As the dust settles over the 2010 elections and the final handful of races are settled, we can clear out the balloons and confetti and start thinking about what the 112th Congress needs to tackle.

(Of course we should note the fiscal year 2011 spending bills still need to be tackled, but we think that will be resolved in the lame duck…)

The ascendant House Republican majority’s Pledge to America included a promise to tackle spending while protecting senior citizens, veterans, our troops (otherwise known as defense spending), and entitlements.

We think that promise was too limited. If we are going to get our fiscal house in order we need to put everything on the table. That means taking a hard look at entitlements, defense, revenue, domestic spending– all of it. But, even if we stay within the limits of the promise the Republicans made, there are lots of areas for the new Congress to start righting our fiscal ship.

Looking for some programs to cut? Here are some wasteful programs ripe for reform or cutting. Commodity subsidies in the Farm Bill total more than $25 billion. And while we are talking about Agriculture, eliminating the Market Access Program, which helps corporations like McDonalds and Nabisco reach “new markets” can save $1 billion over five year. You can also halt construction of new economically unnecessary locks on the Upper Mississippi, saving more than $2 billion. Didn't like the stimulus? Then don't renew the Build America Bonds Program and save taxpayers $9 billion.

Looking for ways to get closer to a balanced budget? Look no further than the labyrinthine system of tax expenditures . Tax expenditures, you ask? These are the little-understood breaks in the tax code that end up costing the government more than a trillion dollars every year. They litter the tax code.

The tax code is like a forest. Over time the underbrush builds up – lawmakers give a break to this industry or this certain group of people, and so on. Eventually the forest is filled with hundreds or thousands of plants competing over precious space, working at cross purposes, and making it difficult for hikers (taxpayers) to navigate. But every once in a while a fire comes through burning up all the underbrush and dead wood, and restoring the forest.

The last major tax reform legislation – in 1986 – took an axe to tax expenditures while cutting rates in order to be revenue neutral and simplify the tax code. It's 25 years later, and we need another tax code prescribed burn to remove the underbrush and dead wood like VEETC.

The National Commission on Fiscal Responsibility and Reform will soon finally be rolling up their sleeves and figuring out what their recommendations are before the December 1stdeadline for their report. The 18 person commission requires a 14 vote majority before they pass on any recommendation. Congressional Democrats and Republicans each appointed six members, so this is a perfect opportunity to put to the test all the post-election talk about how lawmakers have heard that the voters want the two parties to work together . We need them to work together and be creative and aggressive.

TCS and other groups have met with the commission’s staff. We’ve outlined scores of cuts to consider. But we’re not done yet; we’ll be sending them a list of spending cuts, administrative reforms, revenue raisers, and tax expenditures to look at while they try to bring the books closer to balance. Don’t worry, we’ll post them too.

The only way to get our budget back on track is to push and pull in every direction. It’s gut check time for the commission. And then it is time for the 112th Congress to put the budget where their mouth is.
 

Wastebasket Quote of the Week:

“I do, because I think that is what the American people want right now. I think courage is not necessarily going to be standing up alone in the coming years; it is going to be standing next to someone you don’t always agree with.”

– Sen. Amy Klobuchar (D-Minn.) when asked whether there was any chance of Democrats and Republicans agreeing on important issues in the next two years. Politico