Cutting the Federal Budget To Prevent U.S. Bankruptcy, Part VIII: Cutting Energy and Commerce

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–VII of this series, total actual cuts in proposed spending (what I call the "Cut-o-meter") now amount to $370 billion. Those cuts came from Defense, NASA, HUD, the Education Department, the Agriculture Department, Transportation Department, Interior, and other agencies.

Total proposed fiscal year (fy) 2005 outlays for the Energy and Commerce Departments are $22.496 billion and $6.147 billion, respectively. Both have numerous programs which are, to use a polite term, useless, and they can and should be cut back substantially.

Old Commerce

The Commerce Department goes back to the 1920’s, a time when Herbert Hoover was Commerce Secretary. Established to promote business, even though it is not needed, this department is today generally a dumping ground for political appointees, usually the type that are fund-raisers for presidential campaigns.

But Commerce is primarily a pork barrel department, providing little that is really needed by the taxpayer. It includes such organizations as the Economic Development Administration, the Census Bureau, the International Trade Administration, the National Oceanographic and Atmospheric Administration (does it create our air and water?), the Patent and Trademark Office (which is largely self-funding), and the National Institute of Standards and Technology (NIST – formerly the National Bureau of Standards). Over the years, many of these have morphed, taking on a role of ladling out the pork to various constituencies.

The Economic Development Administration (EDA), unlike some of the others, has always been about doling out the pork to favored politicos. It funded heavy amounts of economic aid to depressed areas, like Appalachia, during Lyndon Johnson's "Great Society." Well, in the words of Gomer Pyle, "Surprise, surprise!" It did not work.

Ronald Reagan actually tried to abolish this sinkhole for taxpayers’ money, and he appointed someone who really wanted to deep-six the outfit. The man was Orson Swindle, a hard-nosed Marine pilot who had been a POW in Vietnam. Heck, if Charlie couldn't finish off Orson, Reagan figured that Orson was the right man to finish off the EDA. But even a man of Swindle's bluntness and honesty could not persuade the Congress into abolishing EDA. Late in the Reagan Administration I had the privilege of meeting him at an interagency meeting, and he stated that he had failed in his goal of getting rid of it. Well, EDA spends $0.394 billion per year, and it's on our chopping block. Here's to you, Orson!

While reducing the nearly $0.9 billion budget of the Census Bureau and the Bureau of Economic Analysis (which estimates gross domestic product and other macro-economic numbers) is highly unlikely in the short run, in the longer term BEA could be privatized (just as its former function of estimating the leading economic indicators was privatized and given to the Conference Board, a private non-profit business study group) and the Census Bureau could be restricted to its one constitutionally-mandated function, counting (and nothing else) the number of people in the nation and in each state so as to properly apportion the 435 congressional seats. Census itself is seeking a bit over $0.8 billion for fy 2005, of which $0.435 billion is supposed to be in preparation for the 2010 census. Scale the whole Census Bureau budget back to about $100 million per year, and they could easily conduct the decennial census. Total savings here would be $0.8 billion per year but will not be counted in the Cut-o-meter because I do not think they could be made within the next three years.

The International Trade Administration (ITA) promotes U.S. exports and conducts investigations into foreign "dumping" of products on the U.S. market, of producers selling in the U.S. below their home market price. There are other outfits to do this, namely the International Trade Commission (ITC), a creature of Congress, and whatever your beliefs on the need for such investigations, the ITC can take care of whatever needs to be done. They have a more honest staff of professional economists than the mercantilists at ITA. ITA is asking for $0.384 billion in fy 2005. All of its goes onto our chopping block and will help bump up the Cut-o-meter.

Other dogs at Commerce that will be included on the chopping block are the Bureau of Industry and Security ($79 million – it regulates exports of sensitive dual use (meaning civilian items having defense uses) technology – let DOD do that under its existing budget); the Minority Business Development Administration ($30 million for the politically favored), the National Oceanographic and Atmospheric Administration ($1.742 billion – for ocean research, for the U.S. Weather Service, etc.), and the National Institute of Standards and Technology (NIST – $0.69 billion, for setting standards of measurement and too many useless things that have been added on).

The NIST would have some remaining functions – those legitimately related to the role given in the Constitution – that could be funded for $150 million per year. The Patent and Trademark Office might be another outfit difficult to abolish in the short run; it takes up about $25 million of taxpayer funds but collects fees of approximately $1.3 billion. But cut the $25 million from the Patent Office and make it totally dependent upon the fees it receives.

One other function, the National Telecommunication and Information Administration, might be difficult to cut in the short term as one of its functions is negotiating with foreign governments over rights to the use of the radio and television spectrum. Budget that at $25 million and save over $50 million.

Total savings from getting rid of most of the Commerce Department would be about $5.9 billion. Add that to the Cut-o-meter.

Is DOE a Producer of Energy?

If you cannot answer that question, then go no further. Of course the Energy Department (DOE) does not produce any energy. But what it does is consume taxpayer dollars. Most of DOE's programs ($16.9 billion out of a total proposed fy 2005 budget of nearly $22.5 billion) are for nuclear weapons for the Defense Department. That leaves $5.6 billion for civilian energy programs, and of that, $1.4 billion covers civilian nuclear power-related activities. In the near term, it might be impossible to cut the civilian nuclear program. But the remaining $4.2 billion should all be cut.

Ronald Reagan reportedly wanted to abolish much of the Energy Department but Congressional opposition prevented him from even attempting to cut it out. Well, let's give it a try!

Abolish the civilian programs in the Energy Department laboratories, saving $3.438 billion. Most of these laboratories design and build nuclear weapons. Let them be merged into the Defense Department. That way, the civilian programs at the laboratories can be ended.

DOE hopes to spend additional money – nearly $0.78 billion in fy 2005 – on energy supply studies (renewable energy sources like solar power and wind power). It also wants to spend $0.584 billion on fossil energy research, another $0.128 million on clean coal technology (to help keep eastern coal miners in their jobs as eastern coal is high in sulphur, a pollutant), and $84 million on the Energy Information Administration (EIA – which gathers and publishes energy data). DOE also runs the Federal Energy Regulatory Commission (FERC – it takes in fees from those it regulates) and manages the various power-marketing associations that sell electricity produced by government-owned hydroelectric power dams.

All of these could be abolished, with such outfits like the EIA being privatized. FERC should be abolished, particularly because it no longer regulates power rates. It obviously did not help the California electric power crisis of 2001, so why keep it around?

Savings from cutting out most DOE programs would be $4.2 billion annually. The remaining nuclear power programs would be run by the government until enough political pressure could be built to privatize them.

And the Cut-o-meter Total is …. $380 billion

Cuts of $5.9 billion from the Commerce budget and $4.2 billion by abolishing the Energy Department bump up the Cut-o-meter to $380 billion.

Lest readers think there is nothing else to cut, let me assure them that some really large programs will appear on the chopping block in future installments.

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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