Bankrupting America’s Spending Daily
Spending Daily | January 29, 2013
Gallup: Americans Least Satisfied with Economy, “most important problem facing the nation today”
Gallup reports, “As President Barack Obama’s second term in office gets underway, Americans are most satisfied with the nation’s military strength and preparedness, security from terrorism, and the quality of the environment, and least satisfied with the state of the economy and the way the country deals with poverty and homelessness. … At the same time, Americans’ satisfaction with the state of the economy — the lowest-rated area tested — has dropped by 27 percentage points since 2005. This reflects the impact of the 2008 housing crisis and financial recession, and is a stark reminder that economy-related issues remain at the top of the public’s views of the most important problem facing the nation today. … The mood of the nation in general is not particularly positive these days, as Americans express high levels of dissatisfaction with the majority of the 17 different aspects of U.S. life tested. Lawmakers looking for direction on their policy priorities need look no further than the economy, the aspect of life about which Americans are least satisfied.”
Sen. Landrieu: Gov’t Spending Problem Exists Only on Fox News
The Weekly Standard reports, “Democratic senator Mary Landrieu said on the Senate floor that Washington’s spending problem exists only on Fox News. ‘I am not going to keep cutting the discretionary budget, which by the way is not out of control, despite what you hear on Fox News,’ said Landrieu. The Louisiana senator did say that entitlement spending is a major problem. ‘It is mandatory spending that is rising rapidly, because the greatest generation that gave us the greatest nation the world has ever heard is dying and they needhospice care, they need Social Security, and they need hospitals.’” Click here to watch the video.
Krugman: Debt Not a Problem, “Medicare and Medicaid shortfalls should be ignored”
Joe Scarborough editorializes in POLITICO, “Nobel Prize-winning economist Paul Krugman came on ‘Morning Joe’ Monday to discuss his latest book and the state of affairs in Washington. Mr. Krugman’s view is that Americans would be better off if its government ran deeper deficits and ignored its longterm debt. … Mika [Brzezinski] let out a gasp when Mr. Krugman suggested Medicare and Medicaid shortfalls should be ignored. … Krugman took exception, saying that no one could predict the future of entitlements so there was no need to worry until the programs became insolvent. That response drew a spirited email from former Treasury official and ‘Morning Joe’ regular Steve Rattner…who wrote the following: ‘We are putting millions of tons of carbon in the air every day; we are also adding billions of dollars to our future entitlement obligations every day. We are borrowing (stealing?) from our children to pay far more in benefits to seniors than we are paying into the system. We have something like $60 trillion in unfunded liabilities to Medicare and Social Security. Paul Krugman would like us to just wait until those programs run out of money, at which point those unfunded liabilities would be just that much larger.'”
Fitch: U.S. Needs “credible” Plan to Reduce Deficit in Next 6-12 Months
Reuters reports, “Rating agency Fitch on Monday stepped back from its threat to cut the United State’s triple-A credit rating in the next few months, citing the recent debt deal in Washington, in the latest sign that anxieties have eased over another drawn-out budget battle. … With lawmakers now free of ‘the distraction of a near-term funding crisis,’ Fitch said policymakers now ‘have the space to focus on the substantive fiscal policy choices.’ Nevertheless, Fitch warned that the United States could still face a debt downgrade if policymakers don’t pull together a ‘credible’ plan to reduce the country’s massive deficit over the medium term, which it defines as six to 12 months.”
Bailed Out Banks Deal Out Treasury Approved Pay Raises
The Washington Guardian reports, “The U.S. Treasury Department disregarded its own guidelines by allowing large pay increases for executives at three firms bailed out during the financial crisis, a report released Monday says. The Special Inspector General for the Troubled Asset Relief Program said Treasury approved all 18 requests it received for executive raises at American International Group Inc., General Motors Corp. and Ally Financial Inc. Of those requests, 14 were for $100,000 or more. One raise, for the CEO of a division at AIG, was for $1 million. The three firms together received nearly $250 billion from the bailout fund. Only AIG has fully repaid its $182 billion bailout. The report says Treasury bypassed rules under the 2008 bailout that limited pay. Treasury approved raises that exceeded pay limits and in some cases failed to link compensation to performance, it notes.”
Video: High-Speed Rail or High-Speed Fail?
Remember President Obama’s ambitious plans to build high-speed rail systems in the U.S.? A few billion stimulus dollars later, there still haven’t been any new high-speed rails. CNN reports on where taxpayers’ money went. Watch the video here.
Senate Approves $50.7B Sandy Relief Measure
According to The Hill, “In a 62-36 vote, the Senate on Monday approved legislation providing $50.7 billion to help New York, New Jersey and other states hit by Hurricane Sandy. … The House had already approved the measure, so the Senate action sends the bill to President Obama, who has said he will sign it. … The House passed its bill earlier this month in a bipartisan 241-180 vote. Unlike a bill approved by the Senate in the last Congress late last year, the House measure did not include money for states outside the Northeast. … Republicans argued that separate weather-related disasters in the West should be dealt with separately and not lumped in with this bill.”
“Let’s meet on Medicaid, Mr. President”
Gov. Bobby Jindal editorializes in The Washington Post, “As the implementation of Obamacare unfortunately nears, every governor must decide whether to expand Medicaid. This is not a simple question. Expanding Medicaid will significantly burden state budgets across the country. Our state’s analyses, and reports by organizations that have supported Obamacare, such as the Kaiser Family Foundation and the Urban Institute, estimate that such an expansion would cost Louisiana more than a billion dollars over the first 10 years. The Obama administration heralds this as a tremendous bargain for states. That’s simply not the case. The administration overlooks that Medicaid is largely failing current enrollees with its outdated model that costs billions of taxpayer dollars and produces poor outcomes. … A number of Republican governors have asked to meet with President Obama to discuss their solutions, but the White House has ignored these requests. The president claims that he wants to work across party lines to get things done for the American people, so perhaps he could start by meeting with Republican governors who want to solve our nation’s health-care problems.”
Fed’s Latest Round of Asset Buying Will Reach $1.4 Trillion by 2014
Bloomberg reports, “Federal Reserve Chairman Ben S. Bernanke’s latest round of bond buying will reach $1.14 trillion before he ends the program in the first quarter of 2014, according to median estimates in a Bloomberg survey of economists. Bernanke will push on with purchases of $40 billion a month of mortgage bonds and $45 billion a month of Treasuries, according to the survey of 44 economists, even as some Fed officials warn his unprecedented balance-sheet expansion will impair efforts to tighten policy when necessary. … Fed asset purchases will probably do little to help reduce 7.8 percent unemployment, economists said, with 57 percent of them predicting the program won’t help boost the number of jobs created this year.”
Debt Ceiling Fight Could Be Continued…In August
Politico reports, “The next deadline for raising the nation’s borrowing limit may not come until August if the Senate passes the House-approved debt ceiling billthis week as scheduled, according to Capitol Hill sources. Treasury Department officials have privately advised Senate Democrats that the Housebill, which suspends the debt ceiling until May 19, can be extended throughJuly thanks to ‘extraordinary measures’ used by the agency to avoid a default, the sources said. … President Barack Obama and Democratic leaders are seeking a long-term debt extension to cover the entire 113th Congress, although that has been rejected by Speaker John Boehner and other top Republicans. Rank-and-file GOP lawmakers still want to use the debt ceiling as leverage to force Obama and the Democrats to cuts government spending, especially entitlement programs like Medicare or Medicaid.”
Senate Dems Maybe Not Be Able to Avoid Tricky Budget Vote
Roll Call reports, “Senate Democrats have largely avoided politically tricky votes in recent years, but last week’s dueling announcements that they would pursue a budget and give the minority guaranteed amendments on some bills is bound to put vulnerable members on the spot. A budget on the floor involves an expedited process that allows senators in both parties the chance to offer — and get votes on — an unlimited number of amendments on a cornucopia of subjects. The process requires hours and hours of clerks continuously calling the roll. … Asked about the effect of vote-a-rama on 2014, NRSC spokesman Brian Walsh highlighted the federal debt and criticized Democrats for not having gone through the budget resolution process. ‘There’s no doubt that they may finally be forced to make some tough votes but it’s made worse by the Democratic majority’s failed leadership and abdication of responsibility in recent years,’ he said.”
Washington Plays Favorites In Doling Out ‘Cliff’ Deal Favors
The Wall Street Journal reports, “The New Year’s Day legislation that averted tax increases for millions of Americans brought an unwelcome surprise for Elekta AB, (EKTA-B.SK +0.26%) a Swedish maker of radiation tools designed to battle brain tumors. A provision, inserted at the last minute, sharply cut Medicare payments for the company’s product while leaving unchanged those of its direct competitor, Varian Medical Systems Inc., (VAR -1.61%) of Palo Alto, Calif. Varian lobbyists pushed for the change, according to congressional staff and other lobbyists, which was put through by Senate Majority Leader Harry Reid (D., Nev.). … The insert looks like the kind of provision helping a specific company or industry that lawmakers have repeatedly vowed to halt. Nonetheless, even in the budget bill tackling the so-called fiscal cliff, lawmakers found time to craft such provisions. … Mr. Reid has a deep relationship with Varian. About nine years ago, he secured federal funding for Varian to work with the Harry Reid Center for Environmental Studies at the University of Nevada, Las Vegas, according to Oliver Hemmers, the center’s director. The project looked at technologies that could X-ray cargo shipments as part of antiterror efforts.”
Economy “struggling to accelerate”
The Associated Press reports, “The U.S. economy is a study in contrasts. The housing, banking and auto industries are surging back to health and that has helped push the stock market to a five-year peak. Higher prices for homes and stocks tend to make people feel wealthier and spend more. Yet unemployment remains high and hiring modest. The end of a Social Security tax cut is shrinking already flat pay. Federal budget fights have put businesses and consumers on edge. Balanced between those tailwinds and headwinds, the economy is struggling to accelerate.”
Sequester Cuts “look more likely now than ever”
The Hill reports, “A timeline of how sequestration went from the unthinkable to the probable among Capitol Hill lawmakers. The defense industry has now stared down the prospect of across-the-board spending cuts under sequestration for nearly 18 months — and they look more likely now than ever as the March 1 deadline approaches for the automatic cuts to occur. When the prospect of $1 trillion in across-the-board cuts to both defense and non-defense spending was included in the 2011 Budget Control Act, leaders in Washington said the cuts would never happen — the across-the-board reductions were ‘bad policy’ to be used as a ‘forcing mechanism.’ But lawmakers have increasingly become open to the prospect that the cuts will, in fact, occur in 2013, after a two-month delay was included in the New Year’s Eve ‘fiscal-cliff’ deal.”
“Stopping debt growth in bite-size stages”
Will Marshall editorializes in Politico, “Republicans have retreated twice this month on the fiscal front, but they aren’t giving up. After having been forced to swallow higher tax rates and a debt ceiling increase, they’ve regrouped behind a new demand: balance the federal budget in 10 years. That’s not going to happen, but no matter: The GOP is making an ideological statement. President Barack Obama should counter with a realistic fiscal goal, one Congress could actually achieve this year: Stop the debt from growing. … Freezing the debt at present levels (around 73 percent of GDP) won’t be easy, either. Given what’s already been put on the negotiating table by Obama and House Speaker John Boehner, however, it wouldn’t require acts of political self-immolation from either side. Most important, it would reassure Americans that their government isn’t hopelessly dysfunctional and would boost investor confidence in our economy’s fundamental soundness. An agreement to ‘stop the debt’ would sustain the momentum of fiscal reform in Washington without slamming the brakes on economic recovery. In 2011, Congress passed the Budget Control Act, which will cut federal discretionary spending (including savings on interest) by about $1.7 trillion over the next decade.”
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