Bankrupting America’s Spending Daily

| February 4 2013

Spending Daily | February 4, 2013

Reid: Dems to Demand More Tax Hikes in Sequester Deal
The Wall Street Journal reports, “Senate Majority Leader Harry Reid drew a red line in the budget showdown with Republicans, saying Democrats will demand additional revenue as part of any deal to alter the mandatory spending cuts set to hit at the beginning of next month. The comments, made in an interview Sunday with ABC’s ‘This Week,’ come as Senate Democrats weigh options for averting at least some of the March 1 cuts, known in Washington as the sequester. One Democratic proposal would seek to offset some of the roughly $85 billion in cuts this year with a combination of tax increases and spending cuts.”

Premiums Could Triple for Some Young, Healthy Men Under New Healthcare Law
POLITICO reports, “The federal health care law could nearly triple premiums for some young and healthy men, according to a forthcoming survey of insurers that singles out a group that might become a major public opinion battleground in the Obamacare wars. The survey, fielded by the conservative American Action Forum and made available to POLITICO, found that if the law’s insurance rules were in force, the premium for a relatively bare-bones policy for a 27-year-old male nonsmoker on the individual market would be nearly 190 percent higher. That isn’t the sticker price many of these individuals would pay, thanks to subsidies offered with the law. But the young men with higher incomes wouldn’t get subsidies, and the warning of a premium price shock for them might become a key exhibit in opponents’ argument that Obamacare won’t save Americans money over the long haul but would rather cost them.”

Samuelson: “Stimulus Becomes A Narcotic”
Robert J. Samuelson editorializes in The Washington Post, “Japan’s new prime minister, Shinzo Abe, is trying to revive the country’s flagging economy, and we could all learn from the exercise. … To get the economy moving, Abe has proposed a ‘stimulus’ package of 10.3 trillion yen ($114 billion), about 2.2 percent of gross domestic product (GDP), and pushed the Bank of Japan (BOJ) — Japan’s Federal Reserve — to ease credit. This is familiar stuff. For years, Japanese governments have adopted stimulus plans. Since 1995, budget deficits have averaged 6 percent of GDP; that’s why debt (all past deficits) has exploded. The BOJ has repeatedly eased credit. In 1999, it cut short-term rates to near zero. It has had two episodes of ‘quantitative easing’ — pumping more money into the economy — one from 2001 to 2006, the other from 2009 to now. None of this has restored Japan’s glory days. … The lesson is that huge budget deficits and ultra-low interest rates — the basics of stimulus — have limits and can be self-defeating. To use a well-worn metaphor: Stimulus becomes a narcotic. People feel better for a while, but the effect wears off. The economy then needs a new fix. Too many fixes may spawn new problems (examples: excessive debt, asset ‘bubbles,’ inflation).”

Obama: “Washington cannot continually operate under a cloud of crisis”
According to The Hill, “President Obama insisted Sunday that additional tax revenue will need to be part of future deficit deals, but said hikes in tax rates may not be necessary. In a pre-Super Bowl interview with CBS, the president outlined his vision for further deficit reduction, which he said was essential, but in a way that preserves the government’s ability to continue spending on key programs. He also emphasized that the seemingly continuous stream of Washington standoffs was wreaking havoc on confidence in the U.S. economy. … ‘Washington cannot continually operate under a cloud of crisis, that freezes up consumers,’ he said. ‘We can’t afford these self-inflicted wounds.’”

House Taking Up Measure to Force President to Identify Date of Balanced Budget
Roll Call reports, “House Republicans want to spend this short congressional week hammering President Barack Obama and Senate Democrats over the budget, hoping to ride the momentum of their ‘no budget, no pay’ ploy. The House will take up a measure that would force the president to identify the date his budget would balance when he submits the spending blueprint to Congress later this year. If it does not do so, he would have to submit a new budget that does. … By law, the president must submit his budget by Monday, but acting Office of Management and Budget Director Jeff Zients sent a letter to Budget Chairman Paul D. Ryan, R-Wis., last month informing him that the budget will be delayed because of late passage of a fiscal-cliff deal.”

Cantor Speech Could Signal Change in Republican Messaging
The Wall Street Journal reports, “House Majority Leader Eric Cantor plans to urge Republicans to begin talking about how the  federal government can help American families rather than focusing primarily on the need to reduce federal spending and tackle budget deficits. In a policy speech scheduled for Tuesday to the conservative think tank American Enterprise Institute, Mr. Cantor plans to talk about a range of areas—from education to medical research to job training, as well as an overhaul of the tax code—in the context of how Republican ideas could benefit families across the nation, a top aide to the majority leader said. The overarching theme of the speech will be that, while Republican determination to pare back federal budget deficits and the size of the federal government shouldn’t fade away, it should be supplemented with talk of how the party wants to make the government work better, the aide said. Public opinion polls have repeatedly shown Americans hold Republicans to blame for the series of fiscal crises that have dominated Washington over the past two years. The speech, in effect, would serve as recognition that the GOP must change its messaging and its actions.”

Partisan Stalemate On the Hill Returns
POLITICO reports, “Washington is entering a distinctly familiar situation: a paralyzing legislative stalemate with outsize importance for the nation’s economic and homeland security. In just 25 days, automatic federal spending cuts — the ones Democrats and Republicans say they hate in equal measure — take hold. But once again, rather than working together on a deal, House Republicans and SenateDemocrats are on divergent paths — neither of which seem as though they’ll lead to quick resolution. The GOP game plan: turn the heat up on President Barack Obama. Much like the tax rates in November, the spending cuts are baked into law. It’s Obama’s responsibility to replace the spending reductions, GOP leadership staff says. Don’t expect any more legislation from the House. They’ve passed legislation to stop the cuts, they say.”

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