CEI Scholars Respond to Bush Budget

<?xml:namespace prefix = o ns = “urn:schemas-microsoft-com:office:office” />  



Analysis from CEI Vice President for Policy Clyde Wayne Crews, Jr.:


“The hidden tax of regulation is moving in lockstep with spending. While down somewhat over the past year, federal departments and agencies still managed to issue more than 4,000 new rules in 2004, with few serious proposals for serious reassessment and reduction of the regulatory state and its costs during 2005.”




Aviation Security Tax  The administration’s plan for imposing new security “user fees” on airlines and their customers would worsen existing problems caused by government regulation. The administration expects to raise an extra $1.5 billion for the Department of Homeland Security to provide airport security. Fees for a one-way flight would increase by $3 to $5.50 (or to $8 for a one-way flight with multiple stops).

Analysis from CEI Technology Counsel Braden Cox:


“Under the current system, the airlines bear the brunt of consumer complaints about airport delays, even though airlines have little control over decisions concerning security procedures and air traffic control. Government agencies that set such regulatory policies—the FAA and TSA—are often the source of time delays and security gate problems that affect passengers. The security tax is not a true “user fee” because it is mandated by government agencies that are not bound by a competitive environment to spend it in the most efficient manner. Airlines and airports should be entrusted with their own security implementations.”


Amtrak Subsidy Cut  The administration’s plan to eliminate most of the $1.2 billion subsidy to Amtrak is long over-due. Despite the fact that the passenger train service produced operating losses over its 34-year existence, federal subsidies only increased over the years.


Analysis from CEI Senior Fellow Iain Murray*:


“CEI welcomes the President's decision to eliminate Amtrak's operating subsidy and provide funds only for capital investment. Amtrak has tolerated bad business decisions for too long, assuming loss would always be paid off by federal subsidies. If Amtrak cannot balance its books, it is time for Congress to consider the long-overdue privatization of the industry.”


*CEI Senior Fellow Iain Murray worked on the successful privatization of passenger rail in the <?xml:namespace prefix = st1 ns = “urn:schemas-microsoft-com:office:smarttags” />United Kingdom.


Securities and Exchange Commission Budget Cut

Analysis from CEI Warren T. Brookes Fellow John Berlau:

“The budget cut for the SEC is perfectly fine; the SEC's budget had been increased greatly in the past few years. The President and Congress should follow up by cutting the workload of the SEC, as well. That would benefit the American economy by rolling back the burdensome Sarbanes-Oxley corporate ‘reform’ legislation.”


Federal Communications Commission Budget Increase  The President’s budget includes $304 million for the Federal Communications Commission in fiscal year 2006. That’s an increase from $281 million appropriated for 2005, and a 24 percent increase in the FCC budget from five years ago.

Analysis from CEI Technology Counsel Braden Cox:

“As ‘Universal Service’ mandates grow out of control, so does the budget needed to administer it. The FCC wants more money to staff up its oversight of the federal universal service fund. Instead, Congress should dismantle this fraud-ridden program, which has become a massive means to redistribute wealth from urban to rural local telephone users. The money required to administer and oversee the universal service program would be better spent on targeted subsidies to low-income persons that really need it.”



Food and Drug Administration Budget Increase  The administration’s plan for increasing a portion of FDA’s budget by 20 percent is the wrong solution to improving drug safety.


Analysis from CEI General Counsel Sam Kazman:


“The 20 percent increase in FDA's budget for monitoring already-approved drugs is premised on the notion that the current drug safety debates show a need for more agency resources. But the real threat to public health stems not from any lack of FDA oversight, but from the fact that the agency itself continues to be a barrier to the development of new therapies. All drugs pose risks, and some drugs may turn out to pose far more risks than we currently realize. The greatest risk, however, is that drug innovation will become even more heavily regulated. A bigger budget for FDA may well mean bigger regulatory obstacles to the availability of needed therapies.”

See op-ed by CEI Adjunct Scholar Henry Miller, The Curse of Too Much Caution.


Research and Development Budget Increases  The administration’s plans for reshuffling funds for research and development won’t spur more innovation from the private sector. The Bush plan for fiscal 2006 increases by 1 percent total research and development spending, to $132 billion, with a bigger share of the money flowing to the Department of Homeland Security.  

Analysis from CEI Senior Fellow Iain Murray:


“CEI questions the wisdom of continuing to increase the science and engineering research budget, which has now swelled by 45 percent since 2001. Research has shown that government money simply drives out private money in scientific research, while at the same time stifling innovation. The President would have done better to consider incentives for private scientific research.”



Feds in charge  While the budget would scale back federal involvement in EPA environmental management and cleanup programs by 7.8 percent, the budget doesn’t do enough to get the federal government out of the role of chief regulator. 


Analysis from CEI Director of Risk and Environmental Policy Angela Logomasini:


“Since President Bush took office, the EPA budget has grown by nearly $1 billion.  A small cut this year hardly compensates for its excessive growth. There is plenty fat in this bureaucracy that could be cut even further without any harm to environmental quality. The Bush Administration could be doing even more to empower private conservation and local initiative efforts by devolving programs to the local level and reducing federal spending. For example, cutting—rather than raising—the budget for failed government ‘cleanup’ programs like the federal Superfund would have been a step in the right direction. After all, states are cleaning sites faster and at a fraction of the cost. Not only should we be cutting the program, we should be devolving this responsibility to the states.”


Energy Department Budget  The President's Department of Energy budget is a mixed bag. On the plus side are proposed cuts in oil, natural gas, and hydropower technology programs. On the minus side are proposed increases in hydrogen and nuclear programs, as well as a massive increase in ‘clean coal’ research.

The greatest missed opportunity is Bush's proposal to renew, rather than simply let expire, special tax breaks for electricity produced from wind, biomass, and landfill gas. Renewable energy tax credits prop up state-run renewable portfolio standard (RPS) programs.

Analysis from CEI Senior Fellow Marlo Lewis, Jr.:


“RPS programs essentially assign a renewable energy quota to electric power producers regardless of cost or market demand. They're a reversion to the 1970s' energy shortage malaise, and federal tax breaks keep them going. In terms of bang-for-the-buck (dollars of coerced taxpayer and ratepayer support per unit of energy produced) renewables are ‘the king of energy subsidies.’ Bush should pull the plug on them.”

Analysis from CEI Director of Clean Air Policy  Ben Lieberman:

“Taxpayers should not have to subsidize research and development for the coal industry. This industry should pay its own way.”