Cutting the Federal Budget To Prevent U.S. Bankruptcy, Part XI: The Treasury Budget Can Also Be Cut

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by Jim Grichar (aka Exx-Gman) by Jim Grichar

(Author's note: I ask readers for their indulgence because of my extensive use of the b-lingo – bureaucrat-lingo – and the detail I used in presenting my arguments. I do this to reduce bureaucratic counter-arguments – which I expect to receive – to the absurdity that they invariably are.)

For those who did not read Parts I–X of this series, total actual cuts in proposed spending (what I call the "Cut-o-meter") now amount to $610 billion. Those cuts came from Defense, NASA, HUD, the Education Department, the Agriculture Department, Transportation Department, Interior, Commerce, Energy, Health and Human Services, Homeland Security, Justice, State and other agencies.

The Treasury Department has one of the largest budgets in the government, with a total for proposed fiscal year (fy) 2005 net outlays of $395.2 billion, of which an estimated $349.8 billion is for interest on federal debt. The estimated gross outlay total exceeds $395.2 billion because Treasury anticipates getting payments for loans and other services performed for other departments and agencies. However, there is still plenty of room for cuts.

The following minor programs should be abolished outright: 1) subsidies to minority-owned banks ($0.084 billion); 2) the violent crime reduction program ($0.006 billion); 3) the super-snooper Financial Crimes Enforcement Network (aka FINCEN, which follows money laundering and is a gross infringement upon individual privacy – $0.073 billion); 4) payments to the territorial wildlife habitat restoration fund ($0.005 billion); and, 5) payments to Puerto Rico as offsets on federal excise taxes collected on products it produces and consumes as well as products it ships to the U.S. ($0.46 billion – why should Puerto Rico get a tax break – it should be given its independence from the U.S.). Cutting out these minor programs saves over $0.6 billion.

Lest some readers worry about the money laundering and flows of money out of the U.S. to fund terrorist organizations that might increase if the FINCEN were abolished, the federal government – through the CIA, FBI, National Security Agency (NSA) – would still be able to gather data where it was needed for legitimate national security purposes and for prosecuting organized criminals. The FINCEN operation, started up when the current president's father was in office, is nothing more than a big brother agency designed to monitor the public's financial transactions, a gross infringement of the right to life, liberty and property. This Orwellian outfit needs to be deep-sixed.

Because of the desire to end the welfare state, the bulk of the cuts proposed for Treasury occur in the various welfare state programs administered by the Internal Revenue Service (IRS) through the personal income tax, namely the various tax credits given to low income people, for children, and for health care expenditures. For fy 2005, the IRS proposes to spend a net $33.708 billion in payments for the Earned Income Tax Credit where the credit exceeds actual tax liabilities, $11.486 billion for the child credit where it exceeds the actual tax liabilities, and $0.171 billion for health care credits where they exceed actual tax liabilities. That adds up to a total of nearly $45.4 billion. And these are actual cash outlays by the Treasury, not reductions in taxes paid by individuals. Eliminate all of this and give those on welfare an incentive to get a job.

Adding in the minor programs to the above welfare cuts amounts to approximately $46 billion.

And the Cut-o-meter Total is …. $656 billion

Adding in the nearly $46 billion in proposed cuts for the Treasury Department budget pushes the Cut-o-meter up to $656 billion from current spending levels or more than $100 billion over the anticipated budget deficit for this year of $521 billion. And if the cuts I proposed to the HHS budget occurred, the total savings might even be $35 billion higher, as I indicated when using a more conservative estimate of savings.

There is one more budget proposal necessary for keeping the U.S. from bankruptcy. Stay tuned!

Jim Grichar (aka Exx-Gman) [send him mail], formerly an economist with the federal government, writes to “un-spin” the federal government’s attempt to con the public. He teaches economics part-time at a community college and provides economic consulting services to the private sector.

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