What does the Heritage Foundation have to say about our potential choices concerning federal spending:Study released May 10, 2011 (Part 3)

Federal Spending by the Numbers

“Saving the American Dream: The Heritage Plan to Fix the Debt, Cut Spending, and Restore Prosperity,” Heritage Foundation, May 10, 2011 by  Stuart Butler, Ph.D. , Alison Acosta Fraser and William Beachis one of the finest papers I have ever read. Over the next few days I will post portions of this paper, but I will start off with the section on federal spending reform.

Scaling Back K–12 Education Spending and Reforming Higher Education
Federal spending on K–12 education has grown 192 percent faster
than inflation since 2000, yet this sharply increased federal spending and
federal micromanagement of school districts has not improved student
performance. Under the Heritage plan, total federal K–12 spending is reduced to
2000 levels (adjusted for inflation), in part by eliminating many of the
numerous small education programs that Washington uses to micromanage school
districts. This will allow states and school districts to manage and meet the
needs of their students more effectively.

Higher education reforms, including the new deduction for college tuition in
the Heritage tax reform, ensure that students receive enough financial
assistance to attend college. Shifting from grants to student loans ensures that
most college costs will be financed by the college graduates themselves, who
benefit the most from their degrees, and not by other Americans.

However, thanks to a key provision in the Heritage plan’s tax reform, higher
education costs are partially defrayed through the simplified and generous tax
deduction for higher education tuition. Families whose incomes are too low for
them to benefit fully from this tax deduction are eligible for a Pell Grant with
a value up to the tax deduction. The direct student loan program is retained
with loan limits high enough to guarantee college access but with rates set to
ensure that there are no budgetary costs, including the costs associated with
deferred repayment until graduation as well as the costs of loan forgiveness

Thus, all Americans will have access to financial aid in attending college,
but it will not be a free ride at the taxpayers’ expense.

Making Public Health Service Spending More Efficient. Public health
service spending has grown 56 percent faster than inflation since 2000. While
health research is vital, the Heritage plan eliminates waste and inefficiencies
that have accumulated. For example, by consolidating redundant facilities and
laboratories, the Heritage plan saves the National Institutes of Health $1
billion annually. States take over the financing and operation of health
centers, health professions programs, and the substance abuse block grant. The
Centers for Disease Control and Prevention sees savings over $2 billion annually
by reducing travel, ending questionable public campaigns, and focusing its role
on interstate coordination. Finally, converting Indian Health Service aid into a
premium-support system (where possible) and reforming the Food and Drug
Administration save a combined $1 billion annually.

Funding an Adequate Defense. The most important core function of the
federal government is ensuring America’s national security, but it needs to be
accomplished as economically and efficiently as possible. The Defense Department
will focus on identifying and addressing its significant levels of wasteful
spending and initiating significant reforms and efficiencies in logistics and
acquisition processes so that those funds can be reprioritized into the most
important uses to protect America and our allies by maintaining a strong,
modern, and effective military.

The war on terrorism has increased defense spending to approximately 5
percent of GDP, yet it remains well below the 9 percent spent during in the
1960s and the 6 percent spent during the 1980s. While the Heritage plan
recognizes that predicting precise funding requirements for overseas contingency
operations is impossible, it is reasonable to expect that the phasedown in those
efforts will permit reducing defense spending to approximately 4 percent of GDP
and maintaining it at that level. Ultimately, of course, defense spending will
have to be whatever it takes to protect America and its interests around the

While this proposal for maintaining sufficient levels of defense spending
assumes that future military personnel will be brought under the broader
proposals for health care and retirement reform outlined in this report, it also
provides for tailored transition options for current military personnel and
retirees. Importantly, reforms in compensation and benefits must maintain
effective recruitment and retention of, and honor reasonable commitments to,
members of the armed forces.

Repealing Obamacare. If fully implemented, Obamacare will add
trillions of dollars in long-term government spending to a health care system
that is already unaffordable. It also increases federal controls and mandates
and will impose heavy costs on states, businesses, and households. As noted
earlier, the Heritage plan repeals Obamacare and replaces it with the improved,
consumer-centered health care system.

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