Heritage Experts Weigh In On Massive Omnibus Spending Bill

Increases funding for Head Start and Early Head Start by $612 million, to $8.6 billion. Head Start has been evaluated by the Department of Health and Human Services and deemed ineffective at improving child outcomes on numerous measures. In December 2012, the HHS released a highly anticipated evaluation of the program. The scientifically rigorous evaluation of more than 5,000 children found that Head Start had little to no impact on cognitive, social-emotional, health, or parenting practices of participants. On a few measures, access to Head Start had harmful effects on children. Moreover, access to Head Start had no statistically measurable effects on all measures of cognitive ability, including numerous measures of reading, language, and math ability. Policymakers should base decisions about preschool funding and programs on empirical evidence, and the empirical evidence does not support increasing spending on Head Start.

K-12

Individuals with Disabilities Education Act (IDEA), which provides federal funding to states for students with special needs, is set at $11.5 billion, $498 million above the 2013 post-sequester level. In order to more effectively serve students with disabilities, IDEA should be reformed to allow states to make their IDEA dollars portable, following students to a school or educational option of choice.

Title I funding for low-income school districts is set at $14.4 billion, which is $629 million above the 2013 post-sequester level. To better serve low-income children, Congress should allow states to make their Title I dollars portable. Title I of No Child Left Behind provides federal funding to states in order for the states to provide additional funds to low-income school districts. While the intent of Title I is to provide resources to low-income children, its design is “neither student-centered nor transparent.” Congress should simplify the Title I funding formula and permit states to make Title I funding portable, allowing funding to follow a child to the school of his parents’ choice—public, private, charter, or virtual.

Higher education

The maximum Pell Grant award per student is increased to $5,730. Pell grants, which do not have to be repaid by students, are already funded at historically high levels. Pell grant funding has more than doubled since President Obama took office in 2008; the $34 billion Pell Grant program provides grants to some 9.4 million students. According to the Congressional Budget Office, from the 2006-2007 school year to the 2010-2011 school year, inflation-adjusted Pell spending increased 158 percent, partly due to an 80 percent increase in the number of recipients. The appropriations bill continues this trend by increasing spending and the maximum grant students can receive.

The TRIO program is increased by $42 million. The TRIO program (made up of the Upward Bound program and other smaller programs), provides federal funding for college counseling and tutoring programs, including helping low-income students apply for college. But as the Brookings Institution recently reported, these federal college preparation programs provide little to no return on investment. “Half a century and billions of dollars after these federal college-preparation programs began, we are left with mostly failed programs interspersed with modest successes.”

— Lindsey Burke is a Will Skillman Fellow in Education at The Heritage Foundation.

Obamacare’s Omnibus Funding Loophole

Funding for Obamacare’s health insurance exchanges and related health insurance regulatory activities is principally funded through the “Program Management” account of the Centers for Medicare and Medicaid Services (CMS). The 2013 appropriation for CMS Program Management was $3.86 billion. The President requested an increase of $1.35 billion (35 percent) for this account, and the Democrat-controlled Senate Appropriation Committee agreed to that request.

The Omnibus Appropriations bill sets the level at $3.67 billion, which equals a 5 percent reduction from the 2013 level. However, the bill also allows CMS to augment that appropriation with the user fees it collects. To fund the operation of the Obamacare exchanges, the Administration has imposed a user fee of 3.5 percent of premium on coverage sold through the exchanges. Thus, while it appears to be a cut in the appropriations for implementation of Obamacare, the Omnibus provides a funding lifeline through user fees.

Of course, the real costs of Obamacare – the entitlement spending through Medicaid expansion and the subsidies – remain on autopilot and underscores the reason why the law should be repealed.

— Edmund F. Haislmaier is a Senior Research Fellow of Health Policy Studies at The Heritage Foundation.

Department of Energy’s Wasteful Spending Streak Continues

The Department of Energy continues to waste taxpayer money on activities that can and should be funded entirely by the private sector. Taxpayer dollars spent trying to lower the costs of energy or spent on conventional energy sources is merely another subsidy for energy technologies. In total, the bill allocates $10.2 billion for energy programs within DOE.  This includes:

Renewable Energy and Efficiency  – $1.9 billion—Much of this spending is largely toward commercialization, which should be undertaken by the private sector.  Any government support for technology applicable to efficiency and renewable energy (or any energy) should be part of basic scientific research, for which plenty of funding already exists within the Office of Science.

Oil, Coal and Natural Gas – $562 million—The fossil energy industry makes plenty of money to support its own research and development efforts. Funds that go toward fossil energy either simply offset spending that the private sector would have undertaken or supports efforts that have no market viability.

Nuclear Energy – $889 million —Federal programs to help the existing nuclear industry to operate more efficiently or to build its own workforce should be cut. Further, the Department of Energy should not be picking winners and loser in the reactor technology business. Instead, to the extent that the federal government spends resources related to nuclear energy, those resources should go to the Nuclear Regulatory Commission to build their regulatory expertise. And finally, any money for nuclear waste that does not support Yucca Mountain should be cut.

Office of Science  – $5.1 billion —While federal support for some basic scientific research can be justified, much of the money in the Office of Science goes to programs to advance pet projects or develop technologies to support commercial activities.

ARPA-E – $280 million — The Advanced Research Projects Agency–Energy (ARPA-E) is another energy program designed to fund high-risk, high-reward projects that the private sector would not embark on on its own. The problem is that ARPA-E does not always seem to follow this clear guideline: The federal government has awarded several ARPA-E grants to companies and projects that are neither high-risk nor something that private industry cannot support. Congress must hold ARPA-E accountable to its mission and intended purpose. More scrutiny is necessary to ensure that ARPA-E is not funding projects already receiving private funding or using technicalities to justify those grants. Confining ARPA-E to its mission is critical to the program’s success and could serve as a model for how DOE’s research programs could be restructured.  Funding for ARPA-E should be cut until the appropriate reforms are made.

Congress should get serious about removing attempts to drive politically preferred sources of energy – of all kinds – towards commercialization.

— Nicolas Loris is the Herbert and Joyce Morgan Fellow at the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.

More Federal Transportation Spending, Bigger Government

In the fiscal year (FY 2014) omnibus bill, appropriators have propagated the false notion that government spending on transportation and infrastructure projects is “essential to growing the nation’s economy and commerce”—in essence, that it will create jobs. And they have missed the myriad opportunities to reduce transportation spending or eliminate related programs that this Heritage Foundation report outlines.

For starters, Congress could swiftly phase out subsidies to airlines to offer service in rural communities, under the decades-old Essential Air Service program. Instead it continues subsidies to air carriers to the tune of $149 million.

Additionally, it could have included provisions aimed at exploring the privatization of the Federal Aviation Administration, a bold, structural policy change with which Canada has experienced success and not compromised safety in the process. Even providing for a study of the benefits and challenges of privatization would have been a positive step forward. Instead, this omnibus bill would spend $12.4 billion on the FAA, which was so politicized when “Sequest-air” caused a media frenzy. While that amount is less than was spent in FY 2013, Congress could have tightened its belt further.

On Amtrak, the National Passenger Railroad Corporation, the bill would spend $1.39 billion in operating and capital subsidies. Instead, lawmakers should make future Amtrak subsidies contingent upon reduced operating costs brought about through competitive contracting for its operations and similar reforms—not reward its poor financial performance.

The transportation provisions in this bill fuel the federal government’s tremendous, overbearing, and unnecessarily expensive involvement in America’s transportation system. Congress should prioritize scaling back that role and instead empower the states. There is plenty of room to re-prioritize at the federal level and reduce spending and, given the nation’s dismal fiscal situation and sluggish economy, Congress had better get started.

— Emily Goff is a Research Associate at the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.

Hidden Green Handouts

High profile taxpayer-funded failures like Solyndra and Fisker have made it a little more difficult for the feds to play venture capitalist, and deservedly so.  But that hasn’t stopped policymakers from using other channels to promote their special interests.

Included in the omnibus bill is $1.5 billion in funding for the Clean Water State Revolving Funds, a loan program for water quality improvement projects,  is language that says, “to the extent there are sufficient eligible project applications, not less than 10 percent of the funds made available under this title to each State for Clean Water State Revolving Fund capitalization grants shall be used by the State for projects to address green infrastructure, water or energy efficiency improvements, or other environmentally innovative activities.”

Further, a stipulation as part of the funding for The Export-Import Bank of the United States is that “not less than 10 percent of the aggregate loan, guarantee, and insurance authority available to the Bank under this Act should be used for renewable energy technologies or energy efficiency technologies.”

While not new programs or avenues to subsidize green companies, the continued promotion of handouts is a signal that politicians still don’t get it. We need to be removing subsidies for all sources of energy. Whether a government-backed project succeeds or fails, it is a waste of taxpayer dollars to pick winners and losers among energy technologies.  The market does a fine job of determining what makes economic sense and what doesn’t.

— Nicolas Loris is the Herbert and Joyce Morgan Fellow at the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.

Obsolete Rural Programs

The FY 2014 Omnibus bill continues to fund rural programs that should have been repealed long ago, including the following two examples:

Rural Cooperative Development Grants ($26,050,000): The federal government awards grants to cooperative development centers. These centers provide technical assistance to individuals and entities to help start and expand rural cooperatives and businesses. Taxpayers shouldn’t be subsidizing consulting services for private businesses. Private entities themselves should seek out and pay for whatever expertise they need for their operations.

Rural Energy for America Program ($3.5 million):  Taxpayers are forced to subsidize the development of renewable energy programs for agricultural producers and small rural businesses. It is bad enough that taxpayers are required to subsidize one type of energy over another (picking winners and losers), but they are also forced to subsidize costly and unreliable energy. If producers and small rural businesses seek to develop renewable energy systems, they can and should do so on their own dime.

— Daren Bakst is a Research Fellow in Agricultural Policy at The Heritage Foundation.

No Cuts for National Endowment for the Arts and National Endowment for the Humanities 

It looks like the budgets for both the National Endowment for the Arts (NEA) and the National Endowment for the Humanities (NEH) survived with absolutely no reduction in funding, getting $146 million each.

So, just what are some of the essentials that these programs fund?  Examples of recent NEH Grants include:

•  $40,000 for artists to “spend a year in Rome in the historic setting on the Janiculum, one of the highest hills within the walls of Rome” complete with stipend, studio space, housing and meals
• $55K for a traveling exhibition on “Survival Architecture” – artistic solutions for “emergency housing housing necessitated by natural disasters and climate change”
• $10K for dance choreography that explores life in a “1961 Oasis trailer,” to be performed in parking lots and community parks with “audience participation”
• $10K for a theater program that explores the comic book hero “Wonder Woman”
• $10K to a San Francisco theater group for a premiere and touring of a play on same-sex marriage “created in response to the ongoing battle for marriage equality”

Apparently Congress thinks these kinds of grants are so critical that they can’t afford to cut a dime out of NEH or NEA. The House had proposed a 49 percent cut for NEA and NEH — which went nowhere. Perhaps House Appropriation leaders need an NEH grant in the “art” of negotiation.

— Laura Trueman is a Director of Strategic Operations at The Heritage Foundation.

Justice Department Appropriations for 2014

When it comes to the Justice Department, the latest Consolidated Appropriations Act for 2014 (the Act) has some good provisions but others that the House proposed have been dropped. A summary by Democrats on the House Appropriations Committee trumpets the fact that the Senate version dropped provisions that would have prevented Attorney General Eric Holder from challenging state immigration laws as he did with Arizona and a number of other states, as well as another provision that would have prevented Justice grants from being awarded to “sanctuary” cities that refuse to cooperate with the federal government in finding and detaining illegal aliens. So unfortunately, DOJ will be able to continue its assault on states that are trying to help the federal government stem our illegal immigration crisis and sanctuary cities will be able to continue to defy federal law.

In March 2013, the DOJ’s Inspector General issued a devastating report about the rank politicization of the Civil Rights Division and its biased handling of some of its cases, as well as the unchecked harassment and intimidation of Division employees perceived to be Republicans or conservatives. The Act authorizes one million dollars from the $86.4 million appropriated for the IG to be used for a commission that will conduct an independent review of the management and policies of the Civil Rights Division. This has been long needed, particularly in light of the intransigence of the Obama political appointees inside Justice.

Of course, the other thing needed with the Civil Rights Division is a cutback in its budget, which has grown considerably, and gives Eric Holder the resources to file numerous suits challenging common sense voter ID, immigration, and other state laws he does not like.  There are also at least two dozen lawyers and support staff in the Voting Section of the Civil Rights Division who have seemingly had nothing to do since the U.S. Supreme Court declared the coverage formula for Section 5 of the Voting Rights Act unconstitutional in June 2013. These DOJ personnel who worked on Section 5 matters are now on a permanent, extended coffee break – yet not a single one of them has been laid off. This is an enormous waste of taxpayer funds that should have been eliminated by Congress.

The other thing that should have been done but which wasn’t would have been a cutback in the budget of the Community Relations Service inside the Justice Department. This is the office that is supposed to go into communities where there are racial tensions to work at calming things down. During the Zimmerman trial in Florida, however, reports surfaced that the CRS personnel attended meetings in the state trying to stir up trouble and promote protests and racial disharmony and unrest, which was the exact opposite of their mission goal. Unfortunately, CRS receives $12 million in this Act.

Another foolish waste of taxpayer money is $2.5 million for the State Elections Commission of Puerto Rico to conduct “objective, nonpartisan voter education about, and a plebiscite on, options that would resolve Puerto Rico’s future political status.” But Puerto Rico already held a vote on that issue in 2012. Residents pretty much split on the question of whether they wanted to stay a territory or change their political status. There is no reason for the American taxpayers to spend any money on another plebiscite – if the Puerto Rican government wants to do so, why doesn’t it do it on its own dime?

On the plus side, and obviously with Operation Fast and Furious on their minds, lawmakers put a provision in the Act (Sec. 216) that prohibits federal funds from being used “by a Federal law enforcement officer to facilitate the transfer of an operable firearm to an individual if the…officer knows or suspects the individual is an agent of a drug cartel, unless law enforcement personnel of the United States continuously monitor or control the firearm at all times.” Clearly, Congress doesn’t want any more guns “walking” anywhere – particularly into Mexico. On the other hand, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), which was primarily responsible for this reckless, out-of-control operation and which appears to have retaliated against the whistle-blowers who exposed this wrongdoing, is given $1.18 billion, which is almost $50 million more than the ATF’s 2013 budget.

— Hans von Spakovsky is a Senior Legal Fellow at The Heritage Foundation.

Waste Water, Waste Treatment — Government Waste

On page 436, the Omnibus bill sets aside over $80 million for the Appalachian Regional Commission (ARC).  The programs, authorized by the Appalachian Regional Development Act of 1965, are not specifically defined by the bill. Luckily, the ARC’s website gives us a rundown of how it spent some of its funds last year in 13 states running from New York to Alabama. Here are some highlights:

• $200,000 for Alabama Literature and Educational Teacher Training
• $100,000 for Energy Efficiency Implementation for Small Cities
• $60,000 for University of Alabama Center for Economic Development and Tourism Expansion
• $89,888 for the Haleyville Medical Area Sewer
• $300,000 for the Winston County Hands On iPads Technology Project
• $25,000 for the Chief Ladiga Trail Corridor Planning
• $115,153 for Addison Sewer System Improvements
• $25,000 for the Bryon Herbert Reece Farm & Interpretive Center
• $54,969 for the Hall County Community Based Energy Training and Demonstration Program
• $300,000 for the Jackson County Wastewater Treatment Plant Improvements
• $452,954 for Oral Health Improvement Through Sustainable Local Coalitions
• $500,000 KY Appalachian Housing Program Capitalization
• $50,000 for Prime Time Family Reading Time
• $480,000 Jolly Center Auditorium/Training Center Renovation
• $50,000 for the Evergreen Heritage Center Green Site
• $50,000 for the Washington County Broadband Impact Study
• $250,000 for the Garrett County Broadband Extension Phase I
• $30,000 for the Garrett County Heritage Area Strategic Initiative
• $250,000 for the Meadow Mountain Trail
• $15,000 for the Frostburg Grows, Grow it Local Greenhouse
• $100,000 for the Chickasaw Trail Industrial Park Road Improvements
• $24,144 for the Mississippi Appalachian Community Learning Project
• $101,047 for the Foundation for a Fit Future
• $265,376 for the Byhalia Historic School Building Renovation
• $30,840 for Promoting Economic Development Through Capacity Building Within the Local Food Community
• $100,000 for Building a Clean Energy Economy in Western NC
• $100,000 for Western Carolina University Rural Assessment Center for Older Adults
• $65,262 for Marcellus/Utica Shale Welder Training
• $250,000 for the Center for Advanced Manufacturing
• $250,000 for the Somerset Village Historic District Streetscape
• $400,000 for the Town Creek Bike Park
• $40,000 for Poverty Studies Intern Program at Furman University
• $500,000 for the Travelers Rest Performing Arts & Cultural Center
• $500,000 for the Birthplace of Country Music Cultural Heritage Center
• $338,000 for the Wayne C. Henderson School of Appalachian Music and Arts
• $44,415 for the Country Cabin Outdoor Venue Enhancement

— Jack Spencer is a Director of Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.

Restoring Funding to the Ineffective and Wasteful Office of Community Oriented Policing Services (COPS)

Instead of following the fiscally responsible decision by the House of Representatives Committee on Appropriations to terminate the ineffective Office of Community Oriented Policing Services (COPS) hiring grants, the omnibus spending bill allocates $214 million for the program.

Created in the middle of President Bill Clinton’s first term, COPS promised to add 100,000 new state and local law enforcement officers on the streets by 2000. Research by The Heritage Foundation has demonstrated that COPS not only failed to add 100,000 additional officers to America’s streets, but that it was also ineffective at reducing crime.

State and local officials, not the federal government, are responsible for funding the staffing levels of police departments. By paying for the salaries of police officers, COPS funds the routine, day-to-day functions of police and fire departments. In Federalist No. 45, James Madison wrote:

The powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the State governments are numerous and indefinite. The former will be exercised principally on external objects, as war, peace, negotiation, and foreign commerce; with which last the power of taxation will, for the most part, be connected. The powers reserved to the several States will extend to all the objects which, in the ordinary course of affairs, concern the lives, liberties, and properties of the people, and the internal order, improvement, and prosperity of the State.

When Congress subsidizes local police departments in this manner, it effectively reassigns to the federal government the powers and responsibilities that fall squarely within the expertise, historical control, and constitutional authority of state and local governments. The responsibility to combat ordinary crime at the local level belongs wholly, if not exclusively, to state and local governments.

The COPS program has an extensive track record of poor performance and should be eliminated. These grants also unnecessarily perform functions that are the responsibility of state and local governments. For this particular program, the House Committee on Appropriations originally made a fiscally wise decision and follows the wisdom of our founders and core principles of our government. Restoring funding for the program would signal that Congress has given up on reigning in spending on the wasteful and ineffective program.

— David B. Muhlhausen, Ph.D. is a Research Fellow in Empirical Policy Analysis at The Heritage Foundation.

Omnibus Continues Funding for the Ineffective and Wasteful FIRE Grants Program

The omnibus spending bill allocates $680 million for Firefighter Grants, an increase of $5.7 million above the previous spending level. Fire grants, administered by the Federal Emergency Management Agency (FEMA), encompass a number of grant programs. The Assistance to Firefighters Grant (AFG) program subsidizes the routine activities of local fire departments and emergency management organizations. Fire Prevention and Safety (FP&S) grants fund projects to improve the safety of firefighters and the public from fire and related hazards. The Staffing for Adequate Fire and Emergency Response (SAFER) grants are intended to increase staffing levels by funding the salaries of career firefighters and paying for recruitment activities for volunteer fire departments.

The Heritage Foundation’s Center for Data Analysis evaluated the effectiveness of fire grants. The Heritage evaluation compared fire departments that received grants to fire departments that did not receive grants. Fire grants appear to be ineffective at reducing fire casualties. AFG, SAFER, and FP&S grants failed to reduce firefighter deaths, firefighter injuries, civilian deaths, or civilian injuries. Without receiving fire grants, comparison fire departments and grant-funded fire departments were equally successful at preventing fire casualties.

Instead of continuing a wasteful and ineffective program, Congress should move to defund the fire grant program.

— David B. Muhlhausen, Ph.D. is a Research Fellow in Empirical Policy Analysis at The Heritage Foundation.

“Buy America” Provisions

“Buy America” provisions create as many problems as they solve. Walling off U.S. manufacturing from foreign competition takes away the pressure to innovate at home and makes it difficult to tap into global innovation. Rather than “protect” U.S. manufacturers, such policies will accelerate their atrophy. And that limits government purchasers’ shopping options to a handful of high-priced, second-class goods and services.

— Bryan Riley is a Jay Van Andel Senior Policy Analyst in Trade Policy at The Heritage Foundation.

Fighting Union Corruption Not a Priority

The Omnibus appropriations bill substantially increases the Department of Labor’s spending over sequester levels. The appropriators gave more money to many of the Departments’ agencies: the Wage and Hour Division’s budget increased by $9 million, while Job Corps’ budget will expand by $75 million—despite being completely ineffective. Congress boosted the Mine Safety and Health Administration’s budget by $19 million, and OSHA’s budget by $17 million. Agency after agency in the Labor Department saw its spending rise.

But there was one key exception: The Office of Labor Management Standards (OLMS). The OLMS audits union finances, prosecutes corrupt union bosses, and enforces union financial transparency laws. But while Congress boosted spending throughout the Department of Labor, it froze OLMS spending at sequester levels. Apparently Congress considers fighting union corruption less important than funding completely ineffective job training programs.

Unfortunately union corruption remains a serious problem, as members of IBEW Local 2359 in Sugar Grove, Ohio can attest. After an OLMS investigation their Treasurer just plead guilty to embezzling $160,000. Congress’ inattention will help union bosses escape scrutiny, but they harm rank-and-file union members.

— James Sherk is a Senior Policy Analyst in Labor Economics at The Heritage Foundation.

The Omnibus Appropriations Bill: Ignoring OPM’s Role in Obamacare   

The House Appropriations Committee insists that its massive Omnibus Appropriations bill has changed Washington’s “culture of spending”. It doesn’t.

Obamacare’s massive spending is mostly on auto-pilot. And two items are worth noting.

First, under this Appropriations measure, Congress continues the illegal subsidies for Members of Congress and congressional staff to offset their costs in the Washington D.C. health insurance exchange. Under Section 1312 D of the Affordable Care Act Congress decided to eliminate its own coverage in the Federal Employee Health Benefits Program (FEHBP) and enroll in the Obamacare exchange, subjecting themselves to the law on the same terms and conditions as other Americans. Then on August 7, 2013, the U.S. Office of Personnel Management (OPM), under White House pressure, made a weird ruling that Members of Congress and their staff, even though they are no longer in the FEHBP, can still get FEHBP subsidies. The problem: There is no statutory basis either in the Affordable Care Act or in Title 5 that governs the Federal Employee Health Benefits Program (FEHBP) for such subsidies. Senator David Vitter (R-LA) has proposed an amendment to correct this problem, and Senator Ron Johnson (R-WI) has just filed suit against the OPM Director to stop this unauthorized use of federal funds. The Omnibus Appropriations bill could affect real change in Washington’s “culture of spending” – beginning right in Congressional offices. But it doesn’t.

Second, under Section 1334 of the Affordable Care Act, the OPM Director must contract with certain health insurers to offer “multi-state” plans in the exchanges in each state; and one of the plans must offer abortion coverage. In other words, OPM is sponsoring plans to compete with private plans in the exchanges, while exercising regulatory control over its multi-state plans’ medical loss ratio, profit margins, and premiums, with broad power to set other “terms and conditions” that OPM deems are in the “interests” of the enrollees in the OPM sponsored plans. Congress, of course, claimed it jettisoned the controversial “robust public option” when it enacted the health law, though this provision would concentrate federal power over the health insurance markets even more, enabling the White House itself to play a powerful role in the health insurance markets. The health insurance markets are already less competitive than they were before the creation of the Obamacare exchanges, government-sponsored plans threaten to accelerate that consolidation. The Omnibus Appropriations bill could have zeroed out their funding. But it doesn’t.

Congressional appropriators say that their big bill contains no new funding for the Affordable Care Act. They say it “freezes Obamacare funding at the post-sequester level” of financing and strikes $1 billion out of the Prevention and Public Health Fund that critics have cited as a “slush fund” for the Obamacare exchanges. Needless to say, a $1 billion cut is welcome. But CBO estimates that exchange subsidies and for the Medicaid expansion will cost taxpayers $1.8 trillion over the next ten years, while the Obama team is injecting OPM into the health insurance markets as a new power player. That’s Washington’s “culture of spending”; a very lively culture indeed.

— Robert E. Moffit is a Senior Fellow at the Center for Health Policy Studies at The Heritage Foundation.

Time for Congress to take Control of CO2 Future

When it comes to carbon dioxide and greenhouse gas regulations, Congress punted on an opportunity to regain their responsibility to legislate (that is except in prohibiting funds to go to regulation or reporting of greenhouse gas emissions from manure pools and livestock. See page 839.). However, they at least included a provision (page 838) that would put the President on record for the alleged amount, by line item, of tax dollars going to executive agencies “for climate change programs, projects, and activities.” The executive branch has worked around Congress to implement a global warming regulatory scheme, the costs of which would be huge but for no meaningful environmental benefit. Congress needs to reengage and expressly prohibit all agencies from regulating greenhouse gases and carbon dioxide.

— Katie Tubb is a Research Assistant at the Thomas A. Roe Institute for Economic Policy Studies.

10 Wasteful and Unnecessary Energy Spending Programs in the Omnibus

We’ve written several times that the Omnibus legislation includes Department of Energy spending that needlessly squanders money away on activities that should occur in the private market.

Of the $1.9 billion allocated for Energy Efficiency and Renewable Energy money will be a variety of wasteful projects.

1. “Technology validation” and “market transformation” of hydrogen and fuel cells technologies. A good idea will be validated by its success in the market place, not by how much money government pours into an idea.
2. $2 million for the clean burning, biomass cookstove development. Reducing indoor smoke in developing countries where many families still use cookstoves is a laudable goal but a number of clean cookstove technologies already exist.
3. Offshore wind is one most expensive forms of energy in America but that isn’t stopping DOE from spending money on demonstration projects and technology development. If offshore wind is as promising as proponents say it is, it won’t need help from the taxpayer.
4. Included in the $17.3 million for conventional hydropower, Congress is allocating $3.6 million for Section 242 of the Energy Policy Act of2005, a production handout for hydro that allows a facility to collect 1.8 cents per kilowatt hour (up to $750,000) for up to 10 ten years. It’s your wind production tax credit but for hydro.
5. Money to “research the most promising Class 8 heavy-duty long-haul truck technologies, such as alternative fuel or dual-fuel technologies.” Here’s an industry that operates on razor thin margins and plans its driving routes down to the tenth of a mile and the government’s going to help them determine which fuel to use?
6. $27.5 million for Advanced Manufacturing that conducts research to find energy and savings costs for America’s manufacturing, industrial and commercial bases. Manufacturers already know that energy is a significant input cost and will innovate to find ways to lower costs and gain a competitive advantage.
7. $50 million for the State Energy Program, a competitive grant program for “the adoption of energy efficiency/renewable energy products and technologies.” Read: more handouts for politically preferred technologies.
8. Over $100 million for advanced nuclear reactor concepts and light water reactor sustainability that researches how to extend the life of our nation’s current fleet of reactors. While new nuclear reactor technologies have great potential, commercialization must be shouldered by the private sector. Further, the private sector has tremendously increased the efficiency of our reactors on their own. No help from the feds needed.
9. $392 million for carbon capture and sequestration technology (CCS). The Environmental Protection Agency’s regulation of greenhouse gas emissions on new and existing power plants is hinging on CCS. Even with taxpayer-funded financial handouts to CCS projects, building them will be prohibitively costly, which is why the EPA’s regulation of greenhouse gas emissions will effectively ban the construction of new coal-fired generating units. Even if CCS were affordable, it does not justify the EPA’s greenhouse gas regulation, since the EPA’s greenhouse gas regulations are intended to address a non-problem. CCS should be built only if companies believe it is in their economic interest to do so—for instance, if profitable opportunities for enhanced oil recovery exist nearby.
10. $12.6 million for collaborative research on hydraulic fracturing to, in part, improve the economics and recoverability of shale oil and shale gas as well as $10 million for “activities to improve the economic viability, safety, and environmental responsibility of offshore exploration and production in challenging conditions, of exploration and production from unconventional natural gas and other petroleum resources, and of production by small producers.” President Obama’s line about oil subsidies is that “They’re doing just fine on their own” but he generally misidentifies which provisions are actually oil subsidies. These spending programs are blatant subsidies; there’s no reason taxpayer dollars should be spent trying to improve the economic viability of America’s oil and gas resources; the energy companies will handle that on their own.

— Nicolas Loris is the Herbert and Joyce Morgan Fellow at the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.

The End of the TARP Bailouts? Not Quite Yet 

Taxpayers who thought they were done paying for all the “emergency” funding surrounding the financial crisis were sadly mistaken.  The newly released 2014 Consolidated Appropriations Act contains a $34,923,000 appropriation to pay salaries and expenses related to the 2008 Troubled Asset Relief Program (TARP).  Maybe the emergency will be over next decade?

— Norbert J. Michel, Ph.D. is a Research Fellow in Financial Regulations at The Heritage Foundation.

Cuts to Immigration Agency Undermine Enforcement of U.S. Law

The omnibus continues the disturbing trend of undercutting the enforcement of U.S. immigration law by decreasing Immigration and Customs Enforcement’s (ICE) budget by almost $160 million from FY2013. While President Obama requested additional cuts of approximately $275 million, this cut will further harm our already weakened immigration enforcement policies. President Obama has continually undermined immigration enforcement by ordering ICE agents not to uphold large sections of immigration law and this cut makes it even more difficult for ICE to do its job. Rather than cut funding for ICE, Congress should pressure President Obama to fully and faithfully enforce immigration law and then ensure that ICE and other immigration agencies have the resources they need to complete their missions.

— David Inserra is a Research Assistant on National Security and Cyber Security at The Heritage Foundation.

Obamacare Continues Even With Omnibus Changes

The Omnibus Appropriations bill does little to alter the trajectory of Obamacare because it does not repeal or change any of Obamacare’s most significant elements—all of which were deliberately “set on autopilot” in the original legislation.

On the Obamacare spending side the biggest items are the Medicaid expansion, and the premium and cost sharing subsidies for exchange coverage. On the revenue side there are the new taxes imposed on individuals and businesses.

With respect to Obamacare, the most significant feature of the Appropriations bill is that it forces the Obama Administration to rely on user fees—instead of tax dollars— to pay for fixing and operating the dysfunctional federal exchange.  That will save taxpayers about $1.5 billion next year.  While this might also somewhat hamper the Administration’s efforts to continue implementing Obamacare, it certainly won’t stop them.

Yet the Omnibus bill does nothing to change the much bigger spending and taxing provisions in Obamacare. For example, the Congressional Budget Office projects that in 2014 the Obamacare Medicaid expansion will cost $17 billion while the new exchange premium subsidies will cost $21 billion and the additional cost-sharing subsidies for low-income exchange enrollees will cost a further $4 billion. On the revenue side, the projections are that applying the Medicare tax to investment income will raise $9.6 billion in 2014, while Obamacare’s so-called “fees” imposed on insurers, pharmaceutical companies and medical device makers are scheduled to raise $8, $2.8, and $2.6 billion, respectively, next year. Of course the burden of those taxes will be passed onto consumers in the form of higher premiums.

Beyond the taxing and spending, the Omnibus Appropriations bill also fails to offer Americans any relief from the onslaught of Obamacare regulations that are disrupting existing coverage, driving up premiums, and further distorting the health care system through massive government micro-management.

Bottom line: Obamacare continues.

— Edmund F. Haislmaier is a Senior Research Fellow of Health Policy Studies at The Heritage Foundation.

Bait and Switch Defense Funding

The blame for the dramatic challenges the armed services are currently facing in providing adequate trained and ready forces to protect America lays squarely at the feet of the White House. The Omnibus appropriation bill provides the latest evidence of the president’s abysmal stewardship of national defense.

After 9/11, Congress provided Overseas Contingency Operations appropriations to account for unanticipated funding of military operations that couldn’t be adequately forecasted in annual appropriations. OCO funding made sense in the years following the terrorist attacks on the United States as the administration scrambled to conduct two major wars at the same time as well as worldwide operations against transnational terrorism—and when the U.S. debt checked in at respectable levels.

By 2009, the case for OCO became less obvious. Operational requirements had become more predictable, while fiscal irresponsibility was spinning out of control. Heritage defense expert Baker Spring argued it was time for a more disciplined approach that ensured adequate support for operations overseas and that the military would be trained and ready for future missions. He proposed that “Congress could go some distance toward reducing the shortfall by incorporating the funding for operations in Afghanistan and Iraq into the core defense program and thus raising the overall spending level….”

But rather than phase out OCO and plus-up defense, Obama opted for a bait and switch approach pushing OCO costs into the base budget and just crowding out other military necessities. Even before the Budget Control Act of 2011, the White House laid out more than $400 billion in defense cuts—the only part of the federal budget that the president was happy to cut.

On top of that, the Budget Control Act of 2011 mandated another about $500 billion plus cuts in defense. Even though the budget for the armed forces is less than 20 percent of the federal budget, under the BCA formula it must take about 50 percent of the cuts.

The White House knew well that under this formula readiness would plummet and defense capabilities would be inadequate. But, it was more than willing to “shoot the hostage” to use concerns over defense to force Congress to accept higher spending and more taxes.

The Omnibus Appropriations Bill doesn’t take on the president for playing politics with defense. Moving funding requirements from the base budget back into OCO account isn’t a fix for defense. It is an acknowledgement the president has under-funded readiness — and an admission Congress has no real fix other than the gimmick of moving money back and forth.

To make matters worse, this bill does not reflect a return to the regular order of doing business. There is no real long-term defense planning in the bill or any serious effort at reaping the real benefits of needed defense reforms. Rather, the White House just dumped the responsibility of figuring out where to find some $30 billion in defense cuts on the Congress and the Congress scrambled to figure out how to make the numbers add up.

This is the wrong way to meet the Constitutional obligation to provide for the common defense.

Congress needs to challenge the president head-on. Defense needs to be adequately funded, but overall federal spending must scaled back and Congress must start to make real cuts where they make sense. The White House and the Congress must return to strategy-based defense planning not budget-driven strategies. On all counts the Omnibus bill fails on that score.

— James Jay Carafano, Ph.D. is a Vice President, Foreign and Defense Policy Studies, E. W. Richardson Fellow, and Director at The Heritage Foundation.