what can they do?
7. Repeal the Davis- Act and related laws. Passed in 1931, Davis-Bacon requires that "prevailing wages" be paid on federal construction projects. As interpreted by the Labor Department, that effectively means union wages. This limits competition for federal contracts and raises costs. The CBO puts savings at about $134 million in 1981.
8. Repeal the percentage depletion allowance and intangible drilling costs for oil producers. These complicated tax provisions essentially constitute a subsidy for oil producers, who -- given today's oil prices -- are the last people who need one. Repeal would increase federal revenue $4.4 billion in fiscal 1981, according to the CBO.
9. Eliminate "deficiency" payments for farmers. The government now guarantees participating farmers minimum payments for wheat, feed grains (such as corn), cotton and rice if market prices fall below target price levels. Farmers face a legitimate problem in fluctuating demand levels and market prices, but government now helps through crop loans and officially financed grain reserves. Deficiency payments provide an extra layer of protection. Let the farmers take that risk. About half of the deficiency payments go to 10 percent of the participating farms. The 1981 commitments are probably irreversible, but the CBO puts the 1982 saving at about $900 million.
10. Eliminate operating subsidies for local mass transit systems. Until the 1970s, the federal government limited help to local bus and subway systems through capital grants for new equipment. Now the government helps pay operating deficits, too. This is a license to be inefficient and shift more local costs to the U.S. Treasury. The estimated cost of this provision (which also includes some capital funds) is $1.6 billion in 1981.
Well, folks, that's the way the game ought to be played. Don't take little nibbles at agency budgets. That just leaves a big bureaucracy in Washington to administer smaller programs. And, of course, unhappy constituents will continue their pestering ways in subsequent years, trying to restore spending to previous levels. If you're going to make constituents unhappy (and you will), at least get rid of them. If programs aren't any good, wipe them out. Throw out unneeded subsidies, rewrite bad formulas.
This game probably looks like suicide to most members of Congress, which is why it won't be played. But, even if it were, it wouldn't cure inflation instantly. We had deficits and high spending in World War II, but lacked inflation because we were willing to pay for that spending through higher taxes and enforced saving. Today's government spending includes a lot of things that individual constituencies regard as "nice," but that people collectively aren't willing to support through taxes or saving. But it's only one source of inflationary pressure. Even a Scrooge knows that.