Heritage Foundation Publishes Budget Book of Proposed Spending Cuts

Last week, the Heritage Foundation released the Budget Book, a catalog of 106 ways to cut the budget or reduce the size of government totaling roughly $3.9 trillion in ten-year savings. (However, Heritage notes that the total does not include interactions from enacting multiple proposals.) Here are a few highlights:

  • 65 percent of the cuts proposed are from a single item – capping spending on means-tested programs at 110 percent of pre-recession levels and growing that amount with inflation. Heritage estimates that this could save $2.7 trillion over the next decade. Heritage does not provide any details about which programs to cut, leaving it up to "policymakers to direct welfare spending to the areas of greatest priority."
  • Limiting Highway Trust Fund spending to existing revenue would result in about $180 billion in savings. Since transportation spending would be reduced, "states or private sector [could] take over the other activities if they value them."
  • Repealing the Davis-Bacon Act would reduce spending by $86 billion over the next ten years, by Heritage's estimate. The Act requires federally funded construction projects to pay "prevailing wages" based on the project's location. However, the Congressional Budget Office estimated that this would save less than $12 billion. We mentioned this as an option to reduce highway spending in our paper last year, Trust or Bust: Fixing the Highway Trust Fund.
  • Ending Supplementary Security Income (SSI) benefits for children would save $125 billion. Heritage would instead direct SSI toward disabled adults and seniors, and only keep the children's payments for medical expenses that Medicaid does not cover.
  • Other proposals would end Head Start, higher education programs, and job training programs, resulting in $170 billion in education and training services cuts.

Although Heritage’s proposal calls for over $300 billion in defense cuts, they suggest reinvesting that money into defense. Their defense cuts include proposals on reforming military compensation and commissary spending which we recently described in our blog as findings of the Military Compensation and Retirement Modernization Commission.

Area of Savings
Proposed Savings (10-year, Billions)
International Affairs
General Science, Space, and Technology
Natural Resources and Environment
Commerce and Housing Credit
Community and Regional Development
Education, Training, Employment and Social Services
Income Security
Administration of Justice
General Government
$4.2 trillion
Total, reinvesting defense savings*
$3.9 trillion

*Total lines do not reflect policy interactions that could be a result of enacting all proposals.
Source: The Heritage Foundation. Numbers may not add up due to rounding.

Overall, Heritage presents ambitious cuts to discretionary spending that would result in major deficit reduction. Still, the policies don’t deal with Social Security or health care spending, which are the largest spending items in the budget.  Heritage does acknowledge the need to look at entitlement programs in their introduction:

Almost half of all federal spending goes to Social Security, Medicare, and Medicaid. Clearly, any effort to rein in federal spending will absolutely require major reforms to these and other entitlement programs.

Ultimately, the biggest steps lawmakers can take to put debt on a downward path will be to address these areas.

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