Concord Coalition Calls for "Pork" Rescission and Tax Cut Freeze in Response to Katrina

Press Release
Friday, September 16, 2005

WASHINGTON -- With President Bush promising to respond to the devastation of Hurricane Katrina by launching “one of the largest reconstruction efforts the world has ever seen,” The Concord Coalition said today that at least a portion of the mounting costs should be offset by rescinding all $24 billion of earmarked projects, or “pork,” approved in this year's transportation bill. To prevent further erosion of the nation's fiscal outlook, Concord also recommended that tax cut proposals, including those anticipated in the Congressional Budget Resolution, be subjected to a pay-as–you-go policy and that the entitlement spending cuts anticipated in the Budget Resolution go forward, even if it means reassessing which programs should be targeted for reduction.


“President Bush and Congress must respond fully and swiftly to the emergency needs brought about by Hurricane Katrina. However, as the flood waters recede and a more comprehensive relief plan is developed, they must carefully consider the nation's overall fiscal outlook. Simply adding $200 billion or more to the deficit is unwise and unnecessary,” said former Senator Warren B. Rudman (R-NH), Co-Chair of The Concord Coalition.

“Congress and the President should find cuts in non-priority spending, such as the extravagant amount of earmarked local projects in the transportation bill, and apply the savings to the much more urgent needs of the Gulf Coast region. While this, alone, would not come close to paying for the relief efforts it would mitigate the damage to the budget and demonstrate that politicians in Washington are willing to set aside narrow parochial interests and make hard choices for the common good. The American people would respect and strongly support such action,” Rudman said.

“The question is not whether we can afford to assist the devastated Gulf Coast region. We can, and must. The real question is whether the President and Congress will call for any sacrifice or go on pretending that we can keep spending everything we are spending while cutting taxes at the same time. We already have too many unfunded entitlement promises on the table to engage in such choice-free budgeting. If we can't make some relatively modest sacrifices now, the prospect of our being able to cope with the fiscal challenge of the baby boomers' retirement years is remote,” said Concord Co-Chair former Senator Bob Kerrey (D-NE).

“President Bush and Congress have already approved $62.3 billion of emergency relief and Congress has passed a $5 billion package of tax breaks. The President has made clear that much more assistance is on the way. Yet in the face of this, and with war costs continuing to climb, no rescissions of current spending have been proposed, nor have additional revenues been requested. With the budget already projected to run deficits in excess of $300 billion for the next five years, all of the clean-up and relief aid for Hurricane Katrina will come from borrowed funding unless steps are taken to reorder budgetary priorities,” Kerrey said.

As relief and rebuilding initiatives take shape, The Concord Coalition recommends three initial steps for the short-term:

Transportation Projects: Rescind and Send

This year's transportation bill was larded with 6,373 earmarks totaling roughly $24 billion. These earmarks should be rescinded and the money sent instead to help pay for rebuilding in the Gulf Coast region. In congressional jargon, items such as the infamous “bridge to nowhere” are labeled “high priority.” It is morally indefensible and fiscally irresponsible to pretend that items such as these local pork projects are “high priority” when compared to the needs of the Gulf Coast region, the roughly $70 billion annual cost of the wars in Iraq and Afghanistan and a budget deficit now expected to soar back over $400 billion in 2006.

Tax cut proposals: Pay-as-you-go

All tax cut proposals should be subjected to the pay-as-you-go principle. This would not prevent targeted tax relief for those affected by Hurricane Katrina but it would require offsets to stem the net revenue loss. It simply defies experience and common sense to think that we can finance relief efforts along the Gulf Coast – and other recent initiatives such as the war against terrorism, homeland security improvements and a Medicare prescription drug benefit – by cutting taxes. There are plenty of revenue offsets available. The Joint Committee on Taxation has identified over $350 billion worth of options to improve tax compliance and reform tax expenditures.

Entitlement spending reductions: Keep the goal but widen the net

The Congressional Budget Resolution calls for cuts in entitlement spending totaling $34.7 billion over five years. The increased spending and yawning long-term deficits make these cuts more relevant than ever. While some have argued that these cuts should not go forward because they might target programs such as Medicaid and Food Stamps -- both of which will likely need increased resources in the near-term as part of the relief effort -- there is nothing in the Budget Resolution that requires cuts in those programs. Committees with instructions to find savings are free to look at any programs under their control. For example, instead of looking at Medicaid, they could look at the Medicare Prescription Drug Benefit, an enormous expansion of the program that is scheduled to take effect in 2006. Because it has not yet taken effect, no one would lose a benefit they now have.

The Concord Coalition is a nonpartisan, grass roots organization dedicated to balanced federal budgets and generationally responsible fiscal policy. Former U.S. Senators Warren Rudman (R-N.H.) and Bob Kerrey (D-Neb.) serve as Concord's co-chairs and former Secretary of Commerce Peter Peterson serves as president.



CONTACT: Tristan Cohen (703) 894-6222 [email protected]