Bankrupting America’s Spending Daily

| April 10 2013

Spending Daily | April 10, 2013

“Obama budget likely to play same old song”

Former Congressional Budget Office director and American Action Forum President Douglas Holtz-Eakin editorializes in POLITICO, “Exciting as watching paint dry — that’s the usual assessment of a budget document. And Wednesday’s release of President Barack Obama’s budget promises to be as underwhelming as it is overdue. Will there be anything of interest at all? Not likely. However, if you believe in long shots — think of drawing three cards for a royal, straight flush while watching a 2013 Pirates World Series game seated next to Donald Trump, who does not use the word ‘I’ for nine innings — there is the following. The U.S. has huge budget challenges. And for the first time in years, we will have three budget proposals to carefully consider — instead of speeches and talking points. Thus, the House, the Senate and the White House will all have plans on paper from which one could hope a serious grand bargain on the debt might emerge. For that to happen, the president’s budget will have to be chock-full of detailed and serious entitlement reform proposals, tax reform specifics and mechanisms to enforce an agreement to keep the debt on a declining trajectory. Unfortunately, the administration’s pre-release spin notwithstanding, that is too far a break from history to bet on. Instead, look for a spending-heavy, gimmick-laden budget proposal that never balances and refuses to get to the heart of our debt crisis.”

Obama’s Budget Falling Into “Yawning Political Void”

The Washington Post reports, “President Obama will unveil his 2014 spending plan Wednesday, 65 days late and several trillion dollars short, by Republican standards, of effectively reining in the national debt. But the more relevant fact about the White House budget may be the yawning political void into which it is about to fall on Capitol Hill. Administration officials say their plan offers a path to compromise, a centrist course that avoids the extreme spending cuts of the House Republican budget as well as the $1 trillion tax hike endorsed last month by Senate Democrats. The president’s proposal contains the same set of policies that Republicans rejected just a few months ago during the “fiscal cliff” negotiations. Putting that plan into writing has failed to change many GOP minds, but it allows Obama to argue that he has met their demands to cut Social Security and Medicare. And it sets him up to blame Republican intransigence over taxes if a deal fails to materialize before Congress faces another showdown over the federal debt limit this summer. An actual deal remains elusive, however. It is not even clear who will do the negotiating.”

“Two months late, Obama’s budget proposal irks both sides”

CBS News reports, “President Obama’s budget arrives two months late, faces skeptical Republicans, irate Democratic activists and carries the burden of trying to erase $1.2 trillion in spending cuts under sequestration the White House dislikes but has failed to persuade Congress to reverse or amend. … House Republicans consider Mr. Obama’s document a tardy irrelevance. Democrats in the Senate are focused on fights over gun control legislation and the drafting of a sweeping immigration reform bill. Democrats will welcome Mr. Obama’s budget politely but pay it little respect. In fact, Senate Democrats ignored the biggest and most combustible idea in Mr. Obama’s budget: $230 billion in 10-year savings derived from a new formula for calculating annual cost-of-living adjustments for Social Security and other federal benefits. The adjustments are designed to help retirees on fixed incomes keep pace with inflation.”

Obama Sends Congress His $3.77 Trillion Dollar Blue Print for Spending

The Associated Press reports, “President Barack Obama is sending Congress a $3.77 trillion spending blueprint that seeks to achieve an elusive ‘grand bargain’ to tame runaway deficits by raising taxes further on the wealthy and trimming popular benefit programs such as Social Security. The president’s proposal being unveiled Wednesday includes an additional $1.8 trillion in deficit reduction over the next decade, bringing total deficit savings to $4.3 trillion, based on the administration’s calculations. It projects that the deficit for the 2014 budget year, which begins Oct. 1, would fall to $744 billion. That would be the lowest gap between spending and revenue since 2008. … Obama’s plan is not all about budget cuts. It also includes an additional $50 billion to fund infrastructure investments, including $40 billion in a “Fix It First” effort to provide immediate investments to repair highways, bridges, transit systems and airports nationwide. Obama’s budget would also provide $1 billion to launch a network of 15 manufacturing innovation institutes across the country, and it earmarks funding to support high-speed rail projects.”

Obama Proposing Revenue-Neutral Corporate Tax Reform

POLITICO reports, “President Barack Obama is expected to use his budget proposal to call on Congress to overhaul the corporate tax system in a way that doesn’t generate additional revenue, a move that is sure to anger liberal Democrats in the Senate. The White House didn’t respond to requests for comment on the expected language, which several sources said would be included in the fiscal 2014 budget proposal that will be unveiled Wednesday. Beyond calling for revenue-neutrality, it’s not clear how deeply the president’s budget will wade into the choppy waters of corporate tax reform.”

Liberals Furious Over Potential Cuts to Entitlements

Dana Milbank editorializes in The Washington Post, “Sen. Bernie Sanders of Vermont, red in the face, took off his jacket and rolled up a shirt sleeve — but there was no relief from the discomfort of his affliction. The poor guy is suffering from triangulation. The man triangulating him, President Obama, has proposed cuts to Social Security and Medicare as part of an attempt to find a middle ground in the budget debate. For Sanders (I), a liberal member of the Senate Democratic caucus, the betrayal stung so badly that he literally took to the streets, joining left-wing activists for a protest Tuesday afternoon outside the White House. … [T]he progressives’ street protest did Obama a favor. He needs to have the likes of Bernie Sanders against him. It strengthens his hand and helps him negotiate a better deal with Republican leaders, who can now see that liberal backbenchers and interest groups can sometimes be as intransigent as conservatives. At a Republican presidential debate in 2011, all eight candidates on the stage said they would reject a budget deal that raised taxes even if it had $10 of spending cuts for every dollar of tax increases. At Tuesday’s protest, I put the reverse question to participants: Could they accept a dollar of cuts in Medicare and Social Security benefits for every $10 of increased taxes on corporations and the wealthy? All those I asked said they would decline.”

Fed Pension Program Expected to Be Exhausted in 15 Years

The Washington Guardian reports, “The federal program that protects workers in multiemployer pension plans expects to be exhausted in 10 to 15 years, and the financial hit will most likely land on retirees, a new report said this week. The Government Accountability Office said the Pension Benefit Guaranty Corporation will be overwhelmed because so many multiemployer plans are so seriously underfunded that they will soon be unable to meet their obligations to retirees. The plans have suffered from various factors, including losses in the stock market, the impact of the recession on the companies that sponsor the plans, and the growth in the ranks of the retired. … Beneficiaries are certain to feel the impact. Many plans, struggling to stay solvent, have already reduced benefits and increased employer contributions – which, in turn, reduced the amount of money employers could devote to pay raises or other benefit programs. When a multiemployer plan becomes insolvent, PBGC sends it money to keep benefits flowing to retirees and to fund the plan’s administrative operation. The aid is nominally a loan, although the money is almost never repaid, the report said.”

“New defense budget means more financial uncertainty for Pentagon”

Reuters reports, “The Obama administration is poised to roll out a 2014 defense budget that is billions of dollars higher than legally mandated spending caps, setting the stage for another year of financial uncertainty and turmoil at the Pentagon, defense analysts say. The White House will propose a $526.6 billion defense budget on Wednesday when it unveils its spending plan for the fiscal year beginning October 1, U.S. officials say. That is $51 billion above the spending caps set by a 2011 law aimed at controlling government deficits. The White House budget plan proposes spending reductions and revenue increases that officials say would make defense cuts under a process known as sequestration unnecessary. But a deal on taxes and spending with the Congress seems unlikely, given that President Barack Obama, a Democrat, and the Republican-controlled House of Representatives have been trying for two years to achieve one. As a result, the Pentagon appears to be headed toward another round of forced budget cuts in October with no plan in place for absorbing the reductions, even as it struggles to implement a $41 billion budget cut for which it was ill-prepared.”

Majority of Americans Have Unfavorable View of Tax Code

The Washington Post reports, “A clear majority of Americans have an unfavorable view of the federal income tax system, according to new Washington Post-ABCNews polling. But, in a somewhat remarkable finding, a majority of Democrats view the tax system in a positive light while Republicans and Independents carry the exact opposite view. Fifty-three percent of self-identified Democrats in the Post-ABC survey view the income tax system favorably while 43 percent see it unfavorably. That’s a stark contrast to the 66 percent of Republicans and 62 percent of independents who have an unfavorable opinion of the tax system. … Whatever the reason, the data is intriguing given that President Obama will release his budget proposal today even as the two parties continue to circle one another in the seemingly endless dance of how to solve (or at least address) the nation’s debt problems. Reforming the tax code has long been a priority for Republicans who insist it could reduce the deficit while averting a tax rate increase. But, at least according to these Post-ABC numbers, Democrats don’t see the tax system as broken and may well put up a fight if and when their GOP rivals push tax reform over tax increases as a solution to the country’s fiscal problems.”

Obama’s Budget Eyes Millionaires and Sequester Cuts

Reuters reports, “The White House on Wednesday proposed a budget that sharply trims the U.S. deficit over three years by forcing millionaires to pay more in taxes and enacting spending cuts that replace the ‘sequester’ reductions that went into place last month. President Barack Obama’s fiscal 2014 budget blueprint ensures that those making $1 million a year or more would have to pay at least 30 percent of their income, after gifts to charity, in taxes, officials said. That increase, along with spending cuts and a 28 percent cap on tax deductions for high earners, would bring the U.S. budget deficit down to 2.8 percent of GDP by 2016, senior administration officials told reporters. The nonpartisan Congressional Budget Office in February projected the U.S. deficit to be 5.3 pct of GDP this year. … Obama’s budget proposal would replace those cuts with his original deficit reduction proposal from December. That offer included $930 billion in spending reductions and some $580 billion in tax revenues. The president’s budget includes spending on policy priorities such as infrastructure and early childhood education. He would pay for those programs with additional new taxes and the elimination of some tax breaks for the well-off.”

President’s Nominee to Run Entitlements Vows to Run Them Like A Business
Reuters reports, “President Barack Obama’s nominee to lead the huge agency that runs Medicare and Medicaid got rare bipartisan praise on Tuesday, but faced tough questions about healthcare reform and a recent controversial decision on Medicare Advantage payment rates. Testifying before the Senate Finance Committee, which will decide whether to advance her nomination, Marilyn Tavenner said her role would be to run the Centers for Medicare and Medicaid Services as a business, and as a partner with many healthcare entities for the benefit of all.  … ‘We have an $820 billion dollar business to run that a large amount of this country has a stake in, from beneficiaries to providers to hospitals to insurance companies to Congress to the administration to our CMS employees and contractors,’ Tavenner said. ‘We need to operate CMS as a business and act like business partners.’ In a sign of her bipartisan appeal, she was introduced by one of the nation’s most prominent conservative lawmakers and a longtime foe of Obama’s Affordable Care Act, fellow Virginian and House Majority Leader Eric Cantor, who worked with Tavenner when she ran the state’s Medicaid program.”

 

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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