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Four Really Dumb Ideas That Should Be Avoided

Today’s column is about four really dumb ideas. Let’s start with the House Republican Study Committee’s budget proposal, which, since more than two-thirds of House Republicans belong to the group, is as close as we can find to an official, consensus position of the House majority.

The RSC plan takes seriously the promise in the “Pledge to America” to cut $100 billion in spending this year, and it also ratchets up the spending cuts for future years, starting in 2012, by cutting discretionary domestic spending back to 2006 levels. In other words, not just erasing the Obama years, but also the years when Democrats held a majority in Congress.

This means about a 30 percent cut this year in discretionary domestic spending, via most federal agencies. According to budget expert James Horney of the Center on Budget and Policy Priorities, it means a 42 percent cut by 2021 in nondefense appropriations from what the Congressional Budget Office says is needed to maintain current funding, as adjusted only for inflation and not for population change or other exigencies.

The RSC plan immediately ends the federal role for Fannie Mae and Freddie Mac — which most experts would say might cause havoc in a housing market that is not exactly robust. It eliminates federal Medicaid aid to the states, which face a much heavier Medicaid load in the weak economy and which are also in many cases teetering at the edge of insolvency. That cut would push many over.

The RSC plan eliminates a slew of agencies and programs, from public broadcasting to the National Endowment for the Arts to the Legal Services Corp. and the Economic Development Administration. It also kills applied research in energy (!) and eliminates the U.S. Agency for International Development — just when we have developed a broad consensus on the need for smart power, including aid and diplomacy, to combat the threats of terrorism and state disintegration abroad.

It also excises $45 billion from the stimulus package that is already committed to projects, many well under way, but that it says is not yet spent. All of this would be a huge upheaval, starting immediately upon enactment, to many people, especially the unemployed and poor, and to state and local governments. What would these cuts mean to an economy that is still not strong and may need another jolt to keep it growing? Real danger of a major setback.

As for the long-term cuts, which focus exclusively on the sliver of the budget that is discretionary domestic, not on defense or entitlements, if done across the board, they mean 42 percent cuts in veterans’ health, education, FBI agents combating terrorism and organized crime, border security, drug enforcement, federal corrections officers, health research, disease and epidemic control, food inspection, environmental protection, and so on. Horney notes that if the cuts are not across the board, then some functions are cut even deeper.

Another part of the RSC plan, the second dumb idea, is to cut the federal work force by 15 percent and impose a five-year pay freeze. Let’s be bipartisan here: The president’s call for a two-year pay freeze for federal employees is almost as dumb. Imagine it is recruiting season at Stanford University and the federal government is trying to get some of the best and brightest computer scientists and engineers to combat the devastating threat to cybersecurity that could bring our economy or our defense capability to a halt. It is competing with Intel, Google, Facebook, Apple and other companies offering huge pay and benefits. The pitch from federal recruiters: “We can’t offer their pay and benefits. But we can give you a five-year pay freeze, no help in relocating and no guarantee that you won’t be a part of a forced layoff.”

The third dumb idea is the renewed push for a constitutional amendment to balance the budget. It has tons of co-sponsors in the House and Senate, including the GOP leaders, and some are calling for tying a vote to raise the debt limit to endorsement of the amendment. Let me be blunt: Few ideas are more seductive on the surface and more destructive in reality than a balanced budget amendment. Here is why: Nearly all of our states have balanced budget requirements. That means when the economy sags, states are forced to raise taxes or slash spending at just the wrong time, providing a fiscal drag when what is needed is countercyclical policy to stimulate the economy. In fact, the fiscal drag from the states in 2009-10 was barely countered by the federal stimulus plan. That meant the federal stimulus provided was nowhere near what was needed,  but far better than doing nothing. Now imagine that scenario with a federal drag instead.

The fourth dumb idea is the plan by Speaker John Boehner (R-Ohio) and Majority Leader Eric Cantor (R-Va.) to kill the presidential public financing system — without providing any evidence or holding any hearings, another blow to the pledge for an open and deliberative regular order. For decades, the presidential funding system, which encourages small donors via matching funds, worked well at reducing the rank corruption highlighted by the Nixon re-election campaign. It stopped working because the spending caps and limits in public funds no longer could counter the huge increases in campaign costs. Even conservatives such as former Federal Election Committee Chairman Michael Toner called for reforming, not jettisoning, the system. Call the Boehner-Cantor plan the “Return Us to Watergate-style Abuses Act of 2011.”

Norman Ornstein is a resident scholar at the American Enterprise Institute.

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