Bankrupting America’s Spending Daily

| February 6 2013

Spending Daily | February 6, 2013

“The Budget War Is Back”
Roll Call reports, “The nation’s brief respite from the serial budget battles that have consumed Washington, D.C., is officially over, with President Barack Obama’s Tuesday demand for new tax revenue in a short-term deal to avoid automatic spending cuts at the beginning of March. In an appearance in the Brady Press Briefing Room, Obama once again tried to use the bully pulpit to paint the GOP into a corner, using the same fairness playbook that helped him win re-election and a victory on tax rates during the fiscal-cliff deal. This time, the scale may be smaller but the game is the same — in the president’s eyes, either congressional Republicans agree to more new tax revenue or they will bear responsibility for the economic damage and hundreds of thousands of lost jobs from the sequester taking effect. With the debt ceiling out of the way until May and likely even later, the coming showdown over the sequester is now the main event, albeit one with less of a sense of urgency than a potential default on U.S. government obligations, the fiscal cliff or even an old-fashioned government shutdown.”

CBO Confirms Higher Taxes Won’t Fix Budget Mess
The Wall Street Journal editorializes, “President Obama promised that higher taxes on the affluent would usher in a fiscal golden age, but Tuesday’s annual outlook from the Congressional Budget Office suggests that was, well, fantasy.  … The big news is how little difference all this revenue makes in CBO’s deficit forecast. The deficit will fall this year to $845 billion, which is below $1 trillion for the first time in the Obama Presidency. But at 5.3% of GDP, this will still be the biggest post-World War II deficit except for 1983 (a one-time pop to 6%) and Mr. Obama’s previous four years. So despite the record revenue surge, CBO says federal debt held by the public will continue to rise to 76.3% of GDP this year, up from 36.3% as recently as 2007. And then it will stay there for a decade, if you believe in unicorns.”

CBO: Social Security And Healthcare Spending Will Double Over Decade
Reuters reports, “Spending on Social Security and healthcare will double to $3.2 trillion a year over the next decade, threatening a sharp rise in national debt unless Congress acts to avoid the danger, congressional researchers warned on Tuesday. A report from the nonpartisan Congressional Budget Office did not put forth a plan to resolve the long-term imbalance between revenues and spending on retirement and healthcare benefits. But it said that action taken now would help minimize the economic impact of whatever course lawmakers can agree on. … The agency estimated last June that Social Security and federal health programs would account for more than one-quarter of U.S. gross domestic product by 2037 unless laws were changed.”

Lurching From Crisis To Crisis
The Associated Press reports, “Eager to buy time and avoid economic pain, President Barack Obama urged Congress on Tuesday to pass targeted short-term spending cuts and higher taxes as a way to put off sweeping, automatic cuts that would slice deeply into military and domestic programs starting March 1. Obama’s appeal came as Congress’ budget office projected a yearly federal deficit under $1 trillion for the first time in his presidency and as Republicans applied political pressure on the president to submit balanced budgets, pushing fiscal issues back to the forefront in Washington after weeks devoted to immigration and guns.”  Gretchen Hamel, executive director of Public Notice, issued the following statement:

“If the Obama administration was so concerned about the sequester they would have spent the last year looking for offsets, instead of making empty promises and trading blame.  The ‘we don’t have a spending problem’ mindset that puts budget gimmicks ahead of real solutions is exactly why Americans have been hit with crisis after crisis.  This administration has repeatedly used their own failure as political leverage to push for higher taxes, so why would this time be any different?”

Snowballing Debt Interest to Overtake Defense Spending by 2020
POLITICO reports, “Behind the fine print of new budget estimates released Tuesday is a growing — some say brutal — competition between discretionary spending by Congress and fixed interest payments owed on the growing government debt. Indeed, the steady increase in annual interest costs is a surprisingly big reason why the Congressional Budget Office sees deficits rising in the second half of the coming decade. Accumulated interest payments from 2014 through 2018 are $1.76 trillion under CBO’s new baseline. Interest payments for the second five years are more than double that or about $3.64 trillion. … The end result is that annual interest costs are predicted to have overtaken defense spending by 2020 even allowing for an extra $100 billion annually for overseas contingencies.”

CBO Anticipating “turbulence” in New Health Care Law’s First Years
The National Journal reports, “The Obama administration has been publicly upbeat about the coming rollout of its health care law. But a new report from the nonpartisan Congressional Budget Office suggests that at least one set of influential observers anticipates some turbulence in the law’s first years. On several important measures of the law’s success, CBO’s numbers are pessimistic compared with earlier estimates: Fewer uninsured people will get coverage, insurance options will be more limited, and more employers will stop covering their workers. Perhaps most noteworthy, the report suggests that the new health insurance marketplaces set to launch later this year are unlikely to be completely ready in time. … [T]he report signaled CBO officials are worried that key provisions of the law are not going to work as intended.”

“Analysis: Obama, GOP disagree, again, on spending”
The Associated Press reports, “After two tumultuous years of budget brinkmanship, President Barack Obama and Republicans in Congress finally agree on something — namely, that a previous 10-year pact to cut $1 trillion across the board was such a bad idea it must be stopped before it starts. If consensus counts as good news in an era of divided government, consider this: They also disagree vehemently on a suitable replacement. As a result, they seem likely to spend the spring and perhaps a good part of the summer struggling to escape a bind of their own making. And this time, Medicare and the rest of the government’s benefit programs are likely to face changes. … Obama called on Congress on Tuesday to join him in developing a replacement for the across-the-board reductions, ‘a balanced mix of spending cuts and more tax reform.’ ’We can’t just cut our way to prosperity,’ he told reporters at the White House.”

Washington Post: Time for President Obama to Take the Lead
The Washington Post editorializes on President Obama’s short-term proposal to delay the sequester, writing, “What was missing were specifics: Exactly what would Mr. Obama put in the ‘smaller package of spending cuts and tax reforms’ that he proposes? He doesn’t want to present a detailed plan before the GOP agrees to deal on his terms. House Speaker John A. Boehner (R-Ohio) doesn’t want to talk about a short-term deal that includes any new revenue. … In its [CBO's] latest report on the nation’s fiscal health, the nonpartisan office reported that deficits will decline through 2015. But an aging population and rising health care and interest costs will propel the national debt higher soon thereafter, to 77 percent of the economy by 2023 — and rising. This would have ‘serious negative consequences,’ the office noted — which is putting it mildly, and yet another reason for Mr. Obama to take the lead.

CBO: 2013 Deficit to Fall to $845 Billion
The Hill reports, “The federal budget deficit will fall to $845 billion in 2013 before rising again over the next decade as an aging population and soaring healthcare costs lead to an explosion in entitlement spending, the Congressional Budget Office reported Tuesday. The budget deficit would fall below $1 trillion under President Obama for the first time in 2013 and would drop to $430 billion by 2015, according to CBO’s annual fiscal outlook.  But CBO’s long-term forecast projects that budget deficits will near the $1 trillion mark again by 2023, when it forecasts a $978 billion budget deficit.”

“VA Spends $273 Million On Glitchy Digital System”
The Washington Guardian reports, “VA’s effort at digitizing paperwork is so badly bungled that veterans’ claims are taking four times longer to fill out, investigators find. The Veterans Affairs Department has spent $273 million trying to go from paper to digital claims, but it’s off to a bumpy start. In fact, veterans claims sent digitally are being processed more slowly than the traditional way. That’s the finding of a new investigative report by the VA’s inspector general that provides a stark looks at the flaws in a project that was supposed to speed, not slow, veterans’ benefits. … The program so far has cost $273 million, and officials said they plan to spend an additional $92 million by October.”

Obama’s “Campaign-First, Negotiate-Second” Strategy
Carrie Budoff Brown writes in POLITICO, “President Barack Obama’s speeches have a familiar ring these days … Tout what he’s already done. Say the public’s in his corner. Demand Congress do something. Lament Washington dysfunction. Lay out his own plan. Avoid details. Urge voters to keep up the pressure. Warn it won’t be easy. Bask in the applause. … The campaign-first, negotiate-second strategy worked when Obama pressured Congress to extend the payroll tax cut in 2011, avert an interest rate hike on student loans in 2012 and eliminate the Bush-era tax cuts for wealthier families. But none were as politically fraught as overhauling immigration, cutting entitlements or establishing new gun restrictions. His remarks Tuesday on the need to avert the automatic, across-the-board spending cuts known as the sequester underscored the extent to which his pitch has become predictable, even formulaic.”

Post Office to Stop Saturday Mail Service
USA Today reports,” The financially struggling U.S. Postal Service says it plans to stop delivering mail on Saturdays, but it will continue deliveringpackages six days a week. In an announcement scheduled for later Wednesday, the government agency is expected to say the cut, beginning in August, would mean a cost saving of about $2 billion annually. Over the past several years, the Postal Service has advocated shifting to a five-day delivery schedule for mail and packages — and it repeatedly but unsuccessfully appealed to Congress to approve the move. Though an independent agency, the service gets no tax dollars for its day-to-day operations but is subject to congressional control. It was not immediately clear how the service could eliminate Saturday mail withoutcongressional approval.”

BankruptingAmerica.org is an educational project of Public Notice, an independent, nonpartisan, non-profit, 501(c)(4) organization dedicated to providing facts and insight on the effects public policy has on Americans’ financial well-being.

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