uspirg-ntu report on deficit reduction

8/13/2019 USPIRG-NTU Report on Deficit Reduction

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Acknowledgements

e authors thank the sta ff of Senator Tom Coburn, Megan Debates from the o ffi ce of Rep. PeterDeFazio, Alex Cohen from the Center for Public Integrity, and the authors of the Green Scissors2012 report for their thoughtful and informed assistance. ank you also to Michael Russo andSteve Chang of U.S. PIRG for their editorial and research support.

e authors bear responsibility for any factual errors. e recommendations are those of U.S. PIRGand National Taxpayers Union. e views expressed in this report are those of authors and do notnecessarily re ect the views of our funders or those who provided review.

Copyright 2013 U.S. PIRG and NTU

National Taxpayers UnionNational Taxpayers Union (NTU) is Americas independent, non-partisan advocate for overbur-dened taxpayers. NTU mobilizes elected o ffi cials and the general public on behalf of tax relief andreform, lower and less wasteful spending, individual liberty, and free enterprise. Founded in 1969,we work at all levels for the day when every taxpaying citizens right to a limited government isamong our nations highest democratic principles.

For more information about NTU or for additional copies of this report, please visit www.ntu.org

U.S. Public Interest Research Group (U.S. PIRG)U.S. PIRG is an advocate for the public interest. When consumers are cheated, or the voices of

ordinary citizens are drowned out by special interests lobbyists, U.S. PIRG speaks up and takes ac-tion. We uncover threats to public health and well-being and ght to end them, using time-testedtools of investigative research, media exposs, grassroots organizing, advocacy, and litigation. U.S.PIRGs mission is to deliver persistent, result-oriented public interest activism that protects ourhealth, encourages a fair, sustainable economy, and fosters responsive, democratic government.

For more information about U.S. PIRG or for additional copies of this report, please visit www.uspirg.org

Cover Photo: mikdam/Bigstock, Architect of the Capitol Report Design: Alec Meltzer


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Executive Summary

To break through the ideological divide thathas dominated Washington in recent years andoff er a pathway to address the nations scalproblems, National Taxpayers Union and U.S.PIRG joined together to identify mutually ac-ceptable de cit reduction measures. is reportdocuments our recommendations.

What follows is a general summary of recom-mendations that fall into four categories:

$151.6 billion in savings from ending waste-ful subsidies;

$197.2 billion from addressing outdated orineff ective military programs;

$42.3 billion from improving program ex-ecution and government operations; and

$131.6 billion from reforms to entitlementprograms.

Each speci c recommendation includes anestimate of potential savings over the next 10years, and a reference to the source from whichthe estimate was drawn.

Introduction

As 2013 enters its nal stretch, our nation fac-es enormous scal challenges. A er the recentpartial government shutdownthe rst in 18yearsCongress established a Budget Confer-ence Committee to hash out a long-term bud-get deal and put Americas nances back ontrack.

As a result, National Taxpayers Union (NTU)and U.S. Public Interest Research Group (U.S.PIRG) have joined together to propose to theBudget Conference Committee and to Con-gress a list of 65 recommendations to reformour future spending commitments. If enactedin their entirety, these changes would save tax-payers more than half a trillion dollars over thecoming decade.

While our organizations have typically dif-fered about the proper regulatory role ofgovernment and a host of tax policies, we are unit-ed in the belief that we spend far too much moneyon ineff ective programs that do not serve the bestinterests of the American people. is joint proj-ect is an attempt at identifying the low hangingfruit of waste and inefficiency in the federal bud-get, in hopes of transcending some of the ideolog-ical and partisan bickering that has helped to cre-ate the scal mess we see today. In a similar reportsubmitted in 2010, we outlined recommendationsfor the Presidents National Commission on Fis-cal Responsibility. When the committee chairsand their majority announced their decisions, 20of the 30 U.S. PIRG-NTU recommendations hadbeen adopted.


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Ending Wasteful SubsidiesTotal Savings of up to $151.6 billion

Every year, the federal government hands out billions of dollars in subsidies for a wide variety ofactivities, o en best described as commercial in nature. ough some of these programs may bewell-intentioned e ff orts to provide targeted support to businesses or individuals, in practice theyare a poor use of scarce taxpayer dollars and o en fail to achieve their stated objectives. is sec-tion recommends spending reductions that focus primarily on corporate welfare programs, dis-tortionary agricultural supports, and funding for research that could be done by the private sectormore effi ciently. If Congress were to enact all 19 recommendations, it would save taxpayers $151.6billion over the next decade.

SavingsMechanism Explanation

Savings($ in millions) Source

Link for AdditionalInformation

$151.6 Billion in Savings from Elimination of Wasteful Subsidies to Agribusiness and Large Corporations

Eliminate CropInsurance Program

This program directly subsidizesinsurance premiums foragribusinesses on coveragethey would purchase on theirown, with the most protablefarm operations benetingdisproportionately. Furthermore,it distorts the insurance marketand market for commodity cropsby encouraging overplanting andis partially duplicative as otherprograms provide more rationalinsurance for farmers.

$84,107CBO May

2013Baseline

http://www.cbo.gov/sites/default/les/cboles/attachments/44202_USDAMandator%20FarmPrograms.pdf

OR

Reduce CropInsurance Subsidies1

Taxpayers have subsidized anincreasing share of crop insurancepremiums. Congress could chooseto roll them back closer to thelevel they were at before theyear 2000. This scenario wouldreduce the subsidy from above 60percent to 40 percent.

$22,100 CBO BudgetOptions

http://www.cbo.gov/sites/default/les/cboles/attachments/44715-OptionsForReducingDecit-2_1.pdf

Limit AdministrativeExpenses and ReturnRates for CropInsurance2

Companies offering productsthrough the crop insuranceprogram should have loweroverhead due to cheaperpremiums, while their present

rate of return from the federalprogram has been higher thanwhat other private companieshave experienced.


http://www.cbo.gov/sites/default/les/cboles/attachments/44715-

OptionsForReducingDecit-2_1.pdf


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Eliminate DirectPayments forCommodity Crops

Direct payment programs for theten largest commodity crops wereintended as temporary measuresto ease the transition to a farming

system less reliant upon federalsubsidies. They have since becomea xture despite being identiedas wasteful by watchdog groupson the left and right. They alsodistort the agriculture market byfavoring certain crops.

$45,383CBO May

2013Baseline


Cancel FossilEnergy Research,Development andDemonstrationSpending3

These programs provide

federal grants for research anddevelopment that should beconducted with private dollars.



Cancel Nuclear

Energy Research,Development andDemonstrationSpending4

$4,700 CBO BudgetOptionshttp://www.cbo.gov/sites/default/les/cboles/attachments/44715-OptionsForReducingDecit-2_1.pdf

Cancel Biologicaland EnvironmentalResearch - BiologicalSystems Science5

$3,025 Departmentof Energy

http://science.energy.gov/~/media/budget/pdf/sc-budget-request-to-congress/fy-2014/Cong_Budget_2014_Biological_Environmental.pdf

Halt Mixed Oxide- Fissile Materials

Dispositions -Construction6

The National Nuclear SecurityAdministration is funding theconstruction of a facility to blendsurplus weapon-grade plutoniumwith depleted uranium oxide forproduction of mixed oxide fuelto use in existing nuclear powerplants. The nuclear industry,not taxpayers, should fund theproduction of fuel suitable forpower production.

$602 Department

of Energy

http://energy.gov/sites/prod/

les/2013/04/f0/Volume1.pdf

Restructure thePower MarketingAdministration toCharge Market-Based

Rates

The Western Area PowerAdministration, SouthwesternPower Administration,and Southeastern PowerAdministration provide power(amounting to about 1 percent ofthe nations electricity) at below-market rates, leading to marketdistortions and encouraginggreater usage. Requiring thePower Marketing Administrationsto charge market rates towholesale buyers would saveapproximately $2 billion.

$1,920 CBO BudgetOptionshttp://www.cbo.gov/ftpdocs/102xx/doc10294/08-06-BudgetOptions.pdf


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Eliminate HollingsManufacturingExtension Program7

The Hollings ManufacturingExtension Program, whichprovides consulting services tomanufacturers, spends hundredsof millions of dollars per yearsubsidizing large and protablebusinesses.

$1,349 Department

of Commerce

http://osec.doc.gov/bmi/Budget/

FY14BIB/ENTIREBIB.pdf

Reduce fundingfor EconomicDevelopmentAdministration8

The Economic DevelopmentAdministration is supposed to aidneedy communities with grantsfor economic revitalization, butthe program has been fraughtwith inefciencies for years andhas been a source for manywasteful Congressional earmarks.

$1,000Center forAmericanProgress

http://www.americanprogress.org/issues/2010/09/pdf/athousandcuts.pdf

Eliminate FeedstockFlexibility Program

The Feedstock Flexibility Programis one of a series of price supports

and trade restrictions thatconspire to raise the domesticprice of sugar higher than thatfaced by the rest of the world.The program mandates that thefederal government purchasesurplus sugar and sell it at a lossto biofuels producers to makeethanol.

$188CBO May

2013Baseline


Eliminate MarketingLoan AssistanceProgram

Through a complicatedmechanism, the Marketing LoanAssistance Program providescash payments to agribusinesseswhen crop prices drop below a

government-guaranteed oor. Thisis little more than an elaboratesubsidy for agribusinesses.

$990CBO May

2013Baseline


Eliminate OverseasPrivate InvestmentCorporation (OPIC)

These programs provide fundingfor various activities to promotetrade and exports, such as payingfor private advertising abroad.Though well-intended, theseprograms often fund protablecompanies or their tradeassociations. Taxpayers should notbe bearing the cost of their exportpromotions.

$421 CBO BudgetOptionshttp://www.cbo.gov/ftpdocs/102xx/doc10294/08-06-BudgetOptions.pdf

Eliminate MarketAccess Program $2,000

CBO May2013

Baseline


Eliminate ForeignMarket DevelopmentProgram

$350CBO May

2013Baseline


Eliminate U.S. TradeDevelopment Agency9 $475 USTDAhttp://www.ustda.gov/otherinfo/FY2014_CongressionalBudgetJustication.pdf

Eliminate theInternational TradeAdministrationsTrade PromotionActivities


http://www.cbo.gov/sites/default/les/cboles/attachments/44715-OptionsForReducingDecit.pdf


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Eliminate BiomassCrop AssistanceProgram

This program provides grantsof taxpayer money for researchand development that should beconducted with private dollars.

$15CBO May

2013Baseline


Eliminate Ultra-Deepwater NaturalGas and PetroleumResearch

The ultra-deepwater naturalgas and petroleum researchprogram seeks to expand suppliesof petroleum and natural gasproducts. Though it is fundedthrough existing oil and gasrevenues, this kind of appliedresearch can be conducted moreefciently by private industry, notthrough a federal program.

$50 OMBhttp://www.whitehouse.gov/sites/default/les/omb/budget/fy2014/assets/budget.pdf

Eliminate BiodieselFuel Education

Program

This program provides federalgrants for research anddevelopment that should beconducted with private dollars.

$10

AgricultureReform, Foodand Jobs Act

of 2013

http://www.gpo.gov/fdsys/pkg/PLAW-107publ171/pdf/PLAW-107publ171.pdf and http://www.ag.senate.gov/

download/?id=60b7860d-a8dc-4e8b-91e0-d61356974817


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Savings

MechanismExplanation Savings

($ in millions)Source Link for Additional

Information$197.2 Billion in Savings from Ending Low-Priority or Unnecessary Military Programs

Cancel F-35 JointStrike Fighter andreplace with F-16sand F/A-18s

According to the SustainableDefense Task Force, the F-35Lightning may represent all thatis wrong with our acquisitionprocess. Beyond the costgrowth, it has performance andreliability issues and wouldprovide a capability that is notwarranted considering emergingthreats. This option, derivedfrom the Congressional BudgetOfce, would eliminate the F-35and replace it with sufcientlyadvanced planes, the F-16 andF/A-18.


http://www.cbo.gov/sites/default/les/cboles/attachments/44715-OptionsForReducingDecit-2_1.pdf and http://www.cbo.gov/sites/default/les/cboles/ftpdocs/120xx/doc12085/03-10-reducingthedecit.pdf

OR

Replace F-35B andF-35C Models withF/A-18 E/F10

An alternative option wouldallow the Air Forces F-35 versionto proceed, while canceling theNavy and Marine Corps variantsin favor of a battle-proven, lower-cost aircraft.


http://www.cbo.gov/sites/default/les/cboles/attachments/44715-OptionsForReducingDecit-2_1.pdf and http://www.cbo.gov/sites/default/les/cboles/ftpdocs/120xx/doc12085/03-10-reducingthedecit.pdf

Reduce Spending onMilitary Bands11

This bill would reduce spending,

not cut it entirely. With 140bands and over 5,000 full-timemusicians, reducing annualexpenditures by less than halfshould be feasible, especiallywhen other Pentagon programsshould take priority.

$1,880 Rep. BettyMcCollumhttp://thomas.loc.gov/cgi-bin/query/z?r112:E17JY2-0027:/

Addressing Outdated or Ineffective Military ProgramsTotal Savings of up to $197.2 billion

While the need for a strong national defense is clear, it is equally clear that the Department ofDefense (DoD) has a number of programs that do not advance this goal and instead waste vitalresources. As defense spending comprises the largest portion of the discretionary budget andabout 20 percent of the total federal budget, it stands to reason that prudently examining DoDsfunding and priorities could generate signi cant savings for taxpayers. Due to the delicate natureof decisions relating to national security, we have relied on authoritative recommendations from of- cials and independent experts from across the political spectrum to guide this part of our report.Following these 18 recommendations to carefully reform or eliminate certain weapons programsand make other procedural improvements could save taxpayers as much as $197.2 billion over thenext decade.


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End Global HawkDrone Production12

The Army, Pentagon, and WhiteHouse have said that the Armydoesnt need additional drones ofthis variant.


Cancel CruiserModernizationProgram13

Six Ticonderoga class cruisersare being retired early, and thisprogram is no longer necessary.


Restructure NextGeneration AegisMissile

This missile defense weapon hasbeen widely criticized from ascal (GAO) and technological(National Research Council of theNational Academy of Sciences)viewpoint; current versions ofAegis offer greater promise ofeffectiveness and cost stability.

$2,100 Departmentof Defense

http://comptroller.defense.gov/defbudget/fy2014/FY2014_Budget_Request_Overview_Book.pdf

Eliminate Duplicative

IT Investments

Between FY 2007 and FY 2012,government auditors identied

31 DoD IT initiatives that could bewasting money due to overlap.

$1,200 GAO http://www.gao.gov/

assets/660/652133.pdf

Terminate FutureSpace BasedSurveillance FollowOn Satellite

The modernization of the Space-Based Space Surveillance networkhas been beset by delays and costoverruns, often related to satellitehardware. DoD has recommendedthis cost-saving step in the FY2014 budget.

$500 Departmentof Defense


End Orders for

Obsolete Spare Partsfor Army, Navy, AirForce, and DefenseLogistics Agency14

Defense inventory managementhas been on GAOs High Risklist since 1990; the servicesshould accelerate improvements

in avoiding excess inventory andobsolete spare parts costs. InFY 2010, DoD achieved roughlyan 8 percent cost avoidance byreducing total excess inventory;the services should aim for 12percent.

$3,889 GAO http://www.gao.gov/assets/660/652133.pdfand http://www.gao.gov/products/GAO-12-493

Consolidate ForeignLanguage Contracts,Uniform Designs, andSupport Services atJoint Bases15

In 2013 GAO identied severalsavings opportunities infragmented DoD programs thatfail to coordinate acquisition orbasing among the services.

$2,232 GAO http://www.gao.gov/assets/660/653604.pdf

Replace someMilitary Personnelwith CivilianEmployees

The workforce of the Departmentof Defense contains thousandsof military members doingcommercial jobs that couldbe performed by civilians. These jobs do not involve functions thatraise concerns about personalsafety or national security. Thecost of employing a civilian ison average, less than that for amilitary service member.


http://www.cbo.gov/sites/default/les/cboles/attachments/44715-OptionsForReducingDecit.pdf


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Use Less ExpensiveBoosters for Air ForceEvolved ExpendableLaunch Vehicle (EELV)

EELV has been widely criticizedfor cost-growth problems; sinceMarch 2012 the program hasreported two unit-cost breachesof limits established under theNunn-McCurdy law. DoD isproposing modest near-termchanges to the program.

$1,100Departmentof Defense

http://comptroller.defense.gov/

defbudget/fy2014/FY2014_Budget_Request_Overview_Book.pdf

Reduce DOD Printing/Reproduction Costsby 10%16

Numerous plans have beenproposed or launched byCongress or the Administrationto reduce printing costs acrossmany agencies. Although wepropose a 10% cut, there hasbeen bipartisan legislationto cut printing costs by up to30%: http://beta.congress.gov/bill/112th/senate-bill/1021/text.

$691 OMBhttp://www.whitehouse.gov/sites/default/les/omb/budget/fy2014/assets/mil.pdf

ConsolidateManagement ofRetail Stores onBases

Commissaries and exchangesare administered under afragmented system; unifyingtheir management under asingle system would be morecost-effective. A cash allowancewould help to offset any higherprices resulting from operatingthe system without appropriatedsubsidies.


http://www.cbo.gov/sites/default/les/cboles/ftpdocs/120xx/doc12085/03-10-reducingthedecit.pdf

Reduce Army, AirForce, and NavyConstruction Projects

or Requirements

DoDs 2014 budget requestis proposing to save taxpayerdollars in future years by forgoing

numerous construction initiatives.

$4,100 Departmentof Defense


Reduce Spending forOther Procurement17

The Other Procurementcategory includes spending onitems like night vision gogglesand radios. According to thePresidents National Commissionon Fiscal Responsibility andReform, the military spent $400billion more than their basebudget for these items. Reducingand freezing this spending wouldsave over $50 billion while stillproviding a 50 percent increaseover Other Procurement levelsin 2000.

$85,000

Simpson-Bowles FiscalCommission

MajorityReport

http://www.scalcommission.gov/sites/scalcommission.gov/les/documents/Illustrative_List_11.10.2010.pdf

Delay Refurbishmentof Abrams Tank

The Army has said it doesntneed additional tank upgrades;this refurbishment is beingdone primarily to preserve theindustrial base.

$436

H.R. 804,Rep.

Coffman;Testimony ofChief of Staffof Army, Gen.

RaymondOdierno

http://www.armed-services.senate.gov/imo/media/doc/Odierno_11-07-131.pdf;and http://www.jobs-not-wars.org/senator-armys-unrequested-abrams-tank-funding-will-be-addressed/


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Cancel ArmysGround CombatVehicle Program

The Ground Combat Vehiclehas been deemed too large andheavy to operate effectively incongested areas. The BradleyInfantry Fighting Vehiclesare smaller and lighter, andproceeding with upgrades to thisfamily of vehicles would produceadditional net savings of $16billion between 2024-2036.

$11,200 CBO BudgetOptionshttp://www.cbo.gov/sites/default/les/cboles/attachments/44715-OptionsForReducingDecit-2_1.pdf

Replace V-22 Ospreywith MH-60 and CH-53 Helicopters

The V-22 Osprey has sufferedfrom innumerable schedule,management, cost, andproduction issues. Reducingfuture purchases and replacingthe functionality with additionalMH-60 helicopters would savetaxpayers $17 billion.

$17,100

Taxpayersfor Common

Sense/POGO &

SustainableDefense Task

Force

http://www.taxpayer.net/images/uploads/downloads/Spending_Even_Less_Spending_Even_Smarter_5-8-12_FINAL.pdf


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$42.3 Billion in Savings from Improvements to Program Execution and Government Operations

Consolidate DataCenters and EmbraceCloud Computing18

The federal government maintainsthousands of data centers, manyof which are unnecessary orcould be streamlined throughtechnologies such as cloudcomputing. The Administration isproposing a modest step for FY2014 by consolidating about 100such sites.


Reduce Backlog ofBuildings Ownedby the FederalGovernment thatare Not Utilized or

Under-utilized19

According to the Ofce ofManagement and Budget, thefederal government owns roughly14,000 buildings and structurescurrently designated as excessor underutilized. While there ispotential for far greater savingsfrom orderly disposition of theseassets, the Civilian PropertyRealignment Board would savetaxpayers $15 billion over the rstthree years.

$14,800 OMB; CBO

http://www.whitehouse.gov/blog/2011/03/02/cutting-costs-getting-rid-government-buildings-we-dont-need%20and http://www.cbo.gov/sites/default/les/cboles/attachments/

hr1734substitute.pdf

Eliminate Grants toLarge and Medium-Sized Airports

Federal grants currently substitutefor funds that larger airportscould raise from private sources.By eliminating grants to largerairports, this option would focusfederal spending on airports thatappear to have fewest alternativesources of funding.



Require DoD/VA to Jointly BuyPrescription Drugs20

Pursuant to a recommendation

from the GovernmentAccountability Ofce, theDepartment of Defense andVeterans Administration began jointly contracting to purchaseprescription drugs in order toachieve cost savings. That practicehas rapidly declined in recentyears, but increased joint effortscould yield substantial savings.

$4,130 GAO http://www.gao.gov/new.items/d11318sp.pdf

Improving Program Execution and Government OperationsTotal Savings of up to $42.3 billion

Payment errors, duplicative programs, and ine fficient processes combine to squander tens of bil-lions of taxpayer dollars every year. Taking a comprehensive approach to streamlining the opera-tion of these myriad functions could not only spare taxpayers additional expense, but also improvethe quality of services they receive. If enacted in their entirety, these 15 recommendations couldsave as much as $42.3 billion over the next decade.


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Terminate Harmfuland/or Wasteful ArmyCorps of EngineersProjects

The 2012 Green Scissors Reportidenties eight specic Corpsprojects that are not onlyexpensive boondoggles, but areharmful to the environment. Forinstance, taxpayers shell out$700 million for federal beachreplenishment projects thatencourage development in oodprone areas. These projectsshould be eliminated.

$5,896Green

ScissorsReport

http://greenscissors.com/content/uploads/2012/06/GS2012-v7E.pdf

Eliminate CatshInspection by theFood Safety andInspection Service

This catsh inspection programis duplicating work already beingconducted by FDA and by theNational Marine Fisheries Service.Eliminating it would allow fora more efcient allocation ofresources.

$140 GAO http://www.gao.gov/assets/660/653604.pdf

Unify MilitaryMedical System

GAO notes that the armedservices health system has nocentral command authority orsingle entity accountable forminimizing costs and achievingefciencies. Unication couldreduce overlap and waste withoutnegatively impacting quality ofcare. Many alternatives have beenexplored in this area.

$4,600 GAO http://www.gao.gov/new.items/d11318sp.pdf

Eliminate EssentialAir Service Program

Created in 1978 as a temporarytransition to a free-marketaviation system, Essential Air

Service persists to this day andprovides subsidies for air servicesin rural areas. The program fundsservice at dozens of facilities thatserve fewer than 10 passengersper day or are within easy drivingdistance of major airports.


http://www.cbo.gov/sites/default/les/cboles/ftpdocs/102xx/doc10294/08-06-budgetoptions.pdf

Eliminate CertainPayments inAbandoned MineRestoration Program

The Abandoned Mine RestorationProgram makes unrestrictedgrants to states and tribes thathave already been certied ascompleting restoration efforts. Asa result, funding has been usedfor unrelated projects.


End ExcessiveDouble-Dippingfor ReemployedAnnuitants

Agencies have dramaticallyincreased the practice of seekingwaivers to rehire retirees whothen draw both a salary andretirement benets.

$611

OPMdiscussions

with SenatorCoburn -Back in

Black report

All data calculated by Coburn staff -http://coburn.senate.gov/public//index.cfm?a=Files.Serve&File_id=c6590d01-017a-47b0-a15c-1336220ea7bf


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Reforming the Operation of Entitlement ProgramsTotal Savings of up to $131.6 billion

Medicare, Medicaid, and Social Security combined comprise roughly 40 percent of the federal bud-get and, as a result, their budgets also deserve close scrutiny. Our recommendations aim to providesmart reforms that lower costs while improving quality and e ff ectiveness of care. Additionally, giv-ing program administrators greater access to technology and other tools to root out fraud and im-proper payments could yield tremendous savings and lead to more e ffi cient programs for patients.

e nine recommendations in the section, if taken together, could save taxpayers as much as $131.6billion over the next decade.




$131.6 Billion in Savings from Reforms to Major Entitlement Programs

Better Align MedicarePayments to TeachingHospitals with ActualCosts

Hospitals with teaching programs

receive additional funding for costsassociated with graduate medicaleducation. However, this funding farexceeds the actual cost of providingsuch education. Reforming andreducing the payments would allowfor substantial savings.

$10,980 OMBhttp://www.whitehouse.gov/sites/default/les/omb/budget/fy2014/assets/budget.pdf

Reduce MedicarePayment Rates Acrossthe Board in High-Spending Areas

Per-beneciary costs areinordinately high in some areas ofthe country, even after accountingfor legitimate differences in thecost for things like labor and ofcespace. Reducing these excess costswould yield nearly $50 billion in

savings over the next ten years.


http://www.cbo.gov/sites/default/les/cboles/ftpdocs/120xx/doc12085/03-10-reducingthedecit.pdf

Reduce Fraud,Waste, and Abusein Medicare andMedicaid

Estimates for the total amountof waste, fraud, and abuse inMedicare and Medicaid vary widely,but the Presidents FY2014 budgetproposes policies that would save$4.1 billion over the next decade.

$4,100 OMBhttp://www.whitehouse.gov/sites/default/les/omb/budget/fy2014/assets/budget.pdf

Clarify RiskEvaluation andMitigation Strategies(REMS) Policy

In order to develop a genericdrug, a drug maker must conducttests using samples of the brandname drug. But in recent years,some brand name samples havenot been supplied to generic drugmakers for use in these tests.The justication has been theREMS safety regulations, whichare intended to prevent misuseof powerful medications (such asnarcotics) by limiting their saleand distribution. This policy wouldclarify REMS and give patients inMedicare and Medicaid quickeraccess to generic parts.

$753 CBO http://www.cbo.gov/sites/default/les/cboles/attachments/S2516.pdf


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Prevent ImproperPayments for Non-Covered ChiropracticServices23

The HHS Ofce of the InspectorGeneral found Medicareinappropriately paid $178 millionfor chiropractic claims in 2006,representing 47 percent of claimsmeeting their review criteria.

$1,780

Departmentof Health

and HumanServices

http://oig.hhs.gov/publications/docs/compendium/2011/CMP-March2011-

Final.pdf

Remove Ceilingfor Collection ofOverpaymentsfrom SupplementalSecurity IncomeProgram

When the Social SecurityAdministration mistakenly overpaysa recipient of Supplemental SecurityIncome, they are limited in theirability to recoup those erroneoustransfers. Removing the ceiling oncollection of these overpaymentswould aid in efforts to save moneyand streamline the program.


http://www.cbo.gov/sites/default/les/cboles/ftpdocs/102xx/doc10294/08-06-budgetoptions.pdf

Reform DurableMedical EquipmentPayments

CBO and MedPAC have identiedways of reducing overpayments

for durable medical equipmentin order to lower costs whilepreserving access. This wouldinclude expanding competitivebidding and limiting Medicaidreimbursement based on Medicarerates, while providing a strongexemption process and excludingcustomized medical equipment.

$10,700 CBO andMedPAC

http://cbo.gov/sites/default/les/cboles/attachments/44247_APB_HealthCarePrograms.pdfand http://medpac.gov/documents/10142011_MedPAC_SGR_letter.pdf

Align Medicare LabPayments with thePrivate Sector

As part of his 2014 budget, thePresident proposed reducingMedicares laboratory servicescosts by lowering fees forlab tests, bringing them into

alignment with lower prices paidby the private sector. In addition,the budget proposed promotingelectronic reporting of lab resultsto cut needless paperwork costs.

$7,600 CBOhttp://cbo.gov/sites/default/les/cboles/attachments/44247_APB_HealthCarePrograms.pdf

Bundle MedicaresPayments to HealthCare Providers forinpatient care and90 days of postacutecare.

Adopt bundled payments inMedicare, so that a single paymentis made to providers for individualepisodes (including inpatient careand 90 days of postacute care).This will help create incentives formore efcient care, and reducemedical errors. This proposal couldalso be adjusted for circumstancessurrounding specic conditions ortreatments.



OR

Bundle MedicaresPayments to HealthCare Providers forinpatient care only.24

Adopt bundled payments inMedicare, so that a singlepayment is made to providersfor individual episodes (includinginpatient care only).



Total $522,682


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Notes

1 is is an alternative to eliminating the entire crop insur-

ance program.2 is is an alternative to eliminating the entire crop insur-

ance program.

3 We multiplied the outlay savings estimates for 2017-2023by 4/3 in order to model the di ff erence between a 75% cut(stated in document) and 100% cut. We based these calcu-lations by applying the 2017 estimates to 2015 and 2016 toeliminate the 3-year phase-in CBO recommends.

4 We multiplied the outlay savings estimates for 2017-2023by 4/3 in order to model the di ff erence between a 75% cut(stated in document) and 100% cut. We based these calcu-

lations by applying the 2017 estimates to 2015 and 2016 toeliminate the 3-year phase-in CBO recommends.

5 is is the FY 2012 x 10 for a 10-year estimate.

6 On PDF Page 590, we added FY 2013 projections of TotalProject Costs (TPC) from of FY 2014, 2015, and 2016.

7 Used FY 2013 annualized number and x 10 years.

8 is is one-year estimate multiplied by 10 for a 10-yearprojection.

9 Used FY 2013 appropriations number x 10.

10 is is an alternative to canceling the F-35 Joint StrikeFighter. e B/C replacement option would save about44.6 percent as much as the A/B/C replacement optionaccording to the 2011 report. Using this percentage andmultiplying by $37 billion for the 2013 A/B/C replacement gure, the result rounds to $16.5 billion.

11 is is one-year estimate multiplied by 10 for a 10-yearestimate.

12 is is a one-year estimate, as provided by the Presidentsbudget.

13 is is a one-year estimate, as provided by the Presidentsbudget.

14 In 2010, the DOD reduced the number of spare parts by8%. To extrapolate for 2011, this is .08 x the 2011 gure of$9.723B ($9.2B+$523M in excess inventory) = $778M. Fora 12% savings, we calculated .12 x 9.723B = $1,167M. Wethen subtracted $778M from $1,167M to come up withtotal savings. We multiplied the result, $389M, by 10 to getthe 10-year estimate.

15 Authors assumed a 10% savings from foreign language

contract consolidation ($1B) + $82M from uniforms, andone-half of $2.3B in 20-year savings from consolidating26 facilities.

16 Authors calculations from FY 2014 budget request; totalsdo not include spending from Defense Automated Print-ing Service. 10% of $691M (total FY 2014 budget request)x 10, to get the 10-year savings = $691M.

17 is option reduces the FY 2015 funding for other procure-ment from $38.6B to $30.1B, which is a savings of $8.5B.To determine a 10-year estimate, we multiplied by 10.

18 is is a one-year estimate, as provided by the Presidents

budget.19 To nd the cost of the bill, we added estimated outlays of

bill over 10-year period = 3+(13x9) = $120 million. Wesubtracted the cost associated with implementing the bill($120 M) from the savings of the bill ($15 billion). $15B-$120M = $14,800M.

20 On PDF page 88, we calculated cost savings based on the2009 baseline. VA estimated $666 million in cost avoid-ance in FY 2005. $214 million in joint spending in 2009 is38% of the $550 million in joint spending in 2005. 38% of$666 (potential savings) = $253 = savings. $666 in poten-tial savings - $253 in savings (in potential realized savings)

= $413.21 Used FY 2013 annualized number x 10.

22 Used FY 2013 CR number x 10 years.

23 is is one-year estimate multiplied by 10 for a 10-yearestimate.

24 is is an alternative to Bundling Medicares Paymentsto Health Care Providers for both Inpatient Care and 90Days of Postacute Care.

uspirg-ntu report on deficit reduction

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