Via Conference Call
5:02 P.M. EDT
SENIOR ADMINISTRATION OFFICIAL: Hi, everybody. Thanks for joining us. As Ken said, we are about to roll out the budget document, and we just wanted to give you some sense of some highlights that we think are important going into it. As you know, the President has talked in some detail about the new foundation that he wants to lay for broad and sustained economic growth, and a budget that will make the investments we need, overdue investments in reforms; in education so every child can compete in the global economy; in health care reform so that we can control costs and offer affordable coverage to Americans; and investing in renewable sources of energy so that we can reduce our dependence on foreign oil and become the world leader in this new clean-energy economy. This budget responds to those priorities -- priorities that were also reflected in our recovery package earlier this year.
The President also has made clear that fiscal discipline is another pillar of this economic foundation he seeks to build. We inherited, as you know, a large budget deficit -- $1.3 billion. We've necessarily had to add to it in order to deal with the economic emergency that we face. But we understand and feel strongly that our long-term growth requires that we tame these deficits and reduce debt.
And so the President ordered a line-by-line review of the federal budget, and he asked my colleague and his crew and Cabinet members to look at all the government programs and ask some hard questions about what works and what doesn't, what's necessary and what's not, what may have made sense once but doesn't any longer, what may never have made sense, so that we could eliminate those things in order to make room for the things that we truly do need.
And the result has been the document that you will see tomorrow. And I will -- I can think of no better person to lead that effort than my colleague, who is really a master of the budget and someone who has talked for a long time about the need to prioritize and bring some discipline to the budget so that we can promote our true priorities and long-term interests and still do it within the context of sane and responsible budgeting.
So why don't you give folks a sense of what to expect.
SENIOR ADMINISTRATION OFFICIAL: Sure, thanks. A few comments before I get to -- I'll give you a few illustrative examples, but before getting to that, a few broader comments.
First, this is an important step in the process, but it's only a step in the process. Our effort to find efficiencies in the federal government are going to continue beyond the release of this document. I know, for example, also Speaker Pelosi has tasked her committee chairs with reporting back by the beginning of June with ideas for savings also. So the Congress has also focused on this as we move into -- throughout the year we will continue to search for additional savings and efficiencies.
Second, I think there's a general point that should be made about what we're looking for. In many cases we have multiple programs that are doing the same thing, and that drives up administrative costs unnecessarily. So duplication can be the enemy of efficiency.
And then secondly another big problem is that we often don't measure and evaluate what works. We are searching for things that work and trying to cut back on things that do not work. Part of that means applying more evaluation to a variety of programs.
So you will see, for example, in the document that we're putting out on terminations, reductions, and savings, footnotes which refer to studies from, for example, the GAO or others on the evidence on why these programs that we're proposing to terminate or reduce are not working.
With that said, the volume that we're releasing includes 121 reductions, terminations, or other savings. In total they would save nearly $17 billion in 2010 alone, and more thereafter. About half of the money comes from defense, and about half from non-defense. Looked at a different way, almost $12 billion -- about $11.5 billion comes from the discretionary part of the budget, and the rest from the mandatory part of the budget.
And finally some of these have been discussed by the administration before, but there are about 80 programs that are new to this volume and have not been discussed by the administration previously.
Let me give you a few examples of things that we are terminating or reducing. First, LRNC, which stands for long-range radio navigation system. It's a system that is now made obsolete by the prevalence of GPS. It's not used, it's unnecessary, it costs us $35 million a year, and we perpetuate it just through inertia. We are proposing that we eliminate the LRNC navigation system.
Abandoned mine land payments. We continue to make payments to states to clean up abandoned mines even after those states have completed the task of cleaning up the mines. So we are no longer going to be -- or we are proposing that we no longer pay states to clean up mines that have already been cleaned up. That saves $142 million.
The Department of Education has an educational attaché in Paris. We are proposing that the Department of Education can instead use e-mail and videoconferencing and does not need a full-time representative in Paris, France -- $632,000 in a year.
The Christopher Columbus Fellowship Foundation costs $1 million a year. It has an overhead rate of about 80 percent, so about 20 percent of that million-dollar appropriation -- or only 20 percent, I should say -- is actually paid out in fellowships and awards. That's obviously inefficient and we are proposing that that appropriation be eliminated.
And then finally as another example of a program that the administration supports the goals of but that the evidence suggests is not working very well -- Even Start. Even Start is a early education -- early childhood education program -- and obviously the President and the administration feel very strongly that early childhood education done in a high-quality way is crucially important and have provided additional funds both through the Recovery Act and in the budget that we will be releasing tomorrow for early childhood education.
However, a variety of studies of Even Start have suggested that that program does not work well. The most recent evaluation, for example, found out of 41 outcomes that were measured between families in the program and families that were not, that there was only a difference in outcomes on 38 out of -- I'm sorry, there was no difference on 38 out of the 41 outcomes.
So we are proposing that Even Start be eliminated even while we are investing in other programs that do work, including Early Head Start and Head Start.
And I think that's a general theme. We're trying to cut back on the things that don't work, invest more in the things that do. And I just gave you five examples of things that we think do not work and that are part of this overall effort to reduce spending and achieve budgetary savings of $17 billion in 2010 alone.
So with that I'll turn it back over to Ken.
Q: A couple of questions for both of you. You mentioned first Even Start. That is a program that President Bush targeted and got a lot of pushback from Democrats, a lot of pushback from liberal advocacy groups who said that that assessment that you're citing was flawed and the program obviously still is alive. A, why do you think you're going to have more success this year than President Bush had in the past? And another question, of the programs on the defense side that are going to be cut, do those include the programs already targeted by Secretary Gates, or is this savings on the defense side on top of those really big programs, like the F-22?
SENIOR ADMINISTRATION OFFICIAL: Let me answer both of those questions and then my colleague can feel free to jump in.
First, this volume that we're releasing does include the reductions or the reforms that Secretary Gates has already announced. There are a few other items, but the bulk of the defense items are part of the package that you have already heard about from Secretary Gates, which is why I mentioned that part of these programs have already been announced by the administration in various forms.
With regard to Even Start more broadly, I guess maybe the more important point is the more broad point about achieving success. Clearly a key thing is congressional support for these changes. None of this is going to be easy and no one ever pretended that it would be. But we are trying to do the right thing here and I think the context has significantly changed. I will again say, for example, Speaker Pelosi has tasked her committee chairs with reporting back on ways to save money by the beginning of June. So the effort to look for efficiencies is not just the administration, it's working in concert with the Congress.
And I'd be happy to have a longer discussion about the evidence on that particular program, but I think the evidence is unfortunately clear that this specific early childhood education program does not work very well, which is why we're proposing to eliminate it. But there are other early childhood education programs that do, which is why the Recovery Act included $5 billion for Head Start, Early Head Start, and related programs. And the budget that we're releasing tomorrow will provide additional funds for those kinds of evidence-based activities.
SENIOR ADMINISTRATION OFFICIAL: Can I just add, just to piggyback on my colleague's last point, Jonathan, that we're interested in measuring programs by their outcomes, not by their intentions. There are a lot of programs that are implemented with the best of intentions; not all of them are effective. And we can't afford to carry programs that are ineffective.
The President's commitment to early childhood education is well known and I think reflected in the commitments that my colleague cited. But what we're not going to do is we're not going to hold back in terms of eliminating programs simply because of their intentions. And yes, as he said, there will be some struggles here. There are very few programs in the federal budget that don't have a constituency and someone who's willing to stand up for them in Congress; we understand that. But there's an overriding national need here and we intend to meet that responsibility.
Q: Okay, thank you.
Q: You talked about some of the education cuts. I was wondering if there are going to be any cuts to higher education or student aid programs.
SENIOR ADMINISTRATION OFFICIAL: If you look back at the document that we released in February, I think you can see the vision for higher education there. Right now we're focused only on the things that I've already discussed, and I gave you some examples. I suppose the educational attaché would not be an example of a higher education reduction, but, again, the Department of Education representative in Paris, France, at almost a -- or a little over a half a million dollars.
Q: Okay. So no cuts to student aid programs --
SENIOR ADMINISTRATION OFFICIAL: No, I didn't say that. I said we wanted -- remained focused on the things that I delineated. You can look back on the -- at the February document for a broader set of policies that we have put forward on higher education and you will see more in the full documents that we release tomorrow.
Q: Thank you. I wanted to be sure -- I'm not sure I heard a figure attached to the Even Start cut. And among the new items that haven't previously been discussed, have you mentioned the biggest item on the table among the samples that you gave us? I assume from what you're saying that the defense items would include such items as the Marine One program and the F-22, but have you divulged the largest of the new, previously not discussed items here today? And lastly, $17 billion in the context of $3.55 trillion -- a lot of people might ask, is this really the best you can do?
SENIOR ADMINISTRATION OFFICIAL: Let me try to answer those in reverse order. First, $17 billion I think is to anyone's accounting a significant amount of money. Again, that's in one year alone. Clearly there are larger savings that are possible in health care reform, for example. The $17 billion does not include the very significant savings that we are putting forward, for example, in Medicare Advantage, where we're proposing more than $175 billion over 10 years in savings from reducing subsidies to -- that are excessive for the private plans that operate under Medicare.
And frankly, the big money is in affecting the rate of growth of health care costs and that is why we are so focused on getting health care reform done this year. But there will be an appropriations process this year as there is every year, and therefore it does make sense to be looking for additional savings in this area also.
And finally, I would say, as I started with, that this is an important first step but it's not the end of the process. We will continue to look for additional savings and I know that congressional committees are also. So you have not heard everything that is to be said on this topic from us as we roll into -- as we have a full year.
Again, maybe the context is important here: During a transition year, the budget process is very accelerated relative to where it -- what normally happens. And as we have the full budget process in the fiscal year 2011 budget, I am confident that there will be yet more savings that we can identify, working with Cabinet agencies and with congressional committees.
You had asked about Even Start. Even Start saves -- eliminating it saves $66 million in 2010.
And your final question was the largest item that we had not previously announced -- I think you'll see that in the document that we release tomorrow morning.
Q: Thanks. I just wanted to get you to reflect for a second on how your approach is going to be different from the previous administration. I mean, I think a lot of people are going to draw the comparison to the previous administration; say, well, you're picking a lot of the same programs. But what do you think is different about your approach?
SENIOR ADMINISTRATION OFFICIAL: Well, first, actually, the majority of the programs that we're proposing here were not -- had not been previously proposed by the previous administration. But more importantly, I think the question becomes how to work -- it comes back to the question that we had earlier about Even Start -- how to work constructively with the Congress to actually get this stuff done. And I think the spirit on Capitol Hill is now cognizant of the need to find some efficiencies and I think you're going to see proposals not just from us, but frankly coming from Capitol Hill, to find savings. And that's all for the good.
I don't know if you want to add anything else.
MR. BAER: Your colleague actually already jumped off, and we need to do, as well. Thank everyone for getting on, and there will be a lot more information to come tomorrow. Thank you.
END 5:22 P.M. EDT