Bankrupting America’s Spending Daily

| December 12 2012

Spending Daily | December 11, 2012

 

“Federal Agencies Brace for Possible Cuts”
The New York Times reports, “While the Obama administration and Congressional leaders are trying to negotiate a deal to head off billions of dollars in tax increases and automatic spending cuts on Jan. 1, federal agencies are quietly preparing for tighter budgets. … Some 1,200 programs, including airport security, food inspections and drug approvals, could be affected by the automatic cuts. They must be squeezed into the last nine months of the 2013 fiscal year, which ends Sept. 30. The administration has repeatedly said it wants a deal to avoid indiscriminate cuts. But last week, as a precaution, it ordered agencies to lock in a plan for sharply reduced spending in case a deal does not come to pass.”

Defense Advocates See Sequestration Becoming More Inevitable
Politico reports, “They’ve tried everything they could think of and so far, none of it has worked. The Pentagon hasn’t been able to get Congress to undo sequestration. Hawks in Congress haven’t gotten their colleagues to agree to undo sequestration. The defense industry tried its hardest to energize voters — and Congress hasn’t undone sequestration. For all the apocalyptic rhetoric, the hours upon hours of hearings, the threats and counterthreats and the dread that built with each tick of the countdown, the defense establishment has little progress to show as it enters the final days before it faces a decade of $500 billion in automatic, across-the-board budget restrictions. … Defense advocates in Congress now lament openly that they see little way to avoid sequestration taking effect. Industry executives who once threatened to embarrass the government into acting now attempt to reassure investors that sequestration wouldn’t be a ‘guillotine,’ but only a ‘speed bump.’ Troops and their families nervously watch and wait.”

House Dems, GOP Urge Defense Spending Cuts for Budget Deal
The Associated Press reports, “Substantial reductions in military spending should be part of any budget deal that President Barack Obama negotiates with Congress to avert the so-called ‘fiscal cliff’ of automatic tax hikes and spending cuts, a group of House Republicans and Democrats said Monday. With just three weeks to the double economic hit, 22 lawmakers endorsed further cuts in projected military spending to address the nation’s debt, arguing that long-term, strategic reductions were possible with the end of the war in Iraq and the drawdown in Afghanistan. … It was the clearest signal yet that defense dollars would no longer be spared from budget cuts in a time of astronomical deficits.”

“Preparing for ‘fiscal cliff,’ investors move assets to avoid higher taxes”
The Washington Post reports, “As lawmakers struggle to agree on a plan to avert the series of tax increases looming next year, many investors are taking preemptive action to get out of harm’s way. Americans are moving to sell investment homes, off-load stocks, expand charitable donations and establish tax-sheltering gifts before the end of the year. Financial advisers and accountants say people are trying to avoid the higher taxes that will take effect in 2013 if Washington does not avert the ‘fiscal cliff.’ For the most part, the people moving their assets are the wealthy, who have the most to lose even if a deal is struck. Ordinary Americans also are in line for higher income and payroll taxes and fewer deductions and tax credits if the nation goes over the fiscal cliff. But since most of their earnings come through wages, there is little they can do to minimize the impact.”

Washington Post Co. Taking Steps To Shield Investors From Tax Hikes
The Start Tribune reports, “The Washington Post Co. will pay its 2013 dividends before the end of this year to try to spare investors from anticipated tax increases. The media and education company said Friday that its dividend of $9.80 per share is payable Dec. 27 to shareholders of record as of Dec. 17. The payout is instead of regular quarterly dividends next year. Washington Post is the latest company to move up its quarterly payout or issue a special end-of-year payment to protect investors from potentially having to pay higher taxes on dividend income starting in January.”

Fear and Frustration Spreads Among Voters Over Fiscal Cliff
The Associated Press reports, “Fear and frustration course through the lunch crowd at Robie’s Country Store and Deli, a popular outpost 500 miles from where Washington is again locked in tense negotiations over taxes and spending as a critical deadline looms. ‘I’m worried,’ Lorraine Cadren of nearby Manchester says between bites of her chicken sandwich. Her doubt in the nation’s elected leaders is palpable: ‘I’m not sure what’s going to come out of Washington next.’ Not that she has the time to pay much attention; the 64-year-old is unemployed and preoccupied with finding a new job as Christmas approaches. … Most voters interviewed in recent days are calling for an immediate compromise and seem willing to raise taxes on the wealthy so long as the middle class is protected.”

“Graham to Obama: How about ‘manning up’ on entitlement reform?”
The Hill reports, “Sen. Lindsey Graham (R-S.C.) suggested President Obama should consider ‘manning up’ to address the deficit and entitlement reform during an interview Monday. ‘You just got reelected. How about doing something big that is not liberal?’ Graham said in an interview with Fox News. ‘How about doing something big that really is bipartisan? Every big idea he has is a liberal idea that drowns us in debt. How about manning up here, Mr. President, and use your mandate to bring this country together to stop us from becoming Greece?’ … Graham also suggested that the president’s call to raise income tax rates on the wealthiest earners was ‘sort of a partisan political trophy’ that Obama was trying to win. And he warned that there was ‘a hardening on the Republican side’ not to agree to raise the debt ceiling without the promise of major entitlement reform.”

U.S. Credit Rating Hangs In the Balance As Each Side’s Plan Grows Debt
The Hill reports, “Deficit-reduction proposals from Speaker John Boehner (R-Ohio) and President Obama fall short of clearly stabilizing the debt, according to budget experts, putting the U.S. credit rating at risk of a downgrade. Under both proposals, U.S. debt would continue to grow as a percentage of gross domestic product, unless the economy grows at a rapid pace, according to experts who have studied the proposals. While some suggest new talks between Obama and Boehner suggest a deal is in reach, they have doubts it will be big enough to meaningfully reduce deficits — or satisfy credit rating agencies. …’If those negotiations lead to specific policies that produce a stabilization and then downward trend in the ratio of federal debt to GDP over the medium term, the rating will likely be affirmed and the outlook returned to stable,’ Moody’s said of the U.S. AAA rating in September. ‘If those negotiations fail to produce a plan that includes such policies, we would expect to lower the rating, probably to Aa1.’”

Exports Plummet: U.S. Trade Deficit Increases Nearly 5% In October
MarketWatch reports, “The U.S. trade deficit increased 4.9% in October to $42.2 billion, as imports of crude oil rose and American exports of manufactured goods fell to the lowest level in nearly a year. Imports of foreign goods into the U.S. declined by 2.1% to $222.8 billion in October, but exports fell by 3.6% to $180.5 billion to account for the wider trade gap, the Commerce Department reported Tuesday. U.S. manufacturers are not selling as many goods overseas because of tougher economic conditions in key markets such as Europe. American companies exported fewer industrial supplies, capital goods and food in October. Falling imports, meanwhile, reflect a softer U.S. economy.”

Government Dysfunction Dragging Down California
Bloomberg highlights government mismanagement in California that’s dragging an entire state toward bankruptcy. Bloomberg reports, “Today, the state’s highest-paid employees make far more than comparable workers elsewhere in almost all job and wage categories, from public safety to health care, base pay to overtime. Payroll data compiled by Bloomberg on 1.4 million public employees in the 12 most-populous states show that California has set a pattern of lax management, inefficient operations and out-of-control costs. From coast to coast, states are cutting funding for schools, public safety and the poor as they struggle with fallout left by politicians who made pay-and-pension promises that taxpayers couldn’t afford.”  Click here to see how California is leading the way off a cliff of its own.

 

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