10 ways to cut Uncle Sam's budget

chart_spending_cuts.top.gif By Charles Riley, staff reporter


NEW YORK (CNNMoney.com) -- Cut the budget! That was the rallying cry for many candidates of both parties, but if you listened closely, you heard little in the way of specifics.

Enter the co-chairmen of President Obama's bipartisan deficit commission. On Wednesday, they recommended 58 ways to cut spending. And their cuts are downright specific.

The report from Erskine Bowles and Alan Simpson -- experienced Washington hands -- recommends reducing discretionary spending to 2010 levels in 2012, and then cutting discretionary spending by 1% a year through 2015.

After 2015, inflation-adjusted growth would be allowed.

Overall, Simpson and Bowles are recommending that total spending not exceed 22% of GDP initially, but no more than 21% eventually.

To show how Congress could hit those targets, Bowles and Simpson offered examples of cuts totaling $200 billion for the year 2015.

Here are their top 10 money-saving proposals, six of which come from the defense portion of the federal budget:

Streamline the Defense Department: In May, Defense Secretary Robert Gates announced a plan to cut defense spending and reallocate the money within defense. But Bowles and Simpson say that $28 billion in savings could be used to reduce the deficit.

Reduce defense procurement: The co-chairmen proposed cutting $20 billion in defense contracts. On the chopping block are two next-generation fighting machines: the V-22 Osprey and the Expeditionary Fighting Vehicle.

Cut 250,000 non-defense contractors: There are simply too many government contractors (2.4 million added between 2002 and 2005), according to Bowles and Simpson. Cutting 250,000 jobs would save an estimated $18.4 billion.

Eliminate all earmarks: Long the whipping boy of government spending, cutting these handpicked pork projects would save an estimated $16 billion.

Freeze pay for non-defense workers for 3 years: The wages of federal employees have continued to climb during the recession, despite the fact that private-sector wages have stalled. A three-year freeze on government pay would net $15.1 billion in savings, according to the co-chairmen.

Cut non-defense workforce by 10%: If the government hires only two workers for every three that leave their jobs, the federal workforce will decline by 200,000 by 2020, saving the government $13.2 billion.

Freeze non-combat military pay: Regular military pay is expected to grow by $9.2 billion from 2011 to 2015. The report recommends a three-year freeze at 2011 pay levels (excluding combat pay).

Cut overseas military deployments: Reducing the 150,000 military personnel on overseas deployment by one-third would save an estimated $8.5 billion. Both former Defense Secretary Donald Rumsfeld and National Security Adviser Jim Jones have supported similar proposals in the past.

Reduce military R&D: A 10% reduction in military research and development would save an estimated $7 billion. Bowles and Simpson argue the cut is consistent with the military's move away from major weapons system research.

Modernize military health care: Reforming the DOD's health care systems would save an estimated $6 billion.  To top of page

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