Giuliani Shows His Claws on Spending

But budget-cutting without entitlement reform may be useless.

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Rudy Giuliani shifts from military hawk to budget hawk in a commentary piece in today's Wall Street Journal. Among his ideas to cut spending:

1) Save $21 billion a year by rehiring only half of the 42 percent of federal civilian workers due to retire over the next decade.

2) Direct all federal agency heads to find savings of 5 to 10 percent.

3) Save $29 billion by ending earmarks.

4) Convene a Government Waste Commission, such as the one that closed military bases. "It can require Congress to vote up or down on a whole package of recommended cuts, beginning by considering the 3 percent of programs currently rated 'ineffective' by the federal government itself," he writes.

My take: Republicans are going to have to get specific on budget cuts. The spending issue hurt the GOP in the 2006 midterm elections, and public skepticism will undercut the ability of presidential candidates to promote their economic agendas, particularly tax cuts. I decided to check which programs, according to the Office of Management and Budget's program assessment rating tool, have been rated "ineffective." Among them: Perkins student loans, Even Start literacy and education programs, oil technology research, black lung clinics, substance-abuse block grants to states, and the AmeriCorps youth volunteer program. (You can check here for more.)

It is especially interesting that oil technology research is rated as "ineffective" yet is pretty much the kind of government energy program that so many Republicans and Democrats apparently desire as they call for "Apollo programs" and "Manhattan projects" to deal with potential climate change and energy independence. It "conducts research and development to . . . advance technologies that industry can use to increase oil production." But the White House argues that "the private sector has the incentives and resources to perform this work, and the program has not demonstrated results." I would guess that near-$100-a-barrel oil provides plenty of incentive.

Then there's this: Total nondefense discretionary spending—made up of the programs that the OMB is rating—is a bit less than half a trillion dollars, with defense spending a bit more than half. Anyone talking tough on spending without a plan to deal with $1.5 trillion in mandatory spending (Social Security, Medicare) doesn't really have a plan at all. That's already 53 percent of the federal budget and headed higher. Again, future unfunded liabilities from entitlement spending now equal some $50 trillion, according to the Government Accountability Office.

Giuliani, Rudolph
federal budget

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