Bankrupting America’s Spending Daily

| May 2 2013

Spending Daily | May 2, 2013 

SHOCK: White House Can’t Avoid Furloughs

Bloomberg reports, “President Barack Obama began experiencing first-hand the effects of across-the-board federal spending cuts as the first wave of White House furloughs kicked in yesterday. The $85 billion in cuts known as sequestration hit White House staffers with day-long furloughs scattered throughout the next two weeks. All staff classified as non-commissioned will miss one work day without salary during May’s first pay period while commissioned officers who, as assistants to the president don’t qualify as leave-earners, will have to take a pay cut commensurate with the planned furlough, spokesman Jay Carney said. ‘It affects everyone in the White House,’ Carney told reporters at yesterday’s daily briefing. Administration officials said about 468 people work at the White House, though they cited for that figure a payroll report from July 2012 — which doesn’t reflect turnover in the administration — and declined to provide updated numbers.”

 

Pentagon Seeks More Flexibility to Manage Sequester

Reuters reports, “The Pentagon is preparing to ask Congress soon for more authority to shift funds to cope with automatic spending cuts, confronting lawmakers with another exception to the ‘sequester’ just days after they gave a break to the flying public and the airline industry. The request may be sent to the House of Representatives’ Appropriations Committee as early as next week, a House Republican aide said on Wednesday. The Pentagon won increased budget flexibility in March, but officials have told members of Congress they believe it was insufficient to cover shortfalls intraining and operations. The Defense Department move would follow closely the fix last week to ease airline flight delays caused by the temporary furloughs of air-traffic controllers by the Federal Aviation Administration. … The Pentagon was one of several government agencies that won some budget flexibility in a stop-gap government funding measure passed in late March. That allowed more than $10 billion that was locked up in other accounts to be shifted to the Pentagon’s operations and maintenance account, which funds training exercises and military readiness.”

 

“Promises, Promises: Obama $4T Deficit Cut Plan”

The Associated Press reports, “Even after a hard-fought deficit-cutting deal in 2011 and a tax-increase measure in January, Washington still has a considerable way to go to wrestle intractable budget deficits under control. The Congressional Budget Office estimates cumulative deficits of roughly $7 trillion over the coming decade and warns ‘such high and rising debt would have serious consequences,’ including higher interest costs for the government, reduced national savings and investment and a potential fiscal crisis.” During his campaign, President Obama said, “’ I’ve put forward a specific $4 trillion deficit-reduction plan.’ … Obama based the $4 trillion claim on last year’s budget and updated it in the budget he released in April. It incorporates $2.6 trillion in deficit savings already achieved by capping annual appropriations bills over a decade, the January tax increase on wealthier earners and the resulting savings on interest payments on the debt. The rest would come from a 10-year $583 billion tax increase, an additional layer of tax increases from slower indexing of tax brackets for inflation, modest curbs to federal health care programs and further savings on interest payments on the $16 trillion national debt.”

 

“The next sequester victors?”

POLITICO reports, “Congress and President Barack Obama spared the FAA from the full brunt of sequester, sending a clear message: We’re willing to cave. Now advocates for other agencies and programs are lining up by the newly opened door, looking for fixes to their own across-the-board budget cut woes. Some are better positioned than others to come out ahead, especially causes with a powerful story: Think of long waits, terrorism threats or deadly disease outbreaks.  It also helps to have powerful lawmakers willing to go to the floor for you and weather criticism that they’re picking favorites in a law designed to hurt everyone equally.” Click here to see other agencies and programs that might be able to work their way around the sequester.

 

Reid Agrees Health Care Law A “Train Wreck” Without More Funding

The Hill reports, “Senate Majority Leader Harry Reid (D-Nev.) says he shares colleagues’ concerns that the Affordable Care Act could become a ‘train wreck’ if it’s not implemented properly. Reid warned that people will not be able to choose health insurance plans on government health exchanges if federal authorities lack the resources to set them up and educate the public. ‘Max said unless we implement this properly it’s going to be a train wreck and I agree with him,’ Reid said, echoing a warning delivered last month by Senate Finance Committee Chairman Max Baucus (D-Mont.).Reid warned the federal government is not spending enough money to implement the law because of Republican opposition to ObamaCare. ‘Here’s what we have now, we have the menu but we don’t have any way to get to the menu,’ Reid said.”

 

ACA “still not well liked or well understood”

The New York Times reports, “Three years after President Obama signed the health care reform law, there are concerns that the process of implementing it will be rocky. Even some of the law’s supporters are worried. Perhaps more troubling for the White House, the Affordable Care Act is still not well liked or well understood. The Obama administration had hoped that over time, the legislation would gain enough support to help smooth over the rough patches of putting it into practice. Instead, public opinion has remained mostly static: a plurality of Americans still disapprove of the law, and a substantial portion of the public remains uncertain about what it says, according to recent polls.”

 

New Study Undermines Assumptions Behind Medicare Expansion

The Washington Examiner reports, “During the health care debate, liberals argued that government had to a moral duty to enact legislation that expanded health insurance among lower-income individuals.  But a landmark study published in the New England Journal of Medicine dramatically undermines this assumption and shatters the rationale behind the law’s Medicaid expansion. In 2008, Oregon expanded its Medicaid program, but because the state could not cover everybody, lawmakers opened up a lottery that randomly drew 30,000 names from a waiting list of almost 90,000 and allowed them to apply for the program. This created a unique opportunity for health researchers, ultimately allowing them to compare the health outcomes of 6,387 low-income adults who were able to enroll in the program with 5,842 who were not selected. … Ultimately, the authors concluded that, ‘This randomized, controlled study showed that Medicaid coverage generated no significant improvements in measured health outcomes in the first two years, but it did increase use of health services, raise rates of diabetes detection and management, lower rates of depression, and reduce financial strain.’ So, the study suggests that expanding Medicaid is one way of reducing financial pressure on low-income groups, but it’s costly and does not improve their health.”

 

“Democrats Dissing ObamaCare”

The Wall Street Journal reports, “Mark Sanford and Elizabeth Colbert Busch on Monday held their first and (likely) only debate in the run-up to next week’s special election for the 1st congressional district in South Carolina. The media tittering over Mrs. Colbert Busch’s decision to publicly slap the former Republican governor over his extramarital affair obscured the more notable political comment of the night. That moment came when Mrs. Colbert Busch slammed her own party’s health-care law: ‘Obamacare is extremely problematic, it is expensive, it is a $500 billion [higher] cost than we originally anticipated, it’s cutting into Medicare benefits and it’s having companies lay off their employees because they are worried about the cost of it. That is extremely problematic, it needs an enormous fix.’ South Carolina’s first district is a conservative place—it voted overwhelmingly for Mitt Romney in last year’s election—so Mrs. Colbert Busch has every political reason to distance herself from her party and its health law. Yet she becomes one of the first Democrats to attempt to win an election on the back of criticism of her president’s signature achievement.”

 

‘Permission Structure’ Phrase Used By Obama Draws Criticism

Reuters reports, “It sounds like something teenagers need before borrowing their parents’ car, but ‘permission structure’ is actually a phrase being tossed around by President Barack Obama to describe his efforts to make deals with Republicans. At a news conference on Tuesday, Obama expressed frustration with resistance to his ideas among congressional Republicans, saying that he thought ‘deep down’ some of them wanted to ‘do the right thing’ but worry about such consequences as being challenged in primary elections. He said the only way to break the impasse might be to ‘create a permission structure’ to allow them to do what’s best for the country. … The phrase puzzled reporters and was mocked by Republicans seeking to highlight what they see as Obama’s ineffectiveness in pushing his agenda in Congress. … The phrase has been used frequently within Obama’s inner circle, dating back at least as far as his 2008 presidential campaign and a former Obama aide said it is a favorite term of Obama senior adviser Dan Pfeiffer. ‘Sometimes there is an issue that seems intractable and in order to help someone find a path your point of view, you have to build in a process that helps them see your point of view more clearly,’ the former Obama aide explained.”

 

“Debt and Growth In A Time of Controversy”

Salim Furth writes for The Heritage Foundation, “The weight of the evidence indicates that high debt slows growth, but there is no magic threshold above which any country at any time will experience slower growth. This truth has been illustrated in the recent controversy around ‘Growth in a Time of Debt,’ an academic paper by Carmen Reinhart and Kenneth Rogoff. ‘Growth in a Time of Debt’ has been widely cited in the policy world for its conclusion that gross debt above 90 percent of gross domestic product (GDP) is associated with lower economic growth. ‘Growth in a Time of Debt’ argues that episodes of high debt tend to last a long time. … Growth in a Time of Debt” showed that very-high-debt countries grow more slowly, on average, than other countries. That finding remains valid after a vigorous and hostile critique, but that single paper was never more than a small part of the broader understanding of how debt can hurt growth. In the United States, the question is not whether gross debt at 90 percent of GDP is acceptable. With gross U.S. debt now over 100 percent of GDP, that milestone has been passed. Rather, the question is whether the nation will continue on a path that promises to take us to debt at 200 percent of GDP within 25 years. If the U.S. continues to borrow at profligate levels to pay for routine spending, it may not be able to borrow to defend itself in an unforeseen war or to ease the pain of the next great recession.”

 

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