Bankrupting America’s Spending Daily
Spending Daily | November 29, 2012
AP: “It’s Not Just About Taxes”
The Associated Press reports, “It’s not just about taxes. There’s another big obstacle to overcome as Congress and President Barack Obama work to skirt the fiscal cliff: deep divisions among Senate Democrats over whether to consider cuts to popular benefit programs like Medicare and Medicaid. … There’s a growing consensus among Senate Democrats and the White House that Social Security should be exempt from any deficit-reduction package. But some centrist Democrats in the Senate argue that fellow Democrats must be willing to consider cuts to Medicare and Medicaid in order to get concessions from Republicans on taxes. ‘It has to be both – a significant revenue increase as well as spending cuts,’ said Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee. … ‘There hasn’t been the slightest suggestion about what they’re going to do about the real problems, and that’s entitlements,’ said Sen. Orrin Hatch of Utah, the top Republican on the Senate Finance Committee. ‘There’s a certain cockiness that I’ve seen that is really astounding to me since we’re basically in the same position we were before’ the election.”
Obama Pivots Debate Away From Spending Cuts
The New York Times reports, “ President Obama surrounded himself with taxpayers on Wednesday to pitch his plan to preserve current rates for the middle class and raise them for the wealthy. A day before, he met with small-business owners for the same purpose. On Friday, he plans to fly to Pennsylvania to tour a factory to make the same point. … Mr. Obama has embraced specific cuts to the federal budget in the past and has committed to an agreement with Congress that will include deep reductions in spending. But it would be easy for those who listen to his public pronouncements lately to miss it. In public statements since his re-election, he has barely discussed how he would pare back federal spending, focusing instead on the aspect of his plan that plays to his liberal base and involves all gain and no pain for 98 percent of taxpayers.”
Bowles: Up To Democrats To Move Towards Entitlement Reforms
MarketWatch reports, “Democrats need to move on reforming entitlements to get a year-end budget deal, former Clinton White House chief of staff Erskine Bowles said Wednesday after talks between House Republicans leaders and chief executives of big U.S. companies. ‘I feel like we made some progress,’ Bowles told reporters after the Capitol Hill meeting, held in House Majority Whip Kevin McCarthy’s office. He said Republicans were clear that there’s need for revenue and for entitlement reforms – and added it’s up to Democrats to move in that direction. … ‘Am I an optimist? No, but I am hopeful,’ he said.”
“GOP: Forget tax rates in talks on the deficit, let’s look at spending”
The Hill reports, “Speaker John Boehner (R-Ohio) on Wednesday shot down a proposal by a senior GOP lawmaker that the House agree to President Obama’s demand to extend middle-class tax rates as Republicans sought to put the focus of negotiations on spending. The Speaker’s swift rejection of an idea floated by Rep. Tom Cole (R-Okla.), a respected party strategist and former chairman of the House GOP campaign committee, came as Republicans voiced increasing concerns that the debate over the so-called ‘fiscal cliff’ had become dominated by talk of taxes rather than spending. … Republicans complained that for all of the president’s talk about coming up with a ‘balanced’ budget plan that includes new tax revenue, spending cuts and entitlement reforms, he has made little effort to identify specific proposals beyond increasing taxes on the wealthy.”
Fiscal Cliff Talks: Taxes Going Up Now, Spending Going Down … In 20 Years?
According to Politico, “[B]ehind the scenes, top officials who have been involved in the talks for many months say the contours of a [fiscal cliff] deal – including the size of tax hikes and spending cuts it will likely contain — are starting to take shape. Cut through the fog, and here’s what to expect: Taxes will go up just shy of $1.2 trillion — the middle ground of what President Barack Obama wants and what Republicans say they could stomach. Entitlement programs, mainly Medicare, will be cut by no less than $400 billion – and perhaps a lot more, to get Republicans to swallow those tax hikes. There will be at least $1.2 trillion in spending cuts and ‘war savings.’ And any final deal will come not by a group effort but in a private deal between two men: Obama and House Speaker John Boehner (R-Ohio). … Democrats want most Medicare and other entitlement savings to kick in between 10 and 20 years from now, which will make some Republicans choke.”
$550M Powerball Jackpot Just Another 81 Minutes In The Life Of Congress
As many Americans were heading to the store to pick up a Powerball ticket for the more than half-a-billion dollar jackpot, Bankrupting America took a look at how far that winning ticket would go in Washington. Turns out – not very. Gretchen Hamel writes, “In fiscal year 2012, which ended on September 30, 2012, the government spent a whopping $3,538,286,000,000. Being that there are 525,600 minutes in a year, that means the government spent $6,731,898 a minute last year. Knowing this, how long would it take the government to spend the $550 million Powerball jackpot of you dreams? 81 minutes. In other words in 81 minutes the government could buy 30 gulfstream jets at $17.5 million a piece. With the current national debt at over $16,317,280,044,971, the federal government would have to win the Powerball jackpot 29,667 times to pay off the national debt. The 2012 federal deficit racked up at $1.1 trillion, so Washington would have to win 2,000 times if it were to balance the budget last year.”
Are Entitlement Cuts On The Table Or Off The Table?
The Hill reports, “Democratic party leaders on Wednesday argued that they had already put Medicare cuts on the table in deficit talks, but they ruled out any reduction to benefits. ‘Is Medicare – has it been on the table? Absolutely it has been on the table,’ Rep. Xavier Becerra (Calif.), the vice chairman of the House Democratic Caucus, said Wednesday following a caucus meeting in the Capitol with senior White House economic adviser Gene Sperling. ‘We’re willing to talk and to put everything on the table for discussion — at least this Democrat is,’ Becerra said. ‘But the moment you want to privatize Social Security, or voucherize Medicare, or block-grant Medicaid — that’s where you lose us. Because we want to strengthen those programs, not let them die on the vine.’”
Looming Fiscal Cliff Has Detroit “Unnerved”
Bloomberg reports, “Ford Motor Company (F) the second-largest U.S. automaker, is making contingency plans should the nation’s economy falter if President Barack Obama and Congress go over the fiscal cliff. … The looming fiscal cliff has Detroit unnerved. Just as the auto recovery picks up speed, the administration that saved the industry now could bring it to a screeching halt. Auto demand would plunge as much as 20 percent if Washington can’t find a solution to avoid a lethal combination of tax hikes and spending cuts coming at the end of the year, said Lacey Plache, chief economist of auto researcher Edmunds.com. ‘I’d rather deal with certainty of misery than the misery of uncertainty,’ Reid Bigland, Chrysler Group LLC’s sales chief, said in an interview yesterday. The sooner there’s ‘a deal made where consumers know what their taxes are going to be, what their social-program payments are going to be, the better, because it has a tendency to put the whole country on edge.’”
Murray: Extending All Tax Rates Worse Than Going Over The Fiscal Cliff
The Washington Free Beacon reports, “Sen. Patty Murray (D., Wash.) said Wednesday she believes a ‘worse idea’ than going over the fiscal cliff would be to extend the Bush tax rates for wealthy Americans. ‘What we are all saying is that it’s not a good idea to go over the fiscal cliff–no one wants to see that happen, it is a bad idea,’ Murray said, when asked about the dangers of the fiscal cliff. ‘But a worse idea is to accept a compromise that allows the wealthy Americans to not pay their fair share,’ she continued, ‘because the result of that will be that middle-class families will pay the entire burden of the challenges that this country faces.’ An analysis from the nonpartisan Joint Committee on Taxation indicated the proposed tax increases would amount to $68 billion more tax revenue in 2013 — between 6.5 and 8.5 percent of the projected 2013 shortfall and just 0.18 percent of the total $3.8 trillion projected spending for 2013. In July, Murray threatened to go over the fiscal cliff should a deal not increase taxes on the wealthy to her satisfaction.”
Fiscal Cliff Negotiations Moving At “Glacial Pace”
The Washington Post reports, “Negotiations to avert the year-end ‘fiscal cliff’ advanced at a glacial pace Wednesday, with a dispute over how to tackle the soaring cost of federal retirement programs emerging as the latest roadblock to progress. Democrats complained that Republicans have yet to name their price for enacting legislation that would preserve tax cuts for the vast majority of Americans next year while raising revenue from the wealthiest 2 percent. Republicans, meanwhile, insisted that it is up to President Obama to offer a plan to restrain the cost of Medicare, Medicaid and Social Security — the government’s biggest and fastest-growing programs — in exchange for GOP concessions on taxes.”
Can Americans Expect a ‘Grand Bargain’ Under Their Christmas Tree?
Reuters reports, “President Barack Obama said on Wednesday he hoped to reach an agreement with Congress before Christmas to avoid the looming ‘fiscal cliff’ and shrink the budget deficit, and ramped up efforts to rally the public to press Republicans for action. … ‘Our ultimate goal is an agreement that gets our long-term deficit under control in a way that is fair and balanced,’ he said at the White House. ‘I believe that both parties can agree on a framework that does that in the coming weeks. In fact, my hope is to get this done before Christmas,’ Obama said.”
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