Bankrupting America’s Spending Daily

| April 17 2013

Spending Daily | April 17, 2013

Dems React to Boston Marathon Bombing with Sequester Talk

POLITICO reports, “With the Boston Marathon bombings less than 24 hours old, some on Capitol Hill are beginning to say the attack shows why Congress should’ve stopped automatic spending cuts from taking hold in March. House Minority Whip Steny Hoyer (D-Md.), responding to a question at a Tuesday morning press conference, said the bombings are ‘clearly another place where it demonstrates why having the ability to address security concerns is important.’ … Rep. Xavier Becerra of California, the chairman of the House Democratic Caucus, said that the first responders working Monday aren’t sheltered from cuts. ‘We have to send you less money to help your first responders,’ Becerra said. A White House official said the sequester cuts ‘will not hamper’ the response to the bombing, but decried the long-term effect.”

 

Dems Relating Boston Bombings to Sequester “Smacks of Political Opportunism”

Associated Editor of The Atlantic David A. Graham commented on Democrats relating the Boston bombings to the sequester. He writes, “On the first day of a tragedy, everyone agrees that it’s no time for politics. On day two, however, it’s open season, apparently. It’s hard to process something like the Boston bombing and speak intelligently about it. Examples of unwise reactions abound, but let’s concentrate on what House Democrats said today. Politico‘s Jake Sherman has the report: House Minority Whip Steny Hoyer (D-Md.), speaking to reporters Tuesday morning, said the bombings are ‘clearly another place where it demonstrates why having the ability to address security concerns is important.’  … In the short term, there’s a question of taste and accuracy. People aren’t taking his comments well (just check Twitter). Even if the Maryland congressman offered it the best faith, it smacks of political opportunism. And moreover, is there any evidence that more funding for law enforcement and security from the federal government would have made any difference in this attack, even if sequestration’s effects were in place?”

 

Defending Debt?

Annie Lowrey writes for The New York Times, “In recent years, policy makers in Europe and the United States have fastened on the notion that reaching a certain heavy burden of debt would threaten future economic health — often to justify austerity budgets that increased unemployment and sapped economic strength in the here and now. But now some economists are challenging the very foundations of that idea, raising questions about whether such a debt threshold even exists and setting off a fierce debate that flared up on Tuesday across the Internet about whether potentially flawed research is at least partly responsible for the slow growth that has bedeviled most advanced industrial countries since the recovery from the financial crisis began in 2009. … The controversy stems from a provocative new paper by economists at the University of Massachusetts, Amherst that claims to have found some basic errors in one of the most path breaking and influential economic studies to come out in the last few years. … The economists, analyzing 3,700 separate economic observations, found little relationship between growth and debt for countries with debt-to-gross-domestic-product ratios of 90 percent or less. But for countries with debt loads equivalent to or greater than 90 percent of annual economic output, ‘median growth rates fall by 1 percent, and average growth falls considerably more.’” Read More…

 

Rebuttal: Our Table Proves Critics Actually Agree, Higher Debt Results in Slower Economic Growth

Business Insider reports, “The big scandal in the world of economics today is a new paper attempting to refute claims put forth by Harvard econ professors Carmen Reinhart and Ken Rogoff that high levels of government debt result in slower growth. We already posted a response from Reinhart and Rogoff, which essentially says that the critique is overblown, and that ultimately the critics corroborate the essence of the paper, which is that high debt does result in slower growth. We just got the following chart from Professor Carmen Reinhart, which further clarifies the statement she sent out with Ken Rogoff. It shows that Herndon, Ash et. al. (the other papers authors) got almost the exact same results as she and Rogoff did in their original paper, ‘Growth in a Time of Debt’ — namely, that higher debt resulted in slower growth.” Click here to see the table.

 

Reid Blasts House GOP For Stalling Budget Conference

The Hill reports, “Senate Majority Leader Harry Reid (D-Nev.) blasted House Republicans and Rep. Paul Ryan (R-Wis.) on Tuesday for stalling the creation of a House-Senate conference committee on the budget. Ryan said Tuesday he wants a ‘framework’ in place before he will agree to form a conference, the next step under regular order in reconciling the wildly different House and Senate budget resolutions. ‘We want to go to conference when we feel we have a realistic chance of getting an agreement,’ Ryan told reporters Tuesday after a hearing. ‘We don’t want to conference when we have an endless process that focuses on our differences.’ … Hours later, Reid shot back that Ryan is holding things up. ‘Chairman Ryan said ‘we want to have a pre-conference.’ Well you can’t have it both ways. Does he want regular order? Obviously not,’ said Reid, whom Republicans have criticized for failing to move a budget over the last four years.”

 

Congress Must Clear Budget Gap Before New Spending Laws Can Pass

Roll Call reports, “Democrats and Republicans will need to bridge a $91 billion gap on budget plans before they can clear any new spending laws. But for now, neither side is suggesting a compromise — even as both contend they want a more orderly appropriations process. ‘Spending is the problem, so moving higher doesn’t make much sense to me,’ Sen. Mike Johanns of Nebraska, a GOP appropriator, said Tuesday. He added it would be a ‘tough sell’ to support a higher spending cap. … Still, Democrats will seek to end the sequester as part of the bargaining around a larger budget deal that they hope will emerge in the next set of negotiations on the debt limit. The spending limit also is a point of contention between the House and Senate versions of the fiscal 2014 budget resolution. And the partisan split over spending is becoming apparent as appropriators prepare to write the 12 annual spending bills. Senate appropriators want to allocate dollars based on the higher spending, while House appropriators plan to stick with the lower number. The different approaches are a formula for legislative gridlock.”

 

Report Finds Stimulus Funds Illegally Used for Lobbying

The Washington Free Beacon reports, “At least seven local health departments illegally used stimulus grant funds to lobby for greater taxes and restrictions on tobacco and unhealthy foods, according to a report released Tuesday by a nonprofit watchdog group. The stimulus-funded Communities Putting Prevention to Work (CPPW) program disbursed about $373 million intended to educate the public about tobacco use and obesity. Federal law prohibits grantees from using the funds for lobbying activities. According to the group Cause of Action, local health departments from Alabama to California used the funds to devise or promote legislation designed to curb tobacco use or combat obesity. The report detailing the allegations is the product of a 19-month investigation into the CPPW program. ‘[Cause of Action’s] investigation revealed that CPPW money went to support lobbyists and public relations companies who used taxpayer dollars to push laws and agendas that would lead to tax increases on tobacco and high calorie products,’ the report said.”

 

House Dems Not Sold On Chained CPI

The Hill reports, “President Obama is struggling to convince House Democrats that a proposed cut to Social Security benefits has a place in the deficit fight. The White House on Tuesday sent its top economic adviser to the Capitol to meet with the Democratic Caucus in an effort to soothe the outcries over Obama’s plan to cut the popular seniors benefit by adopting the so-called ‘chained CPI’ formula in his 2014 budget. … ‘For me, there’s no question. If this is a negotiation on budget issues, trying to deal with deficits, then Social Security has never added a single penny to the deficits of this country or to the national debt,’ Rep. Xavier Becerra (Calif.), chairman of the House Democratic Caucus, said immediately after the meeting. … Rep. Joseph Crowley (N.Y.) also suggested he was not won over by Tuesday’s White House pitch. … ‘There’s no love of this particular avenue,’ Crowley said, describing the administration’s argument, ‘but … of all the avenues that are available, this is the least harmful in terms of what they believe the consequences may be down the road for the country.’”

 

Signs Inflation May Be Slowing Gives Fed Room

The Wall Street Journal reports, “The latest reading on consumer prices could give the Federal Reserve a new reason to keep its easy-money policies intact—inflation shows signs of slowing. The Labor Department’s consumer-price index was up 1.5% in March from a year earlier, the fourth time in five months that it has been below the Fed’s 2% inflation goal. And while the core reading on consumer costs, which excludes volatile food and energy prices, was up 1.9%, it also remained below the goal for the fourth time in five months. Readings like those Tuesday are likely to get the attention of central-bank officials as the debate heats up on when to begin winding down an $85 billion-per-month bond-buying program that was launched last year to stimulate the economy. The Fed has linked the bond buying to developments in the job market, saying it would slow the purchases once the job market improves substantially. Some officials have said recently that an inflation slowdown could be another factor that influences the Fed’s decision on when to curtail the program. If inflation readings are low, the Fed might feel it has more leeway to try to stimulate economic growth.”

 

Obama Targeting Few Provisions for Tax Extenders

POLITICO reports, “It’s a year-end tradition that’s as deeply ingrained as the lighting of the National Christmas Tree: a last-minute, feverish lobbying campaign to keep billions of dollars in temporary tax breaks on the books. But President Barack Obama’s budget proposal threatens to upend that routine. In a break with his previous budgets, Obama isn’t backing the continuation of the so-called tax extenders package that keeps dozens of benefits in place for a hodgepodge group that includes teachers, energy companies and Hollywood producers. Instead, the administration is targeting a few provisions that it finds particularly important, such as the research and development credit and the break for renewable-energy production, and asking Congress to make them permanent.”

 

“Lawmakers Increase Travel As Rest Of Country Deals With Budget Cuts”

The Washington Guardian reports, “While the rest of Congress was struggling to avoid the dreaded fiscal cliff late last year, then-Sen. John Kerry whisked off to London with a top aide. It was a classic farewell trip for a veteran Democrat about to become America’s next secretary of state. What wasn’t classic was the cost to taxpayers: $17,500 for two airline tickets to London that normally cost just $3,000. Across the Capitol, House Majority Leader Eric Cantor commandeered a VIP military flight and dashed off to Switzerland with half-dozen Republican colleagues in late January, just days after a congressional vote to suspend the debt limit and avert another fiscal crisis. The jaunt – for a speech at the World Economic Forum in Davos – likely set back taxpayers more than $50,000. And not to be outdone by their jet-setting bosses, more than a dozen congressional staffers from both political parties took a winter trip to sunny, warm Las Vegas at the expense of special interests Their weighty assignment? Check out the gadgets at the city’s annual consumer electronics expo. … Members of Congress and their staffers spent $1.45 million on official taxpayer trips in 2012, up about $230,000 from the year before. And in the first three months of 2013, lawmakers and staff took another $800,000 in trips at the expense of special interests, nearly $100,000 more than the same period last year, according to the official travel records compiled by Congress and stored on the PoliticalMoneyLine.com site.”

 

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