Federal budget: 10 cuts that would save the most

(Image credit: (Chip Somodevilla/Getty Images))

last updated 8 January 2015

As difficult as it was for Republicans and Democrats to agree on a narrow package to replace the sequester cuts, much more difficult choices lay ahead.

As the Congressional Budget Office put it in a report released last month: "To put the federal budget on a sustainable long-term path, lawmakers would need to make significant policy changes — allowing revenues to rise more than would occur under current law, reducing spending for large benefit programs to amounts below those currently projected, or adopting some combination of those approaches."

To help find those future savings in the behemoth federal budget, two think tanks from opposite sides of the political spectrum joined together to release a long list of possible ways to trim the deficit and cut wasteful spending within the federal budget. The CBO last month issued a list of 103 options for reducing the deficit over 10 years. The new report, released by the U.S. Public Interest Research Group (U.S. PIRG) and the National Taxpayers Union (NTU), includes 65 recommended cuts that, together would reduce the deficit by $522 billion over the next decade.

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"Deficit reduction doesn't have to be hard; there's plenty of low hanging fruit," said co-author Jaimie Woo, U.S. PIRG tax and budget associate. "Before cutting public priorities, lawmakers should go after special interest handouts and government inefficiencies that make average taxpayers shake their heads in disbelief. These recommendations have support from across the political spectrum, and Congress should use them as a roadmap to find common ground."

The groups presented their recommendations to the Budget Conference Committee today. They made similar recommendations in 2011 to the Congressional Super Committee that ultimately failed to agree on $1.2 trillion in long-term budget cuts.

You can find all 65 recommendations in the PDF below, but here are the 10 cuts that would have the largest budget impact:

1. Eliminate crop insurance program: $87.1 billion

This program, which was created during the Great Depression to protect farmers from financial ruin, now subsidizes insurance premiums for agribusinesses on coverage they could afford on their own. According to the report, "it distorts the insurance market and market for commodity crops by encouraging overplanting and is partially duplicative as other programs provide more rational insurance for farmers."

2. Reduce spending for other DOD procurement: $85 billion

This category includes overspending on items like night vision goggles and radios. According to the President's National Commission on Fiscal Responsibility, the military spent $400 billion more than their base budget on these items. The $85 billion savings would equal the cost of the entire first wave of sequester cuts.

3. Reduce Medicare payment rates in high-spending areas: $47.6 billion

Costs per beneficiary are inexplicably high in some parts of the country, even taking into account the local costs of labor and office space. Cutting these unnecessary expenses could yield nearly $50 billion in savings over the next 10 years.

4. Bundle Medicare payments: $46.6 billion

Adopt bundled payments in Medicare so that a single payment is made to health care providers for individual episodes including inpatient care and 90 days of post-acute care. "This will create incentives for more efficient care and reduce medical errors," the report said.

5. Eliminate direct payments for commodity crops: $45.3 billion

Though they were intended to be temporary measures to ease farmers off their reliance on federal subsidies, they have become a fixture in the farming system, "despite being identified as wasteful by watchdog groups on the Left and Right," the report said. "They also distort the agriculture market by favoring certain crops."

6. Cancel F-35 joint strike fighter: $37.1 billion

"The F-35 Lightning may represent all that is wrong with our acquisition process," according to the Sustainable Defense Task Force. The program, which will ultimately cost $1.5 trillion over 55 years, suffers from consistent engine problems and has never been used in combat. This option, suggested by the CBO, would eliminate the F-35 and replace it with sufficiently advanced planes, the F-16 and F/A-18.

7. Reduce crop insurance subsidies: $22.1 billion

Taxpayers have subsidized an increasing share of crop insurance premiums. Congress could choose to roll them back closer to the level they were at before the year 2000. This scenario would reduce the subsidy from above 60 percent to 40 percent.

8. Replace some military personnel with civilian employees: $19.4 billion

The Defense Department has thousands of military workers doing commercial jobs that civilian employees, who cost less on average, could be doing.

9. Dump unused and under-used government-owned buildings: $14.8 billion

The government currently owns 14,000 buildings and structures that have been labeled as "excess" or "under-utilized. "While there is potential for far greater savings from orderly disposition of these assets, getting rid of or repurposing these buildings would save taxpayers $15 billion over the first three years," according to the report.

10. Replace V-22 Osprey with MH-60 and CH-53 helicopters: $17.1 billion

Since the V-22 Osprey has had a handful of production, schedule, management, and cost-overrun issues, reducing future purchases and replacing the functionality with additional MH-60 helicopters would save nearly $17 billion.

Here's the full report:

USPIRG-NTU Report on Deficit Reduction

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