House Funds Key Programs but Adds to Government Bloat, Waste

The House passed two spending bills totaling $1.4 trillion Tuesday to fund the federal government through the remainder of fiscal year 2020, which began Oct. 1.

Although the first
bill
would provide much needed funding and budget certainty to core
constitutional responsibilities, such as national defense, the second
“minibus” is a Christmas tree of bloated spending and add-ons that have no
place being voted on through an appropriations bill.

The House passed the two bills, introduced late Monday afternoon, in less than 24 hours. The Senate is expected to consider the two measures later this week.

The fact that the House voted on more than 2,000 combined pages of text within 24 hours of introducing the two bills is a troubling symptom of Washington’s budget dysfunction. This is not the way that the budget process is supposed to work, and it leads to wasteful spending and other negative impacts for American taxpayers.

Lawmakers must work together to implement reforms that create a
better functioning and more responsible budget
process
.

The first spending bill, dubbed the “national security” minibus, provides a total of $860.3 billion in fiscal 2020. This includes $92.6 billion in funding adjustments that fall outside the Budget Control Act spending caps. The funding is divided among the Defense; Commerce, Justice, and Science; Homeland Security; and Financial Services appropriations bills.

Providing national security is one of the key responsibilities of
the federal government. This package will ensure that the Department of Defense
and other security agencies are properly trained and equipped so that they can
continue to ensure the safety of all Americans. Passing full-year
appropriations now also will enable these agencies to proceed with long-term
projects.

However, the national security “minibus” is not without flaws. The
bill includes $17.4 billion in disaster funding that is not constrained by the
budget caps and is not paid for. This funding goes directly to the Federal
Emergency Management Agency’s Disaster Relief Fund and is intended to be used
to respond to disasters that have a cost of less than $500 million per event.

As of the end of November, the Disaster Relief Fund had a carry-over
balance exceeding $29
billion
. Congress should not provide additional uncapped disaster-relief
funding when FEMA hasn’t used previously appropriated funds.

Further, some degree of recurring natural disasters occurs every
year. Lawmakers should budget
for recurring disasters
through FEMA’s regular appropriation, not new
deficit spending.

The second spending bill, “domestic priorities,” provides a total
of $539.9 billion
(including $19.5 billion in uncapped adjustments) to the following departments
and related agencies: Labor, Health and Human Services, and Education;
Agriculture; Energy and Water, Interior and Environment; Legislative Branch;
Military Construction and Veterans Affairs; State and Foreign Operation; and
Transportation and Housing and Urban Development.

As a result of the irresponsible Bipartisan
Budget Act of 2019
, nearly all areas of these departments received
increased funding. Unlike the national security minibus, this bill is wrought
with wasteful spending. Other funding provided by this bill falls outside the
scope of the federal government and could be reduced or eliminated.

The federal government is projected to run a deficit of more than
$1 trillion in fiscal 2020. Providing additional funding for activities that
don’t meet a truly national interest is irresponsible.

The domestic priorities minibus includes another $6.7 billion in
“emergency” funding to help offset states’ costs for natural disasters,
primarily wildfires. Much like the additional funding for FEMA’s Disaster
Relief Fund, this uncapped emergency funding is inappropriate.

Wildfires and other natural disasters happen to some degree every
year. They do not meet the definition of emergency funding, and Congress should
budget for these recurring events within the budget caps.

Lawmakers must take steps now to budget for the next disaster or
national emergency before it occurs. Emergency designations should be reserved
for truly unforeseen events and in those cases, should be fully paid for
through cuts to other areas of the federal budget.

Other add-ons included in this bill, such as a tax extenders package and a coal miners pension bailout, are discussed in more detail below by other Heritage Foundation policy analysts.

Congress must be held accountable for skirting budget rules and recklessly driving deficits ever higher. Current and future generations will pay a high price if lawmakers continue down this path.—Justin Bogie

Defense

The defense appropriations bill will provide the necessary
stability to continue rebuilding our military for fiscal year 2020, after 79
new starts and 39 production increases were delayed because of the continuing
budget resolutions since Oct. 1. It follows the lead of the National Defense
Authorization Act and makes important investments in our national defense in
the context of renewed great power competition.

The bill provides $19.5 billion more to the Department of Defense,
which will serve well to rebuild and augment our national defense. It creates
the Space Force, establishing an institution focused on wining in space.

The legislation provides a 3.1% pay raise to the military, which
will help with retention and recruiting. Further, the bill appropriates for 98
F-35 aircraft, which will speed up the program as recommended
by Heritage research
.

The bill also creates a path for the Air Force to buy back the
F-35s destined for Turkey. However, the appropriators included the procurement
of eight F-15EX, an
unforced error
.

When it comes to the Navy, the appropriators wisely included 14
new ships, which will help the service get closer to its 355-ship goal and
provides resources for long-lead items for the midlife refueling of the USS
Harry S. Truman, a Nimitz-class
aircraft carrier.

The appropriators decided not to backfill military construction
resources redirected to the southern border, which will be detrimental to the
military.

Congress also continued its tradition of giving nonmilitary
research tasks to the military by providing $492.5 million for cancer research,
which is unfortunate.—Frederico Bartels

Health
Care

After years of efforts to replace Obamacare with health care that
works for all, Republicans seem to have set aside that approach and embraced
deficit spending on failing entitlement schemes that mainly benefit insurance
companies at the expense of patients and taxpayers.

The bill does–rightly–repeal two Obamacare taxes that have driven
up health costs by permanently repealing the medical device excise tax,
effective Jan. 1 (Section 501, p. 1480) and the tax on
health insurance providers
, effective Jan. 1, 2021 (Section 502, p.
1480).

These taxes make health care (and health insurance) cost more,
since they are taxes on the purchase of those products.

However, the bill does not touch the underlying spending that
these taxes fund– i.e., the Obamacare entitlement spending scheme. This scheme
also contribute to higher health costs and greater taxpayer burdens, by giving
insurance companies more money every time they raise prices.

Rather than reform Obamacare and address these and other abuses,
the bill would make it harder for the Trump administration to address how
insurers game the system.  Congress should take a different approach, and
combine repeal of the funding source with reforms to the underlying, failed
spending scheme as well.

Finally, the bill also permanently repeals the “Cadillac” tax
(Section 503, pp. 1481ff), which imposes a tax of 40% on high-cost employer
medical plans. Before the enactment of Obamacare, employer-sponsored health
plans were exempt from federal taxation regardless of the dollar amount of
the job-based health coverage.

This tax policy gave employers (as well as labor unions) powerful
incentives to drive up health insurance spending and thus overall health
insurance costs. As a way to increase compensation, tax-free health insurance
increases, in comparison to taxable wages, was an attractive option for
employers and employees alike.

The Cadillac tax, for all of its faults, was designed to be a
break on rising health care costs, but Congress repeatedly has delayed the tax
from going into effect.

Congress should
replace
this tax with a simple cap on the existing tax exclusion for
employer–provided health insurance. Such an approach would mirror that used for
other employer-sponsored benefits. For example, Congress caps tax-free
contribution amounts to 401(k) plans.—Marie Fishpaw

Tax
Extenders

The bill includes a familiar list of about 46
temporary
tax subsidies and other provisions, most of which have been
expired for two years. The bill retroactively extends these credits along with
a list of other soon-to-expire provisions through fiscal 2020.

Credits for biodiesel and certain railroad track maintenance get an
extra lease on life, being extended through 2021 and 2022, respectively. Even
potentially good reforms, such as lower alcohol excise
taxes
, are less effective when they are made temporary.

As a policy tool, narrowly targeted and temporary tax preferences
are always poorly
designed subsidies
. They introduce unnecessary complexity and
ambiguity to the tax code and do a bad job of targeting the desired activity.

The myriad special interest tax provisions included in this bill
are each uniquely defective, and as a whole, represent flawed
policy
.—Adam Michel

Pension
Bailout

Lawmakers are preparing to vote on a spending package that would
provide a $6
billion
[MK1] taxpayer
bailout to one select union. That union is the United Mine Workers of America.

For the first time in history, Congress is poised to use taxpayer
dollars to fund the broken pension promises of a private-sector union and
private employers. The United Mine Workerscovers fewer than 1% of multiemployer
pension recipients, and its roughly $6 billion in underfunding is only the tip
of the iceberg.

Virtually the entire multiemployer pension system is on the path
toward insolvency. Across the U.S., close to 1,400 multiemployer pension
plans collectively have set aside only 43 cents on the dollar to pay promised
pensions.

In total, the Pension Benefit Guaranty Corporation estimates that
multiemployer plans have $638 billion in unfunded pension
promises
.

The solution to the multiemployer pension crisis is not to bail
out just one of nearly 1,400 massively underfunded union pension plans without
doing anything to improve the system. Neither should it be to bail out all
possible underfunded pension plans—including $638 billion in private union
pensions and up to $6 trillion in state and local pensions—the price tag of
which could reach $52,000 for every household in the U.S.

Instead, Congress needs
to change the rules
so that this never happens again, to maintain
the Pension Benefit Guaranty Corporation solvency as a pension safety net, and
to require plans to act sooner, rather than later, to minimize pension losses.—Rachel Greszler

Securities
and Exchange Commission

Although the
budget of the Securities and Exchange Commission has increased by 82% over 10 years,
its effectiveness remains in question.

Resources have flowed into unnecessary management, “support,” and
ancillary functions, while core functions have been neglected. The SEC’s organizational
structure is unwieldy. It spends resources poorly, especially on information
technology and administrative support. Contract oversight is extremely lax.

The Consolidated
Appropriations Act, 2020 (H.R. 1158) would increase funding for the SEC by
nearly 11% to $1.82 billion (from a fiscal 2019 level of $1.6 billion). This is
more than even the agency requested ($1.75 billion).

Any
increase in the SEC budget is unwarranted until the agency spends its existing
resources better
. An increase of this magnitude is profligate.

Section 634 of H.R. 1158 would stop
the SEC from regulating the disclosure of political contributions,
contributions to tax exempt organizations, or dues paid to trade associations.
This is positive. The SEC
should be seeking corporate disclosure relevant to investment
, not disclosure
for political purposes.—David Burton

Energy and
Water

Rather than a sober review of Energy and Water appropriations, the bill proposes to increase spending by $3.6 billion, continuing a string of such increased spending on Energy Water for the past six years.

Included in that increase is wasteful spending to expand the
office of Office of Energy Efficiency Renewable Energy, the Office of
Science, the Land and Water Conservation Fund, Advanced Research Projects
Agency–Energy, and a nuclear reactor demonstration program in the Energy
Department.

The Office of Energy Efficiency and Renewable Energy, which
Congress should eliminate because it provides taxpayer dollars to subsidize
development of renewable energy and energy efficiency, would receive $2.85
billion. This is a $469 million increase over fiscal 2019 levels and about $2.5
billion more than the White House’s budget request.

The nuclear reactor demonstration program is a particularly
egregious shirking of responsibility and a new program. Although the House is
bent on spending taxpayer money to build
demonstration reactors
largely as proposed in the Nuclear Energy
Leadership Act–an activity that mostly should be left to the private sector and
otherwise fraught
with problems
–Congress should instead be addressing the problem of nuclear
waste management.

Congress’s failure to provide any policy direction on nuclear waste management is an issue that costs taxpayers over half a billion dollars annually and is entirely the fault of the federal government.

Only Congress can fix this. That it essentially went unaddressed is irresponsible, to put it mildly.—Nick Loris and Katie Tubb

Education

Conservatives in Congress should focus their efforts on getting
Washington out of the classroom.

Rather than moving in that direction by reducing federal taxpayer
spending on inappropriate and ineffective education programs, the bill increases
spending at the Department of Education by $1.3 billion over fiscal 2019 levels
(and over $8 billion more than the administration proposed in its budget).

It maintains funding for ineffective programs like the 21st
Century Community Learning Centers and creates a new federal program for
“social emotional learning.”

In addition to increasing discretionary K-12 spending, this
proposal also would increase spending on Pell Grants while expanding access to
public service loan forgiveness.

Conservative policymakers
should be going in the opposite direction, eliminating these failed,
duplicative, and inappropriate federal programs.—Lindsey Burke and Mary Clare Amselem

***

The “minibus” also includes a provision to increase the maximum award for Pell Grants to $5,285 per recipient. This is yet another increase that exceeds inflation, further fueling the skyrocketing growth of tuition.

Even worse, the
Pell provision
will generate a spending increase of roughly $526 million outside
the budget caps. This could be avoided with a simple text fix that limits the
increase to a single year.—David Ditch

Trade

One provision requires the Commerce Department to
release its report on the Section 232 auto case within 30 days of enactment (Section 112 of Senate Amendment to H.R. 1158).
Heritage
research
has called for a release of the report
for months.

The Section 232 statute requires publication, but
does not provide a timeline. Automobile
imports are not a threat to U.S. national security

and the Trump administration should have released the report long ago.

Three other provisions extend “Buy America”
regulatory standards for various government procurement (Section 8026 of Senate Amendment to HR 1158
and Sections 736(a)(1), Section 421(a)(1), and Section 108 of Senate Amendment
to HR 1865). These policies are extremely
onerous and complex regulatory hurdles for producers
.

They also result in American taxpayers spending more
than they would otherwise pay for government projects, and are unlikely to
yield job growth in target industries such as steel.—Tori Smith

Agriculture,
Rural Development, and FDA

Once again, Congress has failed to take reasonable steps to achieve significant
savings in the agriculture spending bill. The fiscal 2020 spending
levels
are about $23.5 billion, which is $183 million above last year’s
levels.

Some examples of the wasteful spending:

  • The legislation would continue funding (over
    $100 million
    in discretionary spending) for the Rural-Business Cooperative
    Service, which uses
    taxpayer dollars to help maintain financial assistance programs for rural
    businesses. As a result, it treats these businesses as if they are incapable of running themselves.
  • The legislation would spend
    about $736
    million
    for Conservation Technical Assistance, a
    costly
    program
    to provide subsidized advice for landowners
    on issues they should be addressing on their own, such as how to enhance
    recreational activities on their land.
  • Instead of addressing the failure that is the new federal school meal standards, this bill
    would spend $30
    million
    to help schools buy new equipment to
    meet the costly, one-size-fits-all requirements.

Some problematic riders also are in the bill. For example, the bill
would limit the Trump administration’s ability to reorganize the Department of
Agriculture (Section 789).

And the bill fails to address the Obama administration’s
Food and Drug Administration produce safety rule that seeks to regulate the
growing of almost every fruit and vegetable regardless of risk.

The bill instead creates special new exceptions for
a limited number of commodities without requiring the agency to properly
consider
risk for all fruits and vegetables as
was required by the Food Safety Modernization Act (Section 746).—Daren Bakst

Housing
and Urban Development

The bill provides $175 million for the Choice Neighborhoods
Initiative to “transform neighborhoods of poverty into functioning, sustainable
mixed income neighborhoods with appropriate services, schools, public assets,
transportation and access to jobs.”

The bill also requires an “additional period of affordability” of up to 20 years for housing constructed with these funds. This effectively requires rent control, a policy demonstrably leading to localized housing shortages and dilapidated condition.

The bill appropriates $3.4 billion for the Community Development Fund and $262 million for Community Development Financial Institutions.

These funds often flow to politically favored
housing
developments and services desired by special interests.
Accountability, transparency, and efficiency also pose significant concerns.
Often, this approach enriches the politically connected at taxpayer expense and
expands the government’s harmful interference in the housing market.

The approval process ensures that politically connected entities
are enriched at taxpayer expense. Even if funds flowed directly from the
government to recipients, this would be a concern.

The manner in which these programs operate compounds the problem.
The federal government transmits the funds through intermediaries (including
state governments) to the ultimate recipients, reducing transparency and
accountability in the process. Often, those recipients are real estate
developers or investment property owners.

Intense pockets of poverty across urban
neighborhoods long have garnered public attention. Research
shows that targeted development subsidies have failed to increase employment,
raise wages, or advance general economic opportunity.

In stark contrast, lifting government-imposed barriers to work, housing supply, and education choice can expand economic mobility and opportunity.—Joel Griffith

Source material can be found at this site.

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