Bankrupting America’s Spending Daily

| April 30 2013

Spending Daily | April 30, 2013

“Treasury to pay down debt for first time since Obama took office”

According to The Hill, “The Treasury Department announced Monday that it would reduce its level of debt in financial markets for the first time since President Obama took office. The department said it expects to pay down a net of $35 billion in its marketable debt for the second quarter of 2013, the first time it has done so since 2007. In February, Treasury had estimated the government would have to borrow $103 billion during the second quarter, and would end up with a cash balance of only $30 billion. But thanks to unexpectedly higher receipts of government revenue and lower outlays in spending, the Treasury is experiencing a swing in fortune that allows officials to actually pay down some of its outstanding debt. Treasury now expects to have a cash balance of $75 billion in June after paying down the $35 billion in debt.”

 

“Debt and Growth”

The Wall Street Journal editorializes, “Perhaps you’ve read that America’s debt burden is no longer a problem. Former White House economist Larry Summers says the U.S. should borrow even more money today because interest rates are low, and his Keynesian brethren are busy trying to discredit economists Kenneth Rogoff and Carmen Reinhart for their famous claim that a country’s economic growth begins to fall when debt hits 90% of GDP. Time for Stimulus 5.0! The Reinhart-Rogoff duo have admitted a math error while defending their core argument, though we’ve never considered their 90% figure to be dogma. Their main contribution was to remind politicians amid the post-crisis Keynesian spending blowout that public debt isn’t a free lunch. It has to be repaid, which means a country must either spend less, tax more, grow faster, repudiate the debt or inflate it away. … One reason to be more worried about debt now is what we’re borrowing to finance. Spending on wars eventually ends. But today most spending by far goes to social welfare payments and entitlements that are difficult to reduce. Those payments are only going to increase as the baby boomers retire, and as ObamaCare takes effect. These income transfers spread the wealth but they do nothing to increase the growth of the economy. To the extent that they are financed by higher taxes, they retard growth by taking money that would be invested more productively in the private economy.”

 

“3.3 Billion Lost in Unemployment Fraud”

CNBC reports, “Unemployment fraud is costing the government billions of dollars in paid benefits to people who are still working, no longer alive or are behind bars, according to a new report. A study by the St. Louis Federal Reserve released last week found that of the $108 billion paid out in unemployment benefits in 2011, some $3.3 billion was paid out dishonestly. … According to the study, individuals with relatively low earnings constitute a larger fraction of those committing fraud. High-earnings individuals, however, account for larger dollar amounts of fraud.”

 

Governments Bet On Fisker Goes Sour

The Washington Post reports, “Of all the arguments for the Obama administration’s green-energy loan program, one of the worst is that federal aid leverages private capital. Consider Fisker Automotive. In August 2009, this wannabe plug-in electric hybrid car company was hard up for cash to pay suppliers and faced potential layoffs. A green-energy loan was the only hope, Fisker executive Bernhard Koehler explained in an e-mail to the Department of Energy — because it would help bring in private money. ‘We are oversubscribed in this equity round with the DOE support — and nowhere without it,’ Koehler pleaded. A month later, in September 2009, the Energy Department approved a $529 million low-interest loan. Vice President Biden stood before the proposed site of a Fisker plant in Delaware and described the department’s program as ‘seed money that will return back to the American consumer in billions and billions and billions of dollars of good new jobs.’ … Alas, government loans could not overcome Fisker’s fundamental problem: no experience mass-producing automobiles, let alone the complex battery-powered luxury cars that it proposed to sell for more than $100,000. Today, the company is nearly bankrupt; taxpayers are on the hook for $171 million, and private investors are probably nearly wiped out.”

 

Does the White House View Smarter Cuts as Leverage?

Roll Call Reports, “The Obama administration’s strategy for replacing the sequester has always been to rely on public pressure when the automatic spending cuts start to sting. But with the White House’s recent willingness to create special workarounds for programs such as the Federal Aviation Administration and meat inspectors, many Democrats fear the president is giving away all his leverage on the issue. … The Obama administration’s strategy for replacing the sequester has always been to rely on public pressure when the automatic spending cuts start to sting. But with the White House’s recent willingness to create special workarounds for programs such as the Federal Aviation Administration and meat inspectors, many Democrats fear the president is giving away all his leverage on the issue. … The White House’s backup plan was in pressuring the GOP after the cuts were implemented, when real Americans started to be affected by them. And the administration is backing down on that now, too.”

 

Poll: President and Republicans Blamed Equally for FAA Furloughs

The Washington Post reports, “At least on one aspect of the required federal spending cuts known as the sequester, the blame game seems to have evened out. A new Pew Research Center survey finds that congressional Republicans and the White House take equal heat for flight delays caused by the cuts. On Friday, Congress passed and Obama signed legislation giving the agency more flexibility to avoid air traffic controller furloughs. The poll, taken in the midst of that legislative wrangling, found 34 percent of Americans blamed Republicans and 32 percent blamed Obama. Another 10 percent blamed both.”

 

Obama Warns Scientists of Research Delays Due to Sequester

The New York Times reports, “At a moment when scientists are on the brink of making breakthroughs that could significantly improve human lives, broad spending reductions that went into effect in March threaten to stall their progress for up to two years, President Obama told a gathering of scientists on Monday. ‘Unfortunately, that’s what we’re facing right now,’ Mr. Obama told an audience of researchers, scientists, and current and former government officials gathered for the 150th annual meeting of the National Academy of Sciences. ‘Because of the across-the-board cuts that Congress put in place — the sequester, as it’s known in Washington-speak — it’s hitting our scientific research.’ … ‘Instead of racing ahead on the next cutting-edge discovery, our scientists are left wondering if they’ll get to start any new projects, any new research projects at all over the next few years,’ he said, ‘which means that we could lose a year, two years of scientific research as a practical matter because of misguided priorities here in this town.’ Mr. Obama said the country could not afford delays that would make it difficult to keep up with the pace of technological innovation or allow other nations to get ahead of the United States in science.”

 

Obama’s Campaign IUOs Are Coming Due

The Associated Press reports, “Presidential campaigns are long in the making, quick to be forgotten. But one part of them lives on for years: the victor’s promises. President Barack Obama paved his path to re-election with fewer promises than in 2008. The ones he did lay down, though, are meaty, legacy-shaping for him and consequential to ordinary lives today and for generations to come, for better or worse. They also are extraordinarily difficult to achieve in a time of gridlock grief and budgets that are tight when they are not paralyzed. He’s promised to set a course in law against global warming, stop Iran from gaining the ability to make nuclear weapons, slash America’s use of foreign oil, restrain college costs, take a big bite out of the national debt even while protecting the heart of the big entitlement programs and overhaul immigration law. … But Obama made a pact with voters, not historians, and he’s got IOUs outstanding. Republican lawmakers do, too. They don’t inherit the promises of GOP presidential nominee Mitt Romney and did not campaign with one voice. But they presented themselves unmistakably as the party of smaller government, low taxes, a strong military capability and fiscal restraint. They have to answer to voters in 2014 for what they deliver and fail to do. So must Democrats.”

 

President’s Budget Complicates House Dems Strategy 

POLITICO reports, “Democrats have used a clear and potent attack against Republicans in recent elections: Don’t vote for them because they’ll cut your Social Security and Medicare. But using that playbook next year, as Democrats had planned, just got a lot more complicated. President Barack Obama blurred the lines this month when he embraced entitlement cuts of his own as part of his budget plan. And Democrats now fear their leader’s tack to the center could blunt one of their sharpest weapons in the battle for the House of Representatives next year. The concern is that Republicans will have a ready retort — your own president proposed entitlement cuts — and force Democrats on the defensive. The issue is critical to senior voters, who turn out in disproportionately large numbers in midterm elections.”

 

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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