By Kathryn Watson | Watchdog.org Virginia Bureau

ANOTHER WAY: Budget experts say there are much better reforms out there than the ones the sequester offers.

ALEXANDRIA — Budget experts have some sequester advice for Congress: Stop making mountains out of molehills.

Members of Congress need to stop exaggerating the consequences of spending cuts, expected to kick in at 11:59 p.m. Friday, and start tackling the actual mountain of the federal deficit, they say.

How?

Simple.

First, prioritize the out-of-control spending that’s increasing the national public debt by $47,000 each second, starting with waste that people have already pinpointed.

The “sequester” reduces federal spending by less than 2 percent this year – $44 billion out of $3.6 trillion – then slows defense and non-defense spending for a total of $1.2 trillion in reductions over nine years.

“Across the board percentage cuts are probably about the worst way to go about cutting things, because it means that low-priority items get cut at the same rate as high-priority items,” said Maurice McTigue, director of the free-market Mercatus Center’s Government Accountability Project at George Mason University in Fairfax. McTigue, who was appointed to Virginia Gov. Bob McDonnell’s Commission on Government Reform and Restructuring, also advised the Office of Management and Budget under the Clinton and Bush administrations.

“The sensible thing to do is to eliminate low-priority items, and to maintain the level of activity in the high-priority items,” McTigue said in an interview with Watchdog.org.

Identifying government waste shouldn’t be too difficult, said Michael Thompson, president of the Thomas Jefferson Institute, a nonpartisan public policy think tank in Virginia. He suggested starting with the Citizens Against Government Waste “Pig Book” and its laundry list of questionable federal earmarks.

Here are a few examples from the 2012 edition.

• $120 million for three earmarks of $40 million each for alternative energy research within the Air Force, Army and Navy.
• $3 million for aquatic plant control.
• $5 million for the International Fisheries Corporation.

“If I were in Congress, isn’t that something I’d want to get rid of first?” Thompson said.

Once the federal government cuts wasteful spending, it needs to seriously take a look at its priorities and agency performance, Thompson said. Some government agencies need even larger cuts than the sequester offers, he said.

“There are some programs that ought to get a 5.6 percent cut or a 20 percent cut, because they really are at the bottom of the list of what we ought to be doing,” Thompson said.

And local managers or even cabinet members should be the ones making the cuts, rather than Congress, he said. 

However Congress and the White House carve out cuts, they shouldn’t be as small and as spread out over time as called for by the sequester, McTigue said. More immediate, drastic measures are needed to fix the root cause of the problem.

“Trying to spread these things over 10 years is politically unrealistic. Can you imagine trying to keep control of the U.S. Congress through five electoral periods to keep a commitment on decisions that were made this year?” McTigue said. “I’m afraid I don’t have any confidence that that’s likely to stick for that period of time.”

As a former associate minister of finance in New Zealand government and ambassador to Canada, McTigue has watched the effects of drastic national budget cuts firsthand.

In the early 1990s, Canada’s debt-to-GDP ratio was more than 50 percent. But the Canadian government made some major cuts — like a 40-percent budget slash to its environmental agency — to eliminate its deficit in a mere four years, he said. For a decade after starting in 1997, the country experienced massive surpluses.

“Did Canada fall to pieces as a result of that? The answer is, ‘no,’” McTigue said.

Closer to home, McTigue mentioned the billion-dollar-plus budget shortfall McDonnell faced at the beginning of his term, which he closed with reductions — even highly criticized and painful ones — to K-12 and higher education, among other areas.

“One of the things that people are most sensitive about are significant cuts to education, but they were part of the deal,” McTigue said. “And that was necessary to get the budget back in balance again. But their philosophy was, let’s do it quickly.”

For real budget reform, McTigue said Washington has to stop two overarching behaviors: doling out money to states with strings attached and spending revenue through the tax code. McTigue said Washington needs to stop its “paternalistic” behavior.

“What I think that the federal government should do is that it should move back more autonomy to states, and it should do that by bulk-funding a whole lot of activities, instead of trying to specify from Washington exactly how they should be managed,” he said.

McTigue said Congress should:

• Consider eliminating tax preferences, as tax deductions are equal to U.S. discretionary spending.
• Take a serious look at entitlements (Medicaid, Medicare and Social Security), which consume more than half of all federal spending.
• Quit offering “free money” to states, like in the Medicaid expansion under the Affordable Care Act.

Contact Kathryn Watson at katie@watchdogvirginia.org.