The Institute to Reduce Spending

The mission for the Institute to Reduce Spending is to educate adults about federal spending issues and balancing the national budget. Only by challenging the culture of deficit spending in Washington will we make future prosperity possible. http://institute.reducespending.org/

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#TBT to the government shutdown 

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The Pentagon’s Phony Budget Wars

Despite the uproar over reductions to defense funding, less than 1 percent of the Pentagon's beefy $550 billion budget will be cut this year.

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Senate Appropriations to hold Ebola hearing in November

The Nov. 6 hearing will be the first Appropriations hearing on Ebola since Sept. The Senate Appropriations Committee plans to begin hearings about funding regarding the Ebola crisis in the US. Questions have arisen given the CDC's disorganized approach to the crisis despite receiving an $88 million dollar grant in February. 

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Even more disheartening, most, if not all, of the equipment being destroyed originally came from the United States — which is why we’re able to estimate its worth. It was given to the Iraqi army ahead of the U.S. military’s withdrawal in 2011 and captured by the Islamic State when it advanced into Iraq earlier this year. That means Washington is now spending hundreds of millions of dollars from the U.S. Treasury to destroy Humvees, tanks and other weapons that American taxpayers purchased. The situation has led some observers to joke that the Pentagon should christen the mission ‘Operation Hey, That’s My Humvee.’

Destroying a $30,000 ISIS pickup truck can cost the US $500,000 (via hipsterlibertarian) "But using [Harrison's] $500,000 upper estimate, last Saturday’s strike missions alone cost as much as $4.5 million. And those figures don’t even include the intelligence, surveillance and reconnaissance flights necessary to scope out targets ahead of strikes, which have helped make even the low-level campaign against the Islamic State hugely expensive. The Pentagon revealed on Monday that it has spent as much as $1.1 billion on military operations against the Islamic State since June." Important. 

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How do appropriations bills work?

Often we read a lot about appropriations committees or discussions of  drafting department budgets without ever hearing a clear explanation of the process. The Institute to Reduce Spending has made a quick graphic to help explain the budget process. 

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Inside the Pentagon's Trillion Dollar F-35 Embarrassment

It's not news that the Pentagon's fated F-35 program is riddled with dilemmas. For more than a decade, it's bumped into roadblock after roadblock. When the planes aren't grounded, they're forbidden to fly in bad weather, combat missions or at night. Vanity Fair just published a lengthy look at just how bad a mess it is.

Over ten years, the F-35 has cost the US 1.4 trillion dollars and comes with a whole variety of problems including engine fires, inability to fly in a variety of situations, and outdated computer equipment. F-35 is the perfect example of why we need to reevaluate the way in which we spend money in the Pentagon. 

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The government spent $300,000 to study how bikes work

Did you know you use your eyes and ears when you ride a bike?! The government knows.

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Why is too much debt bad?

Gosh, where to begin. Let's give just two reasons. First, borrowing to pay for goods and services requires the payment of interest in the future. That makes the real cost of having those programs more expensive than they would be if a country didn't borrow to finance them. In the longer term, large amounts of interest can force a society to pay more and more of its resources toward servicing its debt rather than growing its economy.

The second reason is that there is some evidence that just having higher levels of debt can result in lower growth. This area of academic research is controversial and certainly highly contested in terms of the degree, but there are numerous examples around the world of economies that have struggled under the burden of substantial debt.

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Why couldn't the US print money to pay off the debt?

Actually, they can! But of course, like any economic policy, there are costs as well as benefits. While “printing money” would allow us to pay off our debt, inflation would be significant and our ability to borrow curtailed dramatically as foreign (and domestic) lenders realize that they’ll be paid back the money they lent in currency that buys a whole lot less than it did before.

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Why do prices for things like rent and gas go up every year while opportunities and starting salaries for people entering the workforce go down?

We’ve sort of answered this one already, but the question really has two parts. The first regarding rent and gas prices is largely a function of marketplace supply and demand, government intervention (particularly in the case of housing), and of course, overall inflation.

As for the opportunities available to new workers- this is significantly a legacy of the recession of 2008. The recovery that’s taken place has been noteworthy for the fact that it has been a “jobless” one. This means that as firms have recovered, they’ve found other ways to produce their goods and services that don’t necessarily require hiring new workers — or at least, new full-time workers. Whether that changes — particularly for entry-level workers — is anyone’s guess.

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What is a Sequester? Does it happen every year?

***Wonky alert***

This issue is actually pretty complicated, so it’s hard to discuss without giving a lot of technical background.

To apologize, here is a picture of a cat.

(She also finds the sequester confusing.)The “sequester” is a series of small, automatic spending cuts that are part of  the 2011 Budget Control Act (BCA). Congress passed the BCA as part of a deal to raise the debt limit, and it set spending limits along with forcing the “Super Committee” in Congress to find about one trillion dollars more in cuts.

As you might remember, the Super Committee couldn’t do that, and so “sequestration,” kicked in as a consequence. Social Security, Medicaid, civil and military pay, and veteran’s benefits were exempted from the sequester. The sequester lowered the BCA’s existing caps and instituted small cuts across the board.

These cuts were meant to be a “punishment” and so they were implemented targeting that would “hurt,” not necessarily what needed to be cut — for instance furloughing federal employees or even closing down random entrances to federal buildings. But, they were still relatively minor overall: http://imgur.com/atVcOeXIn 2013, Congress passed a temporary spending bill that reopened the government after the infamous government shutdown and also raised the debt limit again. This bill spent about $20 billion more than the legal sequester level. Then the Ryan-Murray budget deal spent around $400 billion more than the sequester.

Still, the sequester technically remains law, assuming it doesn’t just keep getting ignored.

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It seems like every few years I hear about new scandal related to the VA and the poor quality of care they provide for veterans. What typically follows is that Congress increases their budget to what seems like no positive effect. Do y'all have any insight as to why such poor care continues even with the additional funding. In addition, what other policy options may be available to give veterans access to quality care?

The problem with the VA is difficult. However, the issue with the VA doesn’t stem from a lack of funds. Even since 2009, funding for the VA rose by 68%. The Veterans Administration is a large, complex bureaucracy and it’s fair to say that nobody truly can pinpoint what the specific issue is that prevents efficient and adequate care for Veterans. Here’s some information from the Coalition to Reduce Spending that is helpful about the recent Sanders-Miller plan. (http://reducespending.org/blog/bydlak-reform-the-va-responsibly/)

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If debt is the problem, why not just raise taxes?

Tax policy is a valid issue and one that’s outside the scope of our mission. That’s for other people to fight about! Our only position here is that spending is the root of the problem. At current levels of spending, particularly after 2015 as deficits skyrocket, there’s basically no level of taxation that could reasonably make up the difference.  So whether you favor taxes or not, spending is necessarily part of the equation.

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If the Federal Student Aid Program were to go bankrupt, how would that affect the federal spending and debt as a whole?

Not much; student loans just aren’t a major portion of the federal budget. That’s not to say that subsidies of student loans don’t cause a lot of harms, or that there wouldn’t be huge costs associated with bailing out the program, but budget isn’t one of the harms.

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Why has spending gotten so out of control, and what exactly can be done to reduce it and keep it low?

We love to answer this question in further detail! We will be launching our website (spendinginstitute.org) in the next few days and we have tons of resources regarding specific policy ideas!Also here is a puppy: 

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I'm a student who will not graduate for another 3-4 years. Do you think that the Federal Student Loan system will go into default before I ever have make a payment? If so, does my student debt just go away? *fingerscrossed*

We doubt it! Unfortunately, student loan debt is the most difficult form of debt to get rid of, because even if you declare bankruptcy, you're still responsible for those loans. Best of luck!