10.31.2010 0

America is at a Tipping Point

  • On: 11/01/2010 10:08:23
  • In: Fiscal Responsibility
  • By Rick Manning

    The Conservative Action Project which includes Americans for Limited Government, has released ten spending cuts that would save more than a trillion and a half dollars in the next ten years. The list is formidable and lays a foundation for the new Congress to start the hard task of getting our deficit under control.

    Some items are obvious, like repealing ObamaCare and save taxpayers over $1 trillion over ten years, and privatize Fannie Mae and Freddie Mac and save at least $30 billion.

    Some of the cuts are regional, with a call for ending AMTRAK subsidies at an annual savings of $202 million a year, coming down to a battle between northeast corridor Members of Congress and the rest of America. While ending sugar and peanut subsidies would save $1.3 billion annually, but interests in Florida and Georgia would be fighting to maintain the spending.

    Some of the cuts are just common sense. Completely end TARP and save $16 billion, sell excess federal property and save $15 billion, and end energy subsidies saving $20 billion a year.

    Of course, Americans for Limited Government would add the elimination of the $420 million in yearly federal government subsidies of the Corporation for Public Broadcasting to the chopping block.

    Two proposed measures that deserve more discussion as they permanently roll back the structural cost of government would be to freeze federal employee pay raises, and cut the number of federal employees back to 2008 levels.

    Most people have grown up with the myth of the underpaid government employee, which is anything but the reality of today’s world. The average federal government employee is paid $123,049, while the average private sector employee receives only $61,051 annually. After adjusting for inflation, federal employee wages have increased 36.9 percent since 2000, while private sector wages rose only 8.8 percent over the same time period. Freezing federal government worker salaries until the budget is balanced would save an estimated $5 billion annually.

    Should government workers, who don’t contribute to our nation’s wealth, have compensation packages worth twice as much as the private sector workers who they depend upon for their salaries? The answer is clearly no. In order to restore balance to this pay inequity, the only answer is to freeze federal government employee wages.

    The other common sense measure is to reduce federal government employment to 2008 levels by eliminating 188,000 jobs that have been added to the government payroll since 2008. During the same time frame that the federal government was increasing its payroll by almost 200,000 highly paid people, the private sector lost 7.9 million jobs leaving fewer taxpayers to fund more government workers.

    Of course, the public employee union AFSCME has spent $88 million collected from public employees to try to increase the number of public employees through expanded government. Beyond the $35 billion saved over the next ten years, cutting 188,000 jobs would deprive AFSCME of millions of dollars over the same time frame in union dues that they would expend to expand government.

    The bottom line is that we can no longer afford the government that we are being provided, and failure to act rapidly will doom the new Congress to becoming mired in the muck of the Potomac. Beyond the Conservative Action Project, here are just a few more modest proposals.

    • Sell all of the foreclosed homes that are owned by Fannie Mae and Freddie Mac over the next five years. This would obviously impact other home values negatively, once the sale was completed, the market would be able to be restored. A conservative estimate of the income generated from these sales is $30 billion a year for five years.
    • Sell the U.S. stake in bailed out General Motors and Chrysler. It is doubtful that we will get close to getting back the more than $40 billion that remains on the bailout money taxpayers provided, but when the nation is running a $1.3 trillion deficit, picking up $10 billion or so by getting out of the car business saves $10 billion worth of cuts elsewhere.
    • Rollback the 40 percent increase in the Congressional budget since Pelosi and Reid took over in 2007. While the savings would “only” be in the millions, it would start the ball rolling in the right direction.
    • Eliminate all appropriations that remain related to the failed “stimulus” package. The remaining money is largely due to be used as venture capital play money by the Department of Energy to fund “green” projects that are promoted by Al Gore and other government dependent green billionaires.

    Come January 3rd, 2011, a new Congress will have a long and difficult task. As anyone who has ever found themselves buried in credit card debt can attest, it is a lot easier to get into the mess than it is to get out of it. But the consequences of failing to take drastic action to get debt under control can bury us in interest payments, and in the case of the U.S. government, our creditors are not annoying phone bank people, but are the Chinese government. A government that, along with the rest of our foreign lenders, will make the nastiest collection agent look like Monica from Touched by an Angel.

    Our nation is at a now or never point in history. Regardless of the outcome of the election on Tuesday, November 2nd, failure to take swift and immediate action to restore our financial balance sheet will destroy our great nation’s status as the greatest economic system in the world. Failure to take swift and immediate action is akin to declaring economic surrender, and turning our nation over to foreign creditors.

    Let’s hope that our next Congress has the willpower to do what is necessary to defend this nation’s economic viability, because if they don’t, time may run out.

    Rick Manning is the Director of Communications for Americans for Limited Government.

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