Bankrupting America’s Spending Daily

| March 25 2013

Spending Daily | March 25, 2013

Washington Post: “Fiscal stalemate needs Obama’s Leadership”
Fred Hiatt, editorial page editor of The Washington Post, writes, “It’s often said that Democrats want to raise taxes while Republicans want to cut entitlements. That’s not quite right. If they have to do something, Democrats would rather raise taxes (on rich people and oil companies) while Republicans would rather cut entitlements (for some distantly future retirees). But Democrats have wealthy donors. Republicans have elderly constituents. Left to their own devices, both parties would neither raise taxes nor cut entitlements. They would come together, in other words, to protect the status quo, which is to say a future of gradually rising debt. That’s a future in which spending on retirees crowds out spending on national parks, national defense, schools, research and the poor. It’s a future in which American prestige and power decline abroad while economic prospects dwindle at home.”

“As Obama signs sequestration cuts, his economic goals are at risk” 
Zachary Goldfarb writes in The Washington Post, “With his signature this week, President Obama will lock into place deep spending cuts that threaten to undermine his second-term economic vision just four months after he won reelection. Obama has repeatedly championed a set of government investments that he argues would expand the economy and strengthen the middle class, including bolstering early-childhood education, spending more on research and development, and upgrading the nation’s roads and railways. He has said his comfortable reelection victory in November shows the country is with him. But none of those policies have come close to being enacted. Instead, after returning this weekend from a trip to the Middle East, Obama is set to sign a government funding measure that leaves in place the across-the-board cuts known as sequestration — a policy that undermines many of the goals he laid out during the 2012 campaign. … Lawrence Mishel, president of the liberal Economic Policy Institute, said Obama shoulders part of the blame. Since 2010, he said, Obama has spent too much time focused on the debt, including agreeing to significantly shrink domestic spending as part of his own budget proposals. ‘I think they brought it on themselves to the extent that they validated the deficit issue,’ Mishel said. ‘It was always the case that the actual budget policy being pursued contradicted the rhetoric in the campaign. Now it’s even worse.’”

Dems: Our Budget Isn’t Balanced
The Hill reports, “Two Senate Democrats defended their votes against the upper chamber’s budget resolution on Saturday, saying that it was not a balanced approach. Sens. Max Baucus (D-Mont.) and Mark Pryor (D-Ark.) were among only four Democrats to cast votes against the budget measure, which narrowly passed the Senate early Saturday morning, 50-49. ‘This budget fails to strike the right balance between cutting our spending and setting up a path for future job creation and economic growth,’ Pryor said in a statement. ‘Instead of one-party solutions, we should work together to find a balanced approach that will benefit our economy, seniors, and middle class families.’ …. An aide to Baucus said that the Senate Finance Committee chairman opposed both the Democratic-led Senate bill — because it raised taxes too much — and the Republican-led House budget approved earlier in the week — because it made too many cuts to entitlement spending. A more balanced approach was necessary, Baucus’s office said. … One public relations silver lining for Democrats is that Saturday’s early morning vote marks the first time the Senate has produced a budget resolution since 2009, a point Republicans have criticized relentlessly. The successful Democratic vote strips the GOP of that talking point. Had the budget failed, however, it would have been a significant setback for Democrats and raised questions about the party’s ability to govern”

“McManus: ‘Sequester’ Causing Pain — To Congress”
Doyle McManus editorializes in The Los Angeles Times, “Think the automatic budget cuts Congress ordered at the beginning of March — the so-called sequester — haven’t caused any pain yet? Think again. Judging from the squeals we’re hearing from members of Congress whose districts are threatened by cuts, the effects are intolerable. … Tea Party Rep. Steve Stockman (R-Texas) has decried cuts to the National Aeronautics and Space Administration, which he called ‘one of the few legitimate functions of government.’ (The Johnson Space Center, with about 3,000 civilian employees, happens to be in his Houston-area district.) …  Wilson never supported the sequester; like many GOP defense hawks, he wanted deeper domestic cuts and fewer defense cuts. And there have been profiles in spending-cut courage too, like Rep. John Campbell (R-Irvine), who says defense contractors in his area will just have to get by with less business, and Rep. Jeff Miller (R-Fla.), who says the Navy’s decision to cancel appearances by the Pensacola-based Blue Angels was worth the $20 million savings despite the pain for his district. Still, it was striking that one of Congress’ rare moments of bipartisan cooperation came last week as the Senate and the House acted together to avoid an unnecessary government shutdown at the end of the month — and, along the way, to undo some of the most painful effects of their own sequester.”

Reid Claims Gov’t Cut Deficit by $2.5 trillion
The Washington Guardian reports, “It’s politically fashionable now to say you’ve helped reduce the nation’s debt.  And at nearly $1 trillion annually, there’s a lot of debt to be reduced. But during a speech this week on the Senate floor, Majority Leader Harry Reid claimed that over the past two years the government has reduced the deficit by $2.5 trillion – almost double the amount the deficit is right now. ‘In the last two years we have reduced the deficit by $2.5 trillion,’ he said. ‘The Senate budget continues this effort without jeopardizing our economic recovery or breaking our promises to seniors and veterans.’ The Congressional Budget Office, which does non-partisan economic analysis at the behest of Congress, estimates that the federal deficit will be $845 billion by the end of this year.  Two years ago, in 2011, the deficit was $1.3 trillion.  That’s hardly a reduction of the more than $2 trillion that Reid claimed.”

Costly IRS Training Video Features Spock
CNN reports, “What genre best fits a six-minute ‘Star Trek’ knock off where government agents confront an epidemic of alien identity theft and Solar Security Number fraud? Perhaps somewhere between the ’science fiction’ and ‘bureaucracy’ categories? Close. The Internal Revenue Service says the video, which came to light after legislators on a House Ways and Means subcommittee requested it and another they say resembled the television hit ‘Gilligan’s Island,’ was an employee training video produced for a 2010 training and leadership conference. Rep. Charles Boustany, R-Louisiana and chairman of the oversight subcommittee, says the IRS told him the two videos cost $60,000 and were produced at an agency television studio just outside of Washington. … In addition, ‘By the end of this fiscal year, we will have reduced employee training costs by approximately 83% since FiscalYear 2010 and training travel costs by approximately 87% during that period of time.’ The Maryland studio which produced those videos also makes taxpayer education videos, such as those posted on the agency’s website. The ‘Gilligan’s Island’-themed video alone saved the IRS about $1.5 million each year, the IRS said in the statement.”

Budget Deal Could Spell Austerity Era For Feds
Bloomberg reports, “The spending bill Congress passed shows $1.2 trillion in budget cuts that weren’t supposed to happen are now part of the political landscape. Lawmakers approved the so-called continuing resolution March 21 averting a government shutdown while giving a handful of agencies more flexibility to meet the mandated reductions under sequestration. Yet the budget ax still cuts deep: $85 billion this fiscal year in across-the-board reductions, forcing agencies to curtail services and lay-off or furlough employees. The cuts were designed to be so onerous Congress wouldn’t let them happen. Now some analysts say they may be enshrined in budget negotiations. ‘The age of austerity is here because Congress didn’t really produce a meaningful change in the budget cuts,’ Darrell West, director of the Brookings Institution, a Washington-based public policy group, said in an interview. ‘Most of the government is going to be on a serious diet going forward.’”

Senate Backs Withholding White House Budget Director Pay If WH Budget Is Late
The Hill Reports, “The Senate late Friday backed withholding the White House budget director’s pay if the president is late delivering a budget.The budget amendment, which has no force of law, was sponsored by Sen. John Cornyn (R-Texas.). It was passed by voice vote. The amendment would also withhold the pay of the deputy director and deputy director for management of the Office of Management and Budget.  President Obama was supposed to deliver his budget by the first Monday of February under the law, but his 2014 budget is now slated to come out in April.  Cornyn told the Senate that ‘the president has rendered himself entirely irrelevant,’ in the budget process since the House and Senate will have acted first.”

GOP Governors Have Change of Heart on Medicaid Expansion
The Associated Press reports, “Given the choice of whether to expand Medicaid under President Barack Obama’s health care law, many Republican governors and lawmakers initially responded with an emphatic ‘no.’ Now they are increasingly hedging their objections. A new ‘no, but …’ approach is spreading among GOP states in which officials are still publicly condemning the Democratic president’s Medicaid expansion yet floating alternatives that could provide health coverage to millions of low-income adults while potentially tapping into billions of federal dollars that are to start flowing in 2014. … But so far, many of the Republican ideas are still more wistful than substantive. It’s uncertain whether they will actually pass. And even if they do, there’s no guarantee Obama’s administration will allow states to deviate too greatly from the parameters of the Affordable Care Act while still reaping its lucrative funding. Yet a recent signal from federal officials that Arkansas might be able to use Medicaid money to buy private insurance policies has encouraged Republicans to try alternatives.”

Bankrupt California City on Trial
The New York Times reports, “Wall Street is taking America’s biggest pension fund to court this week, for a long-awaited battle over who takes the losses when a city goes bust — workers and retirees, municipal bondholders, or both. Stockton, Calif., declared Chapter 9 bankruptcy last year after suffering one of the country’s sharpest riches-to-rags swings when the mortgage bubble burst. Struggling to stay afloat, Stockton has slashed tens of millions of dollars’ worth of city services — firefighters, senior centers, library programs for at-risk children — and said it would cut its municipal bond repayments to a degree never seen before in a municipal bankruptcy. … But there is a looming, larger question that has pension funds around the country nervous: Will a victory by bondholders in Stockton pave the way for cuts in its workers’ pensions and its payments to Calpers, which, in turn, could lead to the demise of other public pension plans?”

“Budget-Messaging Wars Are About to Bloom in Full”
The National Journal reports, “The budget-messaging wars are about to bloom in full. Back in their districts for a two-week spring recess, congressional Republicans and Democrats are expecting to be peppered about the sequester budget cuts and worker furloughs—and their impacts at home—that are becoming more of a reality outside the Beltway. But rank-and-file lawmakers have been armed to carry out a much broader mission. Equipped by their leaders with pre-written tweets, Facebook posts, sample op-eds, event suggestions, and ready-to-go answers to anticipated press inquiries, the fight is on to win over the public on which party has the right prescription for the nation’s long-term fiscal ailments.”

EU Agrees on Cyprus Bailout Deal
According to The New York Times, “Struggling into the early-morning hours to avoid a collapse of Cyprus’s banking system, European Union leaders on Monday agreed on a bailout package intended to keep Cyprus in the euro zone and rebuild its devastated economy. The deal, struck after hours of meetings here, was approved by the finance ministers from the euro zone, the 17 countries that use the common currency. It would drastically prune the size of Cyprus’s oversize banking sector, bloated by billions of dollars from Russia and elsewhere in the former Soviet Union. The deal would scrap the highly controversial idea of a tax on bank deposits, although it would still require forced losses for depositors and bondholders.”

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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