4. BUDGET:
Despite some disagreements, bipartisan panel tells supercommittee where to cut
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Washington think tanks of all political stripes came together at a forum yesterday and offered their suggestions on deficit reduction, targeting oil and gas tax breaks, agricultural subsidies, ethanol tax credits and public lands.
But even though their proposals contained similarities, ideological differences broke through, including the question of whether congressional members should rely solely on cutting spending to achieve a $1.5 trillion reduction in the federal deficit.
As Republican Sen. Orrin Hatch of Utah put it in a keynote speech, "There now appears to be some bipartisan consensus to address the debt, but disagreement reigns when it comes to discussing solutions."
The panel featured experts from right-leaning Americans for Prosperity, National Taxpayers Union and Taxpayers for Common Sense, and left-leaning Center for American Progress and U.S. Public Interest Research Group. Moderate Democratic think tank Third Way also participated.
Each group has released sweeping proposals in the past couple of months but yesterday repeated their calls as the congressional Joint Select Committee on Deficit Reduction nears its Nov. 23 deadline to put together a deficit-cutting recommendation.
All pushed for reductions in energy spending and tax breaks in some form. Perhaps the most drastic proposition came from Americans for Prosperity, which called for Congress to close the Department of Energy completely for a savings of $311 billion over 10 years; the group also wants to see the Agriculture Department and other agencies shuttered.
Acknowledging that such a proposal would not go anywhere in Congress, Phil Kerpen, the group's vice president of policy, outlined other more "politically attainable cuts," such as cutting $3.25 billion for research and development in green energy sources and fossil fuels. The group is also pushing to end DOE's "wasteful" energy conservation and weatherization program.
In a joint proposal, the National Taxpayers Union and U.S. PIRG also recommended reductions in fossil fuel research and development, along with the same in nuclear energy.
The rest of the groups targeted oil and gas tax breaks, mirroring calls for their elimination that Democratic members of Congress have made for months. Taxpayers for Common Sense went farthest, calling for an end to tax breaks for nearly all forms of energy.
All groups pushed for an end or reduction to agricultural subsidies, which they said go to large agribusinesses to help them pay the costs of just doing business. The subsidies have long been a part of national policy, but they are likely to face at least a restructuring in a proposal being put together by congressional agriculture leaders.
Gary Kalman, federal legislative office director of U.S. PIRG, said the subsidies are doing "more harm than good."
"People are talking about agricultural subsidies being just a big handout to corporate interests," Kalman said. "We would actually argue that some of these actually are destructive. Large-scale agricultural production of corn and other crops used for biomass can accelerate other problems like deforestration and raise food prices globally."
Taxpayers for Common Sense further wants to see USDA stop funding environmental improvements, such as better manure storage at large confined feeding operations. Third Way, the moderate think tank, said $6 billion could be reduced by combining all 16 agricultural conservation programs into one.
Each of the groups except for the Center for American Progress want Congress to eliminate the Volumetric Ethanol Excise Tax Credit, which pays blenders 45 cents for every gallon of ethanol mixed with gasoline. That tax break is set to expire at the end of the year, but the proposals would end it immediately.
They also targeted other ethanol tax breaks, including one that gives companies $1.01 for every gallon of cellulosic ethanol that is blended with gasoline, and USDA programs that help producers grow and refine biofuel crops.
USDA's biofuels programs have been on the chopping block since Congress began the budget process this year. The future of the ethanol blenders' credit is more uncertain, as its opponents failed to attach it to the debt-limit deal in August even after the Senate voted to eliminate it.
All except the Center for American Progress also called for the government to sell off public lands or underutilized federal buildings. Noting that the government owns more than half of the land in five Western states, Americans for Prosperity said that selling land and assets could net $18 billion in savings over the next 10 years.
Third Way, meanwhile, would put a five-year moratorium on new purchases of federal lands and require the sale of $2.5 billion worth of federal real estate over the next decade.
Finally, U.S. PIRG, the National Taxpayers Union and Taxpayers for Common Sense are targeting the Army Corps of Engineers for "wasteful" projects. They all push for the end of federal beach replenishment, one of the projects identified in the "Green Scissors" report released in August (E&ENews PM, Aug. 24).
Despite all the similarities, the panel was unable to reach consensus over whether there should be any revenue-raising attached to the spending cuts.
Michael Linden, director of tax and budget policy at the Center for American Progress, butted heads with Kerpen of Americans for Prosperity over the issue. Linden said there should be a balance of spending cuts and revenue-raising, such as allowing the George W. Bush-era tax cuts to expire, while Kerpen maintained that the problem is out-of-control government spending.
Kerpen veered from the rest of the group over the issue of sequestration, or the process that results if the supercommittee fails to come to a decision or if that decision is voted down by all of Congress. Such situations would trigger across-the-board cuts in government departments.
While others said that would harm smaller, necessary government programs, Kerpen said he would welcome it.
"I think that sequestration, compared to some of the other things that have been discussed, would be a huge, huge victory," he said.
Of the panel members, only one -- David Kendall, fellow for health and fiscal policy at Third Way -- believed that the supercommittee would be able to come to agreement.