09.30.2020 0

Continuing Resolution: Target-Rich Environment for Cutting Fat

Photo credit: 401kcalculator.org

By Richard McCarty

On Sept. 29, the U.S. Senate voted to adopt a continuing resolution that will carry forward current spending levels until Dec. 11, after the election, setting up a year-end battle over an omnibus spending bill.

With control of both the White House and the Senate, regardless of the outcome of the election, Republicans should ensure that federal spending largely reflects their priorities. Democrats always arrive at budget negotiations with unreasonable demands for new spending. To counteract this, Republicans should be every bit as aggressive with demands for significant cuts and the implementation of conservative agenda items. Here are a few suggestions.

  • Republicans should insist upon defunding the enforcement of the Foreign Account Tax Compliance Act (FATCA). FATCA, a Democrat idea passed into law the last time Democrats held the White House and both chambers of Congress, has been a disaster. It was supposed to bring in tax dollars that had been going uncollected by requiring US citizens to report their foreign assets and requiring financial institutions around the world to report on customers’ holdings. The penalty for citizens who fail to comply with the law is severe: they can lose up to half of their unreported assets.

FATCA compliance is costly. Some estimates show that the compliance costs for FATCA are in the hundreds of billions of dollars, but the law only resulted in additional federal revenues of $13.5 billion over the course of several years. As a result of this absurd and draconian legislation, some U.S. citizens experience difficulty getting bank accounts abroad simply because financial institutions do not wish to be bothered with the additional paperwork. No doubt, this fact contributes to the dramatic increase in the number of U.S. citizens renouncing their citizenship since the FATCA’s passage.

  • Republicans should insist on slashing funding for the AmeriCorps program by $1 billion. President Trump wants to end the Clinton-Era program and has only requested a small portion of its typical budget to allow for shutting it down. Republicans would be wise to honor this request. When tens of millions of Americans volunteer without compensation each year, it is difficult to justify using federal tax dollars to pay people to volunteer in their communities.
  • Republicans should insist upon defunding the U.S. Institute of Peace (USIP), which would save $45 million each year. Although the mission of the think tank is to promote international peace, the U.S. has repeatedly gone to war since USIP’s founding over 35 years ago. With dozens of U.S. think tanks and countless bureaucrats working on foreign policy, there is little reason to believe that having one less taxpayer-funded think tank would make much difference in advancing world peace.
  • Republicans should insist upon defunding the East-West Center (EWC), a think tank in Honolulu, Hawaii focused on U.S. relations with Asia and Pacific countries. The EWC, which has been receiving taxpayer funds for six decades, is just another of Lyndon B. Johnson’s wasteful Big Government programs. Currently, the think tank receives over $16 million a year from taxpayers. President Trump has recommended that Congress not provide any direct funding for the EWC; interestingly, even the Obama Administration requested that the think tank’s federal funding be slashed. For the few who might think that the EWC is vital, they should be aware that it raises millions of dollars each year so it should be able to continue on even without Congressional appropriations.
  • Republicans should insist that Federal Highway Trust Fund money only be spent on building and maintaining roads. Although much of the money in the Highway Trust Fund is due to the fuels taxes paid by motorists and truckers, trust fund money is continually siphoned off for bike paths, beautification projects, and public transportation. According to a 2017 report by the American Society of Civil Engineers, hundreds of billions of dollars are needed for bridge and highway construction and maintenance. With pressing needs like this, we simply cannot afford to be wasting federal tax dollars on frivolous pet projects and inefficient public transportation.

It should be noted that the U.S. network of roads serves virtually every American, even those who do not drive; for example, consumer goods and mail are typically driven over the road. Mass transit, on the other hand, serves only a small percentage (5 percent) of commuters and an even smaller percentage (2 percent) of people making personal trips. Of course, due to the coronavirus, ridership on public transportation has been further reduced and may not ever – or at least for quite a while – return to its previous levels.

Of course, there is a lot going on right now, but Republicans should not miss an opportunity to reshape the federal government. Halting onerous financial regulations, ending a paid volunteer program, slashing funding to redundant think tanks, and prioritizing roads over bike trails, beautification projects, and public transit are all common sense conservative ideas.

With the current continuing resolution a done deal through Dec. 11, Senate Republicans can still demand these items’ inclusion in the upcoming omnibus spending bill at year’s end.

Richard McCarty is the Director of Research at Americans for Limited Government.

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