The Verifiable Five-Year Savings in Ted Cruz's "Five for Freedom" Plan

November 16, 2015
Demian Brady
CANDIDATE:
Ted Cruz

Senator Ted Cruz has proposed a “Five for Freedom” plan to wind down and eliminate the four Departments (Education, Energy, Commerce, and Housing and Urban Development) and the Internal Revenue Service (IRS). His plan would also eliminate several specified programs, reduce the number of federal employees, reform federal salary, and create a commission to review federal programs.

Regarding the four departments and IRS, Cruz said he “will appoint heads of each of those agencies whose sole charge will be to wind them down and determine whether any programs need to be preserved.” He has also listed 25 specific smaller programs that he would eliminate, and would reduce the number of federal workers through attrition.

Cruz stated that that his plan would save $500 billion over ten years. NTU Foundation reviewed Cruz’s proposals to determine the net spending impact over a five-year budget window. NTU Foundation was able to quantify total savings of $5.151 billion per year. Savings could be higher, especially over the long-term. Outlays for the 5 major programs were nearly $200 billion in FY 2015, but the timeline for winding down the Departments is unclear, as well as which programs within the Departments would be retained. The specific figures and detailed notes and sources are listed below. The figures may be revised as additional information becomes available.

Internal Revenue Service: “[E]nd the political targeting, simplify the tax code, and abolish the IRS as we know it.”

Cost per Year: Indeterminate

Notes: For FY 2016, the IRS’s budget will be approximately $12 billion, including $2.2 billion for taxpayer services, $4.9 billion for enforcement, and $3.7 billion for operations support. Cruz has proposed a flat tax that would significantly reduce the size and complexity of the current Tax Code and would be expected to reduce tax administration and enforcement costs, but an estimate is unavailable. While Cruz has vowed to “abolish the IRS as we know it”, it is unclear what size agency would be necessary to oversee the reformed Tax Code.

Department of Education: “[R]return education to those who know our students best: parents, teachers, local communities, and states. And block-grant education funding to the states.”

 Cost per Year: -$617 million (-$3.085 over five years)

Notes: "The entire budget of the Department of Education in FY 2015 was $103.3 billion, of which grant funding to the states totals $71.3 billion. Based on Cruz’s statement, NTUF assumes that he would convert existing funds to the states into block grants and reduce the size of the Department’s bureaucracy. There are approximately 4,200 full-time equivalents (FTEs) employed at the Department of Education. Based on data available pertaining to the office of Program Administration, the average personnel, benefits, and non-personnel (including such items as travel, rent, mail, telephones, utilities, printing, IT, contractual services, equipment, supplies, and other departmental services) costs per FTE is $220,849. Based on this, total annual personnel and administrative costs could run upwards of approximately $926 million. NTUF assumes the workforce of the Department would be drawn down to 10 percent of its current level over the next five years, saving $315 million in the first year and $834 million in the fifth year.

Department of Energy:

"[C]ut off the Washington Cartel, stop picking winners and losers, and unleash the energy renaissance.”

Cost per Year: Indeterminate

Notes: In FY 2015, the Energy Department’s budget totaled $30.14 billion. It is unclear how the Department would be wound down or which programs would be retained.

Department of Commerce: “[C]lose the ‘congressional cookie jar’ and promote free-enterprise and free trade for every business.”

Cost per Year: Indeterminate

Notes: In FY 2015, the Commerce Department’s budget totaled $9.97 billion. It is unclear how the Department would be wound down or which programs would be retained.

Department of Housing and Urban Development (HUD): “[O]ffer real solutions to lift people out of hardship, rather than trapping families in a cycle of poverty, and empower Americans by promoting the dignity of work and reforming programs such as Section 8 housing.”

Cost per Year: Indeterminate

Notes: In FY 2015, HUD’s budget totaled $42.39 billion. It is unclear how the Department would be wound down or which programs would be retained.

Eliminate Twenty-five Specified Programs: “Empower the people by reducing the alphabet soup of Agencies, Bureaus, Commissions, and other programs that prop up special interests, at the taxpayer’s expense. A Cruz Administration will identify all unnecessary programs – these 25 are merely a start … .”

Cost per Year: -$4.534 billion (­$22.67 billion over five years)

Notes: Except for the catfish inspection program, the figures below  are based on FY 2015 actual outlays:

  • Appalachian Regional Commission: $90 million.
  • Climate Ready Water Utilities Initiative: Indeterminate. The FY 2015 funding level for the Initiative is not specified in the Environmental Protection Agency’s (EPA) recent budget justifications.
  • Climate Research Funding for the Office of Research and Development: Indeterminate. The EPA spent $239 million in FY 2015 through the Air, Climate, and Energy research program. It is unclear whether Cruz would eliminate the entire funding, reduce outlays for the grant, or prohibit expenditures through the program for climate research.
  • Climate Resilience Evaluation Awareness Tool: Indeterminate. The FY 2015 funding level for the Tool is not specified in the Environmental Protection Agency’s (EPA) recent budget justifications.
  • Consumer Financial Protection Bureau: $582 million.
  • Corporation for Public Broadcasting: $445 million.
  • Corporation for Travel Promotion: $118 million.
  • Global Methane Initiative: Indeterminate. The Initiative received $6 million in FY 2013, but it is unclear whether additional funding has been spent since then, and is not specified in the Environmental Protection Agency’s (EPA) recent budget justifications.
  • Green Infrastructure Program: Indeterminate. This program is under the $107 million Safe and Sustainable Water Resources research program. However, FY 2015 funding is not specified in the EPA’s recent budget justifications.
  • Greenhouse Gas Reporting Program: Indeterminate. FY 2015 funding is not specified in the EPA’s recent budget justifications.
  • Legal Services Corporation: $375 million.
  • National Endowment for the Arts: $146 million.
  • National Endowment for the Humanities: $146 million.
  • New Starts Transit Program: $2.012 billion.
  • Pacific Coastal Salmon Recovery Fund: $65 million.
  • Presidential Election Campaign Fund: Indeterminate. In the 2012 election, nearly $38 million was spent through the Fund, because neither major candidate accepted federal funding, nearly all of that amount went to the party conventions. A law passed in 2014 eliminated funding for political conventions.
  • Regulation of CO2 Emissions from Power Plants and all Sources: Indeterminate. This could reduce enforcement costs, but an estimate is currently unavailable.
  • Regulation of Greenhouse Gas Emissions from Vehicles Indeterminate. This could reduce enforcement costs, but an estimate is currently unavailable.
  • Renewable Fuel Standard Federal Mandates: Indeterminate. It is unclear how this proposal would impact spending (see page 15 of this Congressional Budget Office report.)
  • Saint Lawrence Seaway Development Corporation: $32 million.
  • Sugar Subsidies: Indeterminate. It is unclear whether this would reduce outlays. CBO’s budget baseline forecast for the Commodity Credit Corporation shows zero outlays for is sugar program.
  • Transportation Investment Generating Economic Recovery: $464 million.
  • UN Intergovernmental Panel on Climate Change: $10 million.
  • UN Population Fund: $35 million.
  • USDA Catfish Inspection Program: $14 million.

Grace Commission 2.0: “Re-institute President Reagan’s Grace Commission to assess federal spending levels and evaluate areas of waste and fraud.”

Cost per Year: Indeterminate

Notes: Depending on the details and size of the commission, this could cost as little as a few hundred thousand dollars, or as much as a few million.

Balanced Budget Amendment: “Sign a Balanced Budget Amendment to start spending responsibly and save future generations from additional crippling debt.”

Cost per Year: Indeterminate

Notes: There could be significant savings to the degree that the proposed Balanced Budget Amendment includes strict caps on outlays.

Federal Hiring Freeze and Reduction: “Put in place a hiring freeze of federal civilian employees across the executive branch. For those agencies in which it is determined that a vacant position needs to be filled, I will authorize the hiring of a maximum ratio of one person for every three who leave.

Cost per Year: -$3.74 billion (-18.7 billion over five years) (Excluded from total)

Notes: In 2013, the Congressional Budget Office produced a cost estimate for a related proposal to reduce the size of the federal workforce through attrition. For every three federal employees that retire, only one would be hired, for a savings of $18.7 billion over five years. However, this is potentially duplicative with Cruz’s proposals to eliminate and wind down departments and agencies.

Federal Salary Reform: “Reduce the annual across-the-board adjustment for federal civilian pay so that rather than receiving automatic yearly raises, federal workers would have more opportunities for merit-based pay increases.”

Cost per Year: Indeterminate

Notes: A cost estimate for merit-based pay increase reform is unavailable.

Demian Brady

Director of Research

Demian Brady is the Director of Research for the National Taxpayers Union Foundation. His responsibilities include producing commentaries and studies on fiscal issues, as well as managing NTUF's BillTally program (which tracks the impact of legislation on the size of the federal budget), State of the Union analysis, and more. Demian's research has been cited in the New York Times, the Wall Street Journal, and the Washington Times. In addition, he has written on a number of budget-related issues for both NTU and NTUF. Mr. Brady resided and worked in Columbus, Ohio before moving to Washington, DC in 1998. He earned an M.A. in Political Science from American University. He received a B.A. in Russian Area Studies from Bowling Green State University, Bowling Green, Ohio, where he graduated Magna Cum Laude and was inducted into Phi Beta Kappa. 

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