Obama's 2012 budget "won't give much of that back and will ultimately seek dramatically higher taxes to pay for sharply higher spending," Morici says. Thus, at a time when Americans have been tightening their belts, businesses have been scaling back payrolls (and doing more with less), and state and local government have been slashing budgets, laying off teachers, fire fighters and police, among others, Obama is raising spending for his pet projects and making small cuts in other programs that would still leave their budgets higher than when he came into office.
Thankfully, the Obama budget is going nowhere. His thick budget books were put on a dusty shelf just as soon as Congress received them. Congress controls the government's purses trings, and that's who will write and ultimately enact next year's budget.
It begins in the Republican-controlled House, where the GOP's caucus has pledged to cut $100 billion or more. We won't see their proposals until the Budget Committee sends its plan to the floor, but the GOP's huge majority ensures it will pass easily and be sent to the Senate, where Democrats rule by a slim majority, though maybe not enough to pass the Democrats' bigger spending alternative. That's where the battle will be fought.
There are lots of places where spending can be cut and billions saved. Among them:
-- Federal aid to the states: A study by budget analyst Chris Edwards at the Cato Institute found there are 1,122 aid-to-state programs, or "72 percent more programs than just a decade ago." "For lawmakers looking for places to cut, the $650 billion federal-aid empire would be a good place to start," he says. Heritage's Riedl also produced a lengthy list of programs totaling $47 billion that deserve the axe. Here're some examples:
-- Community Development Block Grant Program: It was originally set up to help low-income communities, but under its expanded formula, more than 75 percent of U.S. communities are eligible and get money from this program including hundreds of upper-income communities from Palo Alto, Calif., to Greenwich, Conn. Savings: $2.95 billion.
-- Cut the government's travel budget to half of its level. Savings: $5.8 billion.
-- Privatize the money-losing Amtrak passenger railroad. Savings: $878 million.
-- Eliminate the Economic Development Administration. Its grants are supposed to revive depressed communities and create jobs, but numerous studies show it's a failure. Savings: $287 million.
Reidl's full list is an eye-opener that shows how easy it is to get to $100 billion. There are hundreds of areas in which to make deep, permanent budget cuts that, with the help of a growing economy, would reduce the deficit faster than most people expect.
As for the much larger entitlements such as Medicare and Social Security, it will take longer to work out a politically viable reform plan -- perhaps with the help of a well-balanced, bipartisan commission -- that can muster a majority in Congress. It won't be easy, but it can be done.
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