Sham Savings Scam

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REPORT FROM TAXPAYERS FOR COMMON SENSE – As talks on ways to avoid the so-called fiscal cliff meander along, unsurprisingly lawmakers are lining up to protect or promote their special interests. Boosters use a variety of tactics, but one favorite is to claim the policy or program would reduce the deficit and so can be used to offset the across-the-board cuts slated to start on January 2nd.

But it’s a case of budgetary buyer beware because, like images in your side-view mirror, many of the budget numbers are larger than they appear.


Our favorite example is the Agriculture Committee leaders’ generous offer of including a Farm Bill that would save anywhere between $2335 billion over the next ten years as an offset in the cliff deal. Yes, that’s what the Congressional Budget Office (CBO) says, but let’s look a little closer. Only in Washington can legislation that is going to cost nearly $1 trillion be used for deficit reduction because it spends a couple percent less than what would have happened without the bill (baseline). An examination of the CBO track record on scoring Farm Bills also reveals that they would lose a lot of money in Vegas betting on their Farm Bill estimates. Looking back at the estimates for the 2002 and 2008 Farm Bills reveals that CBO was off by more than $400 billion – that’s money that went right to the nation’s deficit waistline.

The last thing the fiscal cliff deal should include is major agriculture policy that doesn’t save much and that would leave us with new entitlement program headaches for the next five years. It is just these kinds of spending policies that got us into trouble in the first place. Nice try, Agriculture Committee Chairs Stabenow (D-MI) and Lucas (R-OK) but you had your chance the last 22 months. It’s time to wait for next Congress.

Another tactic is wrapping your pet interest in the guise of creating new revenue. So push for more oil and gas development and then count speculative increased revenues as an offset. Considering the industry isn’t drilling on all the land they have access to right now, it doesn’t seem likely that we’ll be seeing increased royalty revenue from new drilling sites for quite some time.

Another rhetorical diversion we’re seeing is repeatedly talking about savings that have already been agreed to as something new. While the President can claim the savings in the Budget Control Act as an achievement, talking about them as part of a new fiscal cliff deal is almost like counting them twice.

The fiscal cliff deal must not be used to enact new and irrelevant policy – whether it be costly, like the Farm Bill, or relatively mundane, like so many pieces of legislative flotsam and jetsam that are floating about the Capitol these days.

In the end, Congress and the President need to stick to the fiscal knitting and avoid all these snake oil and quick fix the deficit schemes. The nation’s elected leaders need to come up with the offsets to delay implementation of sequestration by six months, hammer out a deal to extend tax cuts for the short term, patch the Alternative Minimum Tax, and fix the Medicare doctor payment cut. Then they need to establish a rigid process using the existing budgetary mechanisms to force the 113th Congress to come up with trillions of dollars in spending cuts, revenue raisers, and entitlement reform.

That’s a lot to ask from the least productive Congress since WWII. But to paraphrase former Secretary of Defense Rumsfeld, you go to legislating with the policymakers you have, not the ones you might want or wish you had. It’s time to get it done and done without the gimmicks.