Scott Brown’s deficit response

The Globe asked both US Senate candidates to answer three detailed questions on how to reduce the deficit. Below is the response from Scott Brown’s campaign.

Deficits exist because politicians are addicted to spending other people’s money.  Today’s deficits are exacerbated by a prolonged recession that has put millions of Americans out of work.  The single best way to reduce the deficit and debt is to get America’s economy back on track so people can go back to work and pay taxes on the money they earn.  You can’t create a pro-growth economy with anti-growth tax hikes, frightening levels of spending, and overregulation of job creators.  We should start by avoiding a massive tax increase in December, passing a serious Balanced Budget Amendment to the constitution, instituting a constitutional line item veto, and repealing the $2 trillion federal health care law.  What we should not do, especially while the economy is so fragile, is raise the burden on MA families just so Washington politicians can turn around and spend that much and more.

1)      Please cite five substantive things you would do to cut the budget deficit in a significant way. Please be as specific as possible. For example, if you are suggesting “cutting government waste,” please list the specific programs you would cut and the amount of savings that would generate. If you are suggesting closing tax loopholes, please list the actual loopholes, along with the estimated savings.

Senator Brown would immediately take a number of steps to address over-spending, waste, fraud and abuse in the federal budget. Those steps would include, but are not limited to:

1.      Repeal Obama healthcare law, which CBO has estimated at close to a $2 trillion entitlement  


Former CBO director Douglas Holtz-Eakin has estimated that the healthcare law will increase the deficit by at least $562 billion over ten years:



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The new law is a huge budget buster, as has been outlined in “The Fiscal Consequences of the Affordable Care Act” by Charles Blahous, Senior Research Fellow at the Mercatus Center at George Mason University and Public Trustee for Social Security and Medicare Trust Funds.


The Mercatus report finds that over the coming decade (2012-2021), the ACA is expected to increase net federal spending by more than $1.15 trillion, and to add more than $340 billion and as much as $530 billion to federal deficits over the same period, and increasing amounts thereafter.  The ACA relies upon substantial savings already required under previous law to maintain the solvency of the Medicare Hospital Insurance (HI) Trust Fund. These do not represent new net savings, available to be spent without widening the deficit, but substitutions for spending reductions that would have occurred by law in the absence of the ACA. These cost-savings provisions have the effect of extending and expanding Medicare’s future spending authority. The ACA also uses the same cost-savings to finance new health entitlement spending.  The ACA’s total new spending thus well exceeds its cost-savings provisions. This is not a mere matter of presentational “double-counting” but of evaluating the actual change in law upon the ACA’s enactment. So by law, as distinct from prevailing scoring conventions, the ACA has unambiguously worsened the federal government’s fiscal position.  Moreover, it is increasingly clear that several of the ACA’s provisions will not be enforced as currently specified.  Already, HHS has said that the CLASS ACT program—previously scored as saving $70-$86 billion over its first 10 years—will not, and cannot be implemented.  Similarly, Congress always fixes the SGR (“doc fix”), despite the bill’s contrary assumption.

2.      Freeze Federal Pay, Shrink the Federal Workforce, and Stop Unnecessary Contracting/bonuses/travel/advertising


While the rest of the country has been struggling, Washington DC has been booming, reaching the highest levels of per capita income in the country.  Freezing federal pay has been recommended by the President’s Fiscal Commission and would save approximately $15 Billion over five years.  Cutting the federal workforce by 10%, another recommendation of the President’s Fiscal Commission, would produce estimated savings of $13.2 Billion over five years. Reducing our reliance on government contractors, another recommendation of the President’s Fiscal Commission, would produce estimated savings of $18.4 Billion over five years. Reduce junkets and unnecessary travel, another recommendation of the President’s Fiscal Commission would save $4.2 billion over five years. Reduce advertising by the Federal Government by 60% saving approximately $5 billion over ten years. http://www.fas.org/sgp/crs/misc/R41681.pdf ; http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/TheMomentofTruth12_1_2010.pdf 

3.      Reduce wasteful agriculture subsidies

Senator Brown supports ending Direct Payments, Counter-Cyclical Payments (CCPs), the Average Crop Revenue Election (ACRE) Program, and the Supplemental Revenue Assistance Payments (SURE) Program, and sugar subsidies.  Ending these wasteful programs would save between $15 and $50 billion over ten years.

4.      Responsibly reduce defense spending

We know that we can make cost saving changes in defense, such as (1) reducing Army end strength to roughly 490,000 and Marine Corps end strength to roughly 182,000 within the five-year budget plan and (2) stopping wasteful defense contracting, such as terminating the unnecessary Medium Extended Air Defense System, which alone could save the government $800 million. 

Overall, reducing the size of US ground forces as the wars in Iraq and Afghanistan wind down will save $147 billion during 2011–2020.  As an example, the FY2013 defense budget request included a total of $613.9 billion in discretionary budget authority.  Senator Brown supports that requested amount, which is $31.8 billion less than was appropriated for DOD in FY2012.   


Senator Brown also supports the overall overhead savings Secretary Gates promised to assist with deficit reduction efforts.  http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/Illustrative_List_11.10.2010.pdf 

5.      Reduce Duplication, Waste, Fraud and Abuse across federal programs:

a. Improper Tax Refunds: The US could reduce fraud and abuse in the Earned Income Tax Credit program, by taking the simple step of requiring a valid social security number to claim a refundable tax credit, which would save the US gov’t $10 billion over 10 years.  

b. Improper Payments: GAO also estimates that government-wide the US gov’t makes $100 billion in improper payments per year that we have done nothing to address. Senator Brown is a co-sponsor of the FAST Act to address improper payments in Medicare, which GAO says could be as high as $64 billion per year. http://www.gao.gov/products/GAO-12-573T

Senator Brown is also a co-sponsor of the Improper Payments Elimination Improvement Act (S.1409).  

c.  Federal Property, Information Technology: Other bills that Senator Brown has sponsored or cosponsored that will help to eliminate federal improper payments across the government include Senator Brown’s Civilian Property Realignment Act (CPRA), and Information Technology Investment Management Act of 2011 (S.801). The President’s technology CEO council says that with a concerted effort, we could save between $150-$200 billion over ten years. http://www.techceocouncil.org/clientuploads/reports/TCC_One_Trillion_Reasons_FINAL.pdf

d. Eliminate duplicative programs that have been identified by the non-partisan GAO:  GAO has estimated these budgetary savings at “tens of billions,” while Senator Coburn, the Senate’s most active hawk on duplicative spending, says we could save $100 billion/year.  http://gao.gov/products/GAO-12-342SP.  Despite the GAO's work, there has been no effort to address duplicative programs on the Senate floor.

2)      Most independent deficit analysts say entitlement projected spending will need to be reduced to solve the budget deficit. Which programs would you cut, and whatcuts would you make? If you decline to cut entitlements, where would you find the savings?

Background:  The explosion in healthcare spending is the main driver of America’s long-term fiscal problems.  We should address it in a thoughtful bipartisan way. Senator Brown has voted to protect seniors and their benefits by opposing major changes to our current Medicare system, including the $529 billion in double-counted Medicare cuts that were used to pay for Obamacare.

Senator Brown also opposed the structural Medicare changes proposed in the Paul Ryan budget.  Rather than partisan solutions, Senator Brown believes that we can work together to find long-term savings to ensure that these programs are around for future generations, while protecting current beneficiaries and those close to retirement.  While he does not support each proposal on health care, the bipartisan Simpson-Bowles Bipartisan Commission on Deficit Reduction offers a good starting point for such a discussion. 

The Commission recommendations include a number of policy recommendations in this broad area that Senator Brown would support:

1.      Medical malpractice reform. CBO has estimated up to $62.4 billion in savings from medical malpractice reform:


2.      Civil service pension reform. Use the highest five years of earnings to calculate civil service pension benefits for new retirees (CSRS and FERS), rather than the highest three years prescribed under current law, to bring the benefit calculation in line with the private sector standard. (Saves $500 million in 2015, $5 billion through 2020) http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/TheMomentofTruth12_1_2010.pdf 

3)      Most independent deficit analysts say net revenues would also need to be raised. Which revenues would you raise, specifically, and how much do you expect that would raise? If you decline to raise revenues, what credible substitute would you offer?

Since 1968, annual federal tax revenue from all sources combined has averaged 17.9% of GDP - regardless of how high or low statutory tax rates are set. (See the White House budget Table 2.3 at http://www.whitehouse.gov/omb/budget/Historicals. )  According to the Congressional Budget Office, if we permanently extend all of the Bush Era tax cuts, federal tax revenue will soon rise past the historical average of 17.9% up to 18.5%. (http://www.slideshare.net/cbo/charts-from-cbos-january-2012-budget-and-economic-outlook,  Chart Pg. 25 for the CBO projection from January 2012).  

In contrast,spending has increased significantly from 15.9% of GDP in 2000, to 22.0% in 2012.   In other words, CBO projections show that without any tax increases, we are on a relatively strong track in terms of revenue collection, and that the primary long-term problem is spending. Senator Brown’s position is that we should work together to constrain federal spending over the long term, rather than try to increase taxes to pay for the current unsustainable waste in government.

Tax Reform: To achieve strong revenue collection, we need a growth-oriented approach to taxes, regulation, and government’s role in the economy, providing the private sector long term certainty and stability, and the confidence to grow and hire new workers.  Senator Brown strongly supports comprehensive tax reform which would lower statutory rates that are among the highest in the industrialized world, and limiting various deductions and loopholes that only exist because our rates are not competitive. Senator Brown has already voted to eliminate the VEETC ethanol taxsubsidy, which serves no economic purpose given that the use of ethanol is now mandated by the federal government and domestic ethanol is protected by tariffs on ethanol imports. 

Draft comprehensive tax reform proposals have been put forward by various bipartisan think tanks and commissions, but none has come to the floor of the Senate for a vote.

Tax Gap: The Senator also strongly supports addressing the “tax gap,” which is the difference between taxes paid and taxes legally owed. The IRS estimates the tax gap at approximately $450 billion.  Senator Brown has filed bills to address federal workers and contractors’ unpaid taxes.