Sen. Mike Enzi, R-Wyo., will be the new Senate Budget Committee Chairman, after Sen. Jeff Sessions, R-Ala., announced Wednesday he would end his own bid for the chairmanship.
Enzi is well-known for introducing the Marketplace Fairness Act, which would enable states to collect sales tax from online retailers. Enzi also introduced legislation to permanently repeal the death tax and supports reforming Social Security to fix its finances.
As he takes the gavel of the Senate Budget Committee, Enzi will have unique power to influence spending legislation as Congress looks to work with President Obama on fixing the budget deficit. Here are six reforms Enzi could push to trim the federal government.
1. Medicaid
In 2013, the Congressional Budget Office estimated that capping federal spending on Medicaid could save up to $606 billion over 10 years. Limiting increases in per-enrollee spending to the rate of inflation would achieve the highest savings. This saves more taxpayer dollars than an overall spending cap, while also ensuring that enrollees get the care they need, even if the number of enrollees grows. This could be tied to other free-market healthcare reforms that ensure the cost per enrollee does not rise significantly over time. Under current law, states determine eligibility and simply get more revenue from the federal government as enrollee numbers and costs swell.
2. Welfare
Block granting a few major welfare programs to the states could save nearly $400 billion over 10 years. Annual funding of these programs could be set at 2007 levels, the last year prior to the increased participation during the Great Recession, plus inflation. The affected programs would be the Supplemental Nutrition Assistance Program (formerly known as food stamps), Supplemental Security Income, and child nutrition programs. Less funding won’t mean worse service — state governments can more effectively administer all of these programs, as long as the federal government gives them the resources to do so.
3. Social Security
The Social Security program is a promise that elderly Americans won’t be left in poverty. Without realistic reform, the program will eventually run out of money. Reducing Social Security benefits for future beneficiaries by 15 percent could save $204 billion over the next 10 years, and even more in the coming decades. That figure assumes the reduction is not fully phased in until 2020. If this is too soon to be politically feasible, the phase-in period could be extended. Reform is necessary now so that all beneficiaries are not subjected to arbitrary cuts when the Social Security Trust Fund is completely depleted in 2034, and the program begins automatically limiting benefits to what it takes in through payroll taxes.
4. Inflation
Many federal benefit payments get adjusted for increases in the cost-of-living every year. Adjustments for inflation are currently made according to the consumer price index. Even though CPI is the traditional measurement of inflation, it has flaws that the chained CPI does not. Calculating cost-of-living adjustments according to chained CPI would save taxpayers $182 billion over 10 years. This is a reform the Obama administration has floated this idea in the past.
5. International Affairs Programs
Reducing funding for International Affairs Programs by 25 percent would save taxpayers $131 billion over ten years. As the CBO wrote on this proposal in 2013, “Private organizations already provide significant resources for various international initiatives, such as HIV/AIDS research and financial development assistance.” Why spend taxpayer money on something that private organizations can do better? The desired spending cuts could be achieved by merging some government programs with private organizations. Eliminating a program and giving a portion of its funding to a private organization with a similar mission is also an option.
6. Davis-Bacon Act
Repeal of the Davis-Bacon Act would save taxpayers $11.7 billion over 10 years. The act is a relic of the Great Depression era, signed into law by Herbert Hoover in 1931. It requires that workers on most federally funded or federally assisted construction projects be paid what is known as a “prevailing wage.” Despite the small savings, repeal would be an important factor in lowering the cost of federally funded infrastructure in the long-term, creating much greater savings in the long run. Even if Congress repealed the act and chose to keep appropriations the same, the additional infrastructure projects would be more beneficial than the status quo.
These six options, some of which have drawbacks, all of have long-term benefits. Budget reform is essential for ensuring Americans have the health and retirement security the government has promised them, and it will also help get the economy back on track.
