The Fortune Blog on CNN Money gives us a peak of an interview they did with Mitt Romney that will be published soon, in Fortune, where in he finally reveals some of the specific cuts he will make in his plan to balance the budget. Romney responsed to this question by Fortune, "You've promised to cap government spending at 20% of GDP, Specifically, where will you cut?"
There are three major areas I have focused on for reduction in spending. These are in many cases reductions which become larger and larger over time. So first there are programs I would eliminate. Obamacare being one of them but also various subsidy programs -- the Amtrak subsidy, the PBS subsidy, the subsidy for the National Endowment for the Arts, the National Endowment for the Humanities. Some of these things, like those endowment efforts and PBS I very much appreciate and like what they do in many cases, but I just think they have to strand on their own rather than receiving money borrowed from other countries, as our government does on their behalf.
Second there are major federal programs which I believe should be returned to the states where they can be run more efficiently with less fraud and abuse. So for example Medicaid, which is the health care program for the poor. Housing vouchers, food stamps. I think these programs can be taken over by the states, grown at inflation or in the case of Medicaid, inflation plus 1%, and in doing so we will save approximately $100 billion a year within four years.
Then there are the remaining programs that exist which will remain at the federal government level. I will reduce the headcount in those programs by approximately 10% through attrition. And I would like to tie the compensation and benefits for federal workers to those which exist in the private sector. I don't think government workers should be paid a better deal than the taxpayers who are paying for them. That saves about $47 billion a year by the way.
Romney has previously said he will eliminate Planned Parenthood, and significantly reduce foreign aid, although, as Suzy Khimm notes below the squiggle, these cuts do not even make a dent in the $9.6 trillion in cuts Romney's budget need in non-defense cuts to meet his own goals.
While Romney acknowledges significant cost reductions and efficiencies can be found in the military budget, he says we need to redeploy these savings to add 100,000 active duty personnel, and replace equipment.
Suzy Khimm has posted an analysis on Erza Kleins blog, suggesting that It’s not clear what Romney would actually cut to make his budget add up to.
The problem is, eliminating federal supports for Amtrak and cultural programs would barely save any money. Repealing Obamacare would actually add to the deficit, given the net savings that are in the health-care law. And the savings that Romney projects for tying federal compensation to private-sector levels seem to be overblown, according to recent figures from the Congressional Budget Office. Overall, the cuts that Romney specifies would just be a drop in the bucket, and they still don’t explain how his budget would produce the savings that he promises.
Here’s how it breaks down: In fiscal year 2012, the federal government spent $1.42 billion on Amtrak, $444 million on PBS, and $146 million on the National Endowment for the Arts and Humanities. Getting rid of all these subsidies would have saved the government about $2 billion this year — chump change relative to the scale of cuts that Romney wants.
Meanwhile, repealing Obamacare would actually increase the deficit in 2013 by $34 billion, according to the Congressional Budget Office, as the law’s net savings exceeds its expenditures. By 2022, full repeal of the health-care law would add $109 billion to the deficit.
Finally, Romney’s proposal to tie federal compensation and benefits to private-sector levels would likely produce less than the $47 billion yearly savings that he estimates. Romney is correct that compensation for federal employees is higher than private-sector workers with comparable responsibilities and education: Federal wages are 2 percent higher on average, federal benefits are 48 percent more, and overall compensation (wages and benefits) is 16 percent more, the CBO said in a January 2012 study.
Khimm also points out the entire $211 in spending reductions Romney has proposed would be around 2% of the $9.6 trillion in non-defense cuts that Romney's budget requires.
So Mitt Romney and Paul Ryan have a lot more explaining to do if they want their proposed draconian budget proposal to be mathematically plausible, not even to start the debate on its desirability.