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Bankrupting America’s Spending Daily

Posted: April 12, 2013 at 3:30 pm   /   by

Spending Daily | April 12, 2013

“Obama’s Lazy Budget”

Robert Samuelson editorializes in The Washington Post, “There is something profoundly timid about President Obama’s proposed $3.8 trillion budget for 2014. Stripped of boasts about ‘investments’ for the future and a responsible ‘balance’ between deficit reduction and economic growth, the budget is a status-quo document. It lets existing trends and policies run their course, meaning that Obama would allow higher spending on the elderly to overwhelm most other government programs. This is not ‘liberal’ or ‘conservative’ so much as politically expedient and lazy. The trends are clear. From 2014 to 2023, the administration projects annual spending on Social Security to rise from $860 billion to $1.4 trillion, assuming its proposal for altering the inflation adjustment of benefits is adopted. Over the same years, annual Medicare and Medicaid spending would go from $828 billion to $1.4 trillion. … But Obama remains unwilling to grapple with basic questions posed by an aging population, high health costs and persistent deficits. Why shouldn’t programs for the elderly be overhauled to reflect longer life expectancy and growing wealth among retirees? Shouldn’t we have a debate on the size and role of government, eliminating low-value programs and raising taxes to cover the rest? The ‘spin’ given by the White House — and accepted by much of the media — is that the president is doing precisely this by putting coveted ‘entitlement’ spending on the bargaining table.”


“Deficit Reduction, Minus The Reduction”

Former Obama auto czar Steve Rattner writes in The New York Times, “President Obama’s new budget, released on Wednesday, is stuffed with constructive ideas. It bravely outlines concrete steps to begin fixing Social Security. It flouts today’s all-deficit-cutting, all-the-time mentality with important proposals for fresh spending on infrastructure anduniversal prekindergarten education. It includes detailed plans to close tax loopholes and raise needed revenues from the wealthy. But in one critical area — long-term deficit reduction — the president has offered less than not only the House Republican budget but also the proposal by the Senate Democrats. Over a 10-year horizon, his deficit-reduction plan doesn’t have enough, well, deficit reduction. … But in one critical area — long-term deficit reduction — the president has offered less than not only the House Republican budget but also the proposal by the Senate Democrats. Over a 10-year horizon, his deficit-reduction plan doesn’t have enough, well, deficit reduction.”


Office of Management And Budget Misses Mark On Budget Cuts

POLITICO reports, “After ducking POLITICO’s questions for days, the White House’s new 2014 budget provides some answers about how far the administration was off the mark last week when it ordered $876 million rescinded from domestic appropriations for the last six months of this fiscal year. It’s all spilled milk at this stage — but a lot of it. Indeed, the White House’s new budget appears to totally upend the numbers upon which the rescission was based.The administration would argue that it had no choice but to proceed as it did — given the requirements of the 1990 Budget Enforcement Act. But officials knew last week — and weren’t saying — that they would be soon releasing a very different set of numbers, tucked away in the appendix of the new budget.”


“Now He’s After Your 401(K)”

The Wall Street Journal editorializes, “How many times have you read financial-advice stories lecturing you to max-out on your IRA, save as much as you can in your 401(k), and even pay taxes now to change your regular IRA into a Roth IRA that will be tax-free until you die? Well, be careful how much you save. That’s the message in President Obama’s budget for fiscal 2014, which for the first time proposes to cap the amount Americans can save in these tax-sheltered investment vehicles. The White House explanation is that some people have accumulated ‘substantially more than is needed to fund reasonable levels of retirement saving.’ So Mr. Obama proposes to ‘limit an individual’s total balance across tax-preferred accounts to an amount sufficient to finance an annuity of not more than $205,000 per year in retirement, or about $3 million for someone retiring in 2013.’ Thus do our political betters now feel free to define for everyone what is ‘needed’ for a ‘reasonable’ retirement. Not to be impertinent, but does this White House definition include being able to afford summers at age 70 at Martha’s Vineyard near the Obamas? The feds may think $3 million is all you need after a lifetime of work, but that’s roughly the value of a California police sergeant’s pension if she works for 30 years, retires at age 50 and lives to normal life expectancy. Out in the private economy, people generally have to work longer than that before they retire, and some of them do manage to save significant amounts.”


“Airlines: Obama budget would hike ticket prices”

According to The Washington Post, “The airline industry is warning that passengers would shoulder the financial burden if Congress backs new taxes on tickets and air carriers in the Obama Administration’s budget proposal. ‘The president’s budget represents an unprecedented tax grab on the backs of airlines and their customers, who already pay more than their fair share of taxes,’ Nicholas E. Calio, president of the industry trade group Airlines for America, said in a statement Thursday. … The trade group said that on a typical $300 round-trip ticket passengers pay about $61 in taxes, and that amount would increase to almost $75 under the administration proposal.”


$943 Million FHA Bailout Included In Budget

The Hill reports, “House Republicans criticized the Obama administration’s budget for including nearly $1 billion in bailout funds for a government mortgage insurer to shore up its balance sheet this year. President Obama’s budget proposal anticipates that the Federal Housing Administration(FHA) will need a $943-million infusion of cash to bolster its reserve fundamid a slew of changes designed to put the agency back on a path to solvency. The FHA was hit hard during the recession after banks pulledback from lending, making the agency’s insured mortgages one of the only credit options for first-time home buyers, minorities and those with limited downpayment abilities. Concern about the agency’s finances increased in thefall when an independent audit found that the FHA, which has more than $1 trillion worth of loans in its portfolio, had burned through its capital reserves because of bad mortgages, would come up $16.3 billion short. It would be the first time in the agency’s 79 years that it would require a bailout.”


“President Obama’s Weirdest New Taxes”

ABC News reports, “President Obama has plenty of big taxes in his budget proposal. … But the tax code is a jungle of odd rules, and the penny-pinching side of Obama’s budget raises some new taxes (or closes some ‘loopholes’) that might not readily occur to most taxpayers filling out run-of-the-mill 1040s this weekend. … [H]ere are some quirky maneuvers the president suggests to offset spending and keep the deficit just a bit lower:”

•      A Tax on Flavored Vodka

•      Golf Courses Are No Longer Tax Havens

•      A Higher Tax on Cigarettes

•      Corporate Jets

•      Businesses Can’t Deduct Punitive Damages


Cutting Entitlements to Tame the Deficit is So Popular! … Said No One Ever

Reuters reports, “Republicans, Democrats and even the White House distanced themselves Thursday from President Barack Obama’s proposal to trim Social Security and other safety-net benefits, illustrating yet again the difficulty of reaching a bargain to reduce spending and tame the deficit. Republicans, including House of Representatives Speaker John Boehner of Ohio, said Obama’s offering – made Wednesday in his budget plan for the 2014 fiscal year – did not go far enough to cut spending. … White House spokesman Jay Carney said it was not originally Obama’s idea, but was included in the budget because the president thought Republicans wanted it as part of any deficit reduction deal.”


“House Dem leaders balk at Obama’s plan to cut Social Security”

The Hill reports, “House Democratic leaders pushed back Thursday against President Obama’s decision to include Social Security cuts as part of his 2014 budget request. Several top-ranking Democrats — including Reps. Nancy Pelosi (Calif.), Steny Hoyer (Md.), James Clyburn (S.C.) and Xavier Becerra (Calif.) — questioned the wisdom of altering popular seniors benefits in the context of deficit reduction. … Obama’s budget proposal has infuriated liberals for including the chained CPI proposal, which would change the formula used to calculate Social Security benefits and lower payments over the long term.”


“CPI myths unchained”

Third Way President Jonathan Cowan and Director of the Economic Program Gabe Horowitz editorialize in POLITICO, “You walk through the Safeway deli section looking for lunch meat. The sliced turkey is what you wanted, but the price is a little high. So you check out the ham, like the price, toss it in the cart and go merrily on your way. Watch out – you’ve just committed chain-weighted CPI. This choice — turkey or ham — is at the heart of a political civil war because how we measure the Consumer Price Index (CPI) determines everything from the setting of tax brackets to cost-of-living adjustments for those receiving Social Security. Now that President Obama has proposed chained CPI in his latest budget, this arcane technical fix to the measurement of inflation has become the Battle of Gettysburg between those with fiscal concerns about Social Security and those without. Some progressives are even calling for primary opponents against other Democrats who support fixing Social Security with this change.” Click here to read the five myths about chained CPI.


NRCC, Boehner In Spat Over Chained CPI

Roll Call reports, “National Republican Congressional Committee Chairman Greg Walden touched a nerve Wednesday when he savaged the entitlement changes inPresident Barack Obama’s budget as a ‘shocking attack on seniors.’ But while conservative groups expressed outrage and top House leaders, including Speaker John A. Boehner, said they disagreed with Walden, it’s the lack of fallout for the Oregon Republican that may be more revealing. The debate Walden’s remarks has set off inside the GOP shows many Republicans harbor deep-seated fears about publicly supporting the entitlement cuts they supposedly back and have demanded Obama and other Democrats embrace since taking control of the House in 2011. … Many GOP operatives fear Obama’s embrace of chained consumer price index, a mechanism to slow the growth of Social Security benefits over time, is a trap — a means of getting Republicans to support the policy on the record only to see Democrats savage them for it down the line. Still, that doesn’t change the breathtaking cynicism of Walden’s move.”


Costs of Healthcare Exchanges Soar

POLITICO reports, “The Obama administration’s best guess of how much it will spend to subsidize insurance on Obamacare exchanges shot up substantially this year thanks in large part to the U.S. Supreme Court. But while the exchange costs rise, the Medicaid spending will probably be less than initially forecast as some states decline the expansion. According to the new White House budget, from the time the exchanges open in 2014 to 2021, the administration expects to spend about $606 billion on subsidies, a massive commitment of federal resources. That’s about 27 percent more than the $478 billion projected in the president’s budget last year, and 65 percent more than the $367 billion for the same period in the 2012 budget. … So in states that choose not to expand — still a very fluid situation with only a handful of “hell no” states but many more still up in the air — some of the people who would have been covered by Medicaid will be eligible for subsidies on the exchanges.”


Wall Street Regulators Get Failing Grade In Recent Audit

The Washington Guardian reports, “Charged with trying to prevent the next Enron or Bernie Madoff scandal, the Securities and Exchange Commission hasn’t kept close enough tabs on its own financial books. In fact, a recent audit of its bookkeeping identified two “serious deficiencies,” the accounting equivalent of a failing grade. Some areas of internal fiscal controls were so lacking, investigators said, that $42 million wasn’t reported on SEC’s ledgers, and $5 million worth of equipment was purchased but never used until a year later. ‘These errors were not detected because SEC did not require routine, such as monthly reconciliation of its budget execution module and the related general ledger account balances,’ said a report by the Government Accountability Office, Congress’ watchdog arm. … For an agency that monitors investment banks, markets and other financial institutions, being deficient in its own financial safeguards can seem hypocritical.  That’s why the Securities and Exchange Commission wins this week’s Golden Hammer, a weekly distinction awarded by the Washington Guardian to the worst examples of financial mismanagement. SEC officials acknowledged the problems and say they are making an effort to fix them.” 


“A bipartisan deficit gang is brewing in Senate”

POLITICO reports, “Republican and Democratic senators are considering resurrecting a gang of deficit-busting lawmakers with an eye on a grand bargain with President Barack Obama. … In fact, it seems reining in the deficit is the only thorny issue left in Washington that hasn’t seen a recent bipartisan breakthrough despite an aggressive outreach campaign by Obama to lawmakers. The old Gang of Eight (and before that, Six) — which attempted to negotiate a deficit deal for more than two years up until Obama began negotiating with House Speaker John Boehner over the fiscal cliff last year — has issued proposals, but never acted on them.” 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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Bankrupting America's Spending Daily