Bankrupting America’s Spending Daily
Spending Daily | March 26, 2013
Baucus on Dem Budget: “$1 Trillion in tax increases is too much”
Roll Call reports, “A defiant stand by Senate Finance Chairman Max Baucus against his party’s budget blueprint has raised new questions about the Democrats’ agenda for tax overhaul and deficit reduction. The Montana lawmaker was one of four Democrats who voted against the fiscal 2014 budget resolution (S Con Res 8) adopted on a 50-49 vote in the early morning hours of March 23. His vote was of particular interest since he would be in charge of writing the tax overhaul and revenue increases the budget resolution envisions. … As he left the Capitol, Baucus made it clear the Murray budget does not represent his own fiscal outlook. ‘It was not sufficiently balanced. It was too lopsided,’ Baucus said. ‘I think $1 trillion in tax increases is too much.’”
Sequestration Is Wake Up Call to Fix Congress
Charlie Cook writes in The National Journal, “Almost a month into budget sequestration, the sky has not fallen, the sun comes out most days, and birds are still chirping. Few would argue against the proposition that sequestration is a blunt, mindless instrument to cut budgets, treating all affected programs equally, largely ignoring Social Security, Medicaid, and Medicare, the biggest drivers in the rise in government spending. It causes pain and hardship and yet, it does seem to be working; it is bringing discretionary spending under control, even in a crude fashion. Call it a bad idea whose time has come. …Obviously, it was because the system failed to work. The political and policy process broke down, as the executive and legislative branches were unable to make decisions and cooperate enough to do what the Founding Fathers intended. … Thoughtful members of Congress should now consider the implications of their actions and contemplate reforms and change practices. Getting rid of the filibuster would change the nature and purpose of the Senate and should be avoided.”
“The Senate After Dark”
The Wall Street Journal editorializes, “The U.S. Senate these days seems to conduct most of its business after dark, often after midnight, and no wonder. You wouldn’t want voters to know what you were up to either if you were part of Majority Leader Harry Reid’s national embarrassment. Consider last week’s fiasco involving the air-traffic control system. As part of the White House’s Operation Wreak Havoc response to the sequester spending cuts, the Department of Transportation warned last week that 149 control towers at small, regional airports will close down. … Many of the service cutbacks could have been easily avoided by a budget amendment last week sponsored by Republican Senator Jerry Moran of Kansas. He proposed replacing $50 million of FAA sequester cuts with savings from unspent balances, which are a kind of agency slush fund, and by reducing other low-priority spending. Great idea. How did the vote turn out? There wasn’t one. Majority Leader Reid blocked the amendment from ever getting to the Senate floor. Mr. Moran believes that public safety is compromised by these control-tower cuts, and he calls the Reid gambit ‘a very dangerous way to try to score political points.’”
House and Senate Budgets Face Impossible Mission: Compromise
The Hill reports, “The Senate’s passage of a budget for the first time in four years sets the stage for leaders to name conferees to negotiate a compromise measure. A reconciled budget resolution would then be put before the full House and Senate for votes. Senate Majority Leader Harry Reid (D-Nev.) and Speaker John Boehner (R-Ohio) have made no decisions about when to take these steps, congressional sources said. ‘No decisions have been made at this point, but the leaders will be discussing next steps with [House Budget Committee] Chairman [Paul] Ryan and our members in the days and weeks ahead,’ a House GOP leadership aide said. … Reconciling the House and Senate budgets is often a difficult task, something highlighted by the House GOP’s ‘No Budget, No Pay’ act approved in January. Under that measure, lawmakers would have had their paychecks withheld if their chamber failed to approve a blueprint. But the law does not require Congress to reconcile competing measures. Neither House nor Senate Budget panel leaders are refusing the mission, but they don’t sound optimistic.”
$12 Billion in Stimulus Wasted on High Speed Rail
According to CNN, much of the taxpayer-funded stimulus project has produced little to no results. This includes $12 billion spent on a high speed rail project that has yet to begin.
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Growing Disability Insurance Rolls on Brink of Collapse
The Washington Examiner reports, “America’s unemployment rate has come down significantly from its peak of 10 percent in late 2009. That may seem to suggest a steady improvement in the employment picture, but the impression is misleading. We recently pointed out that workers age 25 to 54 are experiencing a jobs depression that has gotten slightly worse since the end of the GreatRecession of 2007-2009, with nearly all job growth since the downturn’s endcoming among older Americans. …In 2011, on average, one net person has been added to Social Security’s Disability Insurance rolls (and 3.3 to its retirement program) for every five net new jobs created. Since 1970, the number receiving DI has grown sixfold (from 1.4 million to 8.8 million), and the program expenses have grown tenfold, which is unsustainable. The federal government now spends more on disability than food stamps and welfare combined. In 2009, DI began paying out more in benefits than it took in from payroll taxes.By 2016, it is set to run out of money.”
“The Great Recession Has Been Followed By The Grand Illusion”
Mortimer Zuckerman editorializes in The Wall Street Journal, “The Great Recession is an apt name for America’s current stagnation, but the present phase might also be called the Grand Illusion—because the happy talk and statistics that go with it, especially regarding jobs, give a rosier picture than the facts justify. The country isn’t really advancing. By comparison with earlier recessions, it is going backward. Despite the most stimulative fiscal policy in American history and a trillion-dollar expansion to the money supply, the economy over the last three years has been declining. … Cumulative growth for the past 12 quarters was just 6.3%, the slowest of all 11 recessions since World War II. And last year’s anemic growth looks likely to continue. Sequestration will take $600 billion of government expenditures out of the economy over the next 10 years, including $85 billion this year alone. The 2% increase in payroll taxes will hit about 160 million workers and drain $110 billion from their disposable incomes. The Obama health-care tax will be a drag of more than $30 billion. The recent 50-cent surge in gasoline prices represents another $65 billion drag on consumer cash flow. … What the administration gives us is politics. What the country needs are constructive strategies free of ideology
“Cyprus bailout deal reached, as long-term impact remains uncertain”
The Washington Post reports, “European leaders Monday hailed a last-minute bailout for Cyprus as an important step in defending their unified currency, but some officials and analysts questioned whether the deal raised new problems that could still threaten the survival of the euro. The arrangement will grant Cyprus $13 billion in emergency loans from an international group of lenders but will force the country to shutter its second-largest bank and will push massive losses on large depositors there. The deal effectively wipes out Cyprus’s appeal as an international banking haven but saves Europe from cutting off support to one of the 17 nations that use the euro currency.”
“Declining Wealth Brings a Retirement Risk”
Bruce Bartlett, former senior policy associate in the Reagan and George H.W. Bush administrations editorializes in The New York Times, “In a recent post, I examined aggregate national wealth from the Federal Reserve Board’s flow of funds statistics. They show that while national wealth is now approximately back to its precrisis level, the composition of it has changed. Much more is now held in the form of such financial assets as stocks and much less in nonfinancial forms such as housing. This is important, economically and distributionally, because the wealthy are much more likely to be invested in stocks and bonds, while the middle class has more of its wealth in home equity. … On March 21, the Census Bureau published data on median household wealth – the median is the exact middle of the distribution of wealth. It shows that between 2000 and 2005, median wealth increased significantly, to $106,585 from $81,821. It then fell to $68,828 in 2011. Thus, although the stock market is close to its prerecession peak and aggregate national wealth has largely been restored, the median family’s wealth is still considerably below its peak and needs to rise considerably just to get back to where it was in 2000.”
IMF Cuts U.S. Growth Forecast to 1.7 Percent
According to Reuters, “The International Monetary Fund (IMF) is planning to cut its U.S. growth forecast for this year due to higher taxes and spending cuts, Italian news agency ANSA said, citing a draft of the IMF’s next World Economic Outlook report. The U.S. economy, the world’s biggest, will expand 1.7 percent this year, down from the 2.0 percent predicted in January, ANSA reported late on Saturday. The next round of IMF forecasts is scheduled to be published in mid-April. Higher tax rates for wealthy Americans and $85 billion in government spending cuts known as the ‘sequester’ are slowing growth this year, but the U.S. economy will still expand 3 percent in 2014 as previously forecast, the draft report said, according to ANSA.”
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