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Bankrupting America’s Spending Daily

Posted: April 23, 2013 at 11:15 am   /   by

Spending Daily | April 23, 2013 

FAA Furloughs Begin, DOT Website Announces $474M Grant to “Make Communities More Livable and Sustainable”

The Wall Street Journal editorializes, “This week the Federal Aviation Administration (FAA) began furloughing each of its air-traffic controllers for one day out of every 10 to achieve roughly $600 million in savings this fiscal year. The White House dubiously claims that the furloughs are required by the sequester spending cuts enacted in 2011. … Last week at a Senate hearing [FAA head Michael] Huerta acknowledged under questioning that, in fact, his agency does have some discretion to prioritize and move funds to higher priorities from lower ones. But DOT claims it has already used this flexibility and still can’t avoid cuts to air-traffic control. Not that taxpayers should have a lot of confidence in the ability of Messrs. Huerta and LaHood to prioritize. On Monday, as flight delays were hitting travelers at airports around the country due to these allegedly unavoidable cuts, the top story on the Department of Transportation’s website announced a $474 million grant program that promises to ‘make communities more livable and sustainable.’”


“Flight delays trigger blame game over FAA furloughs among parties, airlines”

The Hill reports, “Air travelers reported long delays at airports on Monday as the first worker furloughs related to the automatic spending cuts known as the sequester began.  Airlines and organizations representing pilots put the blame for the delays squarely on the furloughs, while Republicans said the Federal Aviation Administration was intentionally passing the pain onto passengers to make a political statement about the sequester. … White House press secretary Jay Carney blamed Republicans for the delays, saying they should have stopped the sequester. He noted Republicans themselves had called the across-the-board cuts a dumb policy. … Airlines have encouraged their passengers to blame the sequester for the delays as well.  Passengers in some cases have been directed at their gates to a website called that argues the FAA will ‘purposely delay thousands of flights every day’ because of the sequester.”


$25 Million in Stimulus Funds Created 10 Jobs

The Washington Examiner editorializes, “It’s more than a little disheartening when the chief executive officer of one of America’s most storied Fortune 500 corporations is ‘comfortable’ with the fact that his company created a mere 10 jobs with a $25 million grant under President Obama’s economic stimulus program in 2010. The CEO in question is Honeywell’s David Cote, and the stimulus grant involved came from the Department of Energy to advance Obama’s green energy agenda. The funds were to be used by Honeywell’s UOP subsidiary to build a biofuels technology demonstration plant in Oahu, Hawaii, supposedly creating 85 construction jobs and 40 permanent positions in each succeeding year. The Energy Department further envisioned a facility producing biomass fuels ‘on a commercial scale … with the potential to create approximately 800 construction jobs and 1,000 permanent jobs, including in biomass production.’ The problem now is that it appears to be all but impossible to determine whether those rosy projections will come to pass. An April 2012 news report by Honolulu Civil Beat, a trade publication, quoted James Rekoske, Honeywell UOP’s vice president for renewable energy, saying only ‘about 10 jobs’ had been created at that point.”


“IRS overpaid up to $13.6B in low-income tax credits, report finds”

The Hill reports, “The Internal Revenue Service (IRS) overpaid between $11.6 billion and $13.6 billion in tax credits designed to help low-income families in fiscal 2012, the Treasury Department announced in a report released Monday. The overpayments account for 21 percent to 25 percent of the tax credits issued under the Earned Income Tax Credit (EITC), the IRS estimated. The report from the Treasury Inspector General for Tax Administration, the department’s IRS watchdog, highlights the difficulties faced by the agency in properly issuing refunds and credits under the popular program. Though the fiscal 2012 overpayment was among the agency’s lowest in a decade, since 2003, as much as $132.6 billion has been improperly distributed as part of the EITC.”


Sequester Exemptions Are the New Earmarks

POLITICO reports, “Sequestration exemptions are shaping up to be Washington’s newest version of earmarks. Agencies, companies and other groups are on the hunt for Capitol Hill allies with the juice to save their pet issues from the full force of the across-the-board cuts. Some have already been successful. The campaigns are just one example of Washington slipping back into business-as-usual, where powerful players are open to satisfying special interests, even on sequester — which wasn’t supposed to play favorites. … Not everyone will get lucky. The money has to come from somewhere, and any increases for one program mean someone else loses. Granting more get-out-of-jail-free cards from sequestration also undermines the very nature of the budget cuts that were designed in the first place to be equally brutal for everyone, with no simple out. The Obama administration has led the charge with exceptions, finding flexibility that it previously said it didn’t have.”


WIC Food Program Continues to Pay Vendors Caught Overcharging Government

The Washington Guardian reports, “A federal program that provides food to impoverished mothers and young children has continued paying vendors that have been caught overcharging the government or handing out spoiled foods, an investigation found. The U.S. Agriculture Department’s inspector general reported its spot check of the Women, Infants and Children (WIC) program in three states identified more than three dozen vendors that were continuing to collect federal fundseven though they should have been disqualified for violations of federal and state rules. The vendors have already collected $3 million in payments and are in line for even more money unless the program’s state partners take action, the internal watchdog found.  ‘We identified 42 WIC vendors that continued to be authorized to redeem food instruments after committing violations that should have led to their disqualification, such as overcharging the program and/or selling expired foods to the participants,’ the inspector general said.  ‘These vendors could, if allowed to continue their authorization, redeem an estimated $6.6 million in WIC benefits.’”


Internet Sales Tax Legislation Moving Forward After President’s Endorsement 

The Hill reports, “Legislation that would empower states to tax online purchases cleared a key hurdle in the Senate on Monday after winning an enthusiastic endorsement from President Obama.  Senators advanced the bill in 74-20 procedural vote on Monday evening, just one vote short of the backing it received in a test vote last month. Twenty-six Republicans joined Democrats in moving forward with the bill. The Senate will now begin debate on amendments. The chamber is expected to hold the decisive vote on the bill — known as the Marketplace Fairness Act — later this week. Major retailers are putting all their lobbying muscle behind the legislation, arguing it would close an unfair loophole that benefits online merchants over brick-and-mortar stores. The National Retail Federation, which represents chains such as Best Buy, Macy’s and J.C. Penney, and the Retail Industry Leaders Association (RILA), which counts Target and others among its membership, announced it would score lawmakers’ votes.  The White House gave the bill a ringing endorsement on Monday.”


“An Ounce of ObamaCare Prevention”

The Wall Street Journal editorializes, “Congressional Republicans have mapped out another way to obstruct ObamaCare, thanks to the incompetence of its architects. It’s a shame certain absolutists on the right are mounting another self-defeating rebellion in the name of the impossible. The insurrection comes as the Health and Human Services Department has already burned through all the dollars appropriated by the Affordable Care Act for implementation. HHS is now demanding an extra $5.9 billion to set up the law’s insurance exchanges—$2 billion more than it estimated it would take last year—but both Senate Democrats and the House denied the request last month. HHS responded by announcing that it would simply steal however many dollars it needs from a separate ObamaCare slush fund. Supposedly devoted to ‘prevention,’ this cash has been funneled to everything from bike-path signs to patronage for liberal pressure groups lobbying for fast-food taxes. Now HHS is reaching into this till for at least $454 million this year, with no accountability. The House leadership wants to zero out $5 billion from the prevention fund so HHS can’t spend it on the ObamaCare exchanges and instead transfer the money to a different ObamaCare program that insures people with pre-existing medical conditions. That program has also run out of money and is closed to new applicants.”


Fed Reduces Fisker Loan Balance By $21 Million

Delaware Online reports, “The U.S. Department of Energy has tapped a Fisker Automotive reserve account to reduce the troubled automaker’s outstanding federal loan balance by $21 million as the firm teeters on the edge of bankruptcy, the department reported. The move may give Fisker a three-month reprieve in its efforts to survive by finding investors or partners to recapitalize the company – or find some way to sell off the company’s assets and escape what many expect will be a bankruptcy filing. The embattled plug-in hybrid auto manufacturer announced plans in 2009 to build cars at the shuttered General Motors plant in Delaware beginning next year. It was a plan leveraged by a $529 million Energy Department loan and more than $20 million in Delaware grants and loans. … The two-part loan agreement with the Department of Energy stated that the first repayment of the first part of the loan — about $20 million — would be due on April 22. Late Monday afternoon, Aoife McCarthy, a Department of Energy spokeswoman, revealed that on April 11 the department ‘recouped’ the company’s $21 million loan reserve account, which was funded by the company’s sales and investors, and applied it to the loan balance. The department, she said, ‘will apply those funds to the loan.’ It was unclear whether that shift of money covered Fisker’s April 22 payment.”


“U.S. Consumer Bureau Says $425 Million Went to 6 Million”

Bloomberg reports, “In its first 21 months, the U.S. Consumer Financial Protection Bureau has secured $425 million in relief for 6 million consumers wronged by financial service providers, its director will tell Congress today. ‘We also imposed penalties on the companies to deter such activity in the future,’ CFPB Director Richard Cordray will say, according to testimony prepared for delivery to the Senate Banking Committee today. ‘These actions will serve as a warning signal for anyone who seeks to profit by deceiving or misleading consumers.’ The CFPB, created by the 2010 Dodd-Frank Act, has concluded enforcement actions in areas including credit-card add-on products such as credit monitoring, and mortgage insurance. As a consequence, companies including Capital One Financial Corp. (COF) and American Express Co. (AXP) have been forced to pay fines to the government and restitution to consumers. Cordray won’t have a parallel hearing in the House of Representatives, according to House Financial Services Committee Chairman Jeb Hensarling, a Texas Republican.”


“Top 1% Would Pay Two-Thirds of Higher Taxes Under Obama”

Bloomberg reports, “The top 1 percent of U.S. taxpayers would pay 67 percent of the higher taxes called for in 2023 under President Barack Obama’s budget proposal, according to an analysis released today by the nonpartisan Tax Policy Center in Washington. Households making as little as $30,000 a year would pay some higher taxes. By 2023, households making between $30,000 and $40,000 would pay an average of $54 more than if lawmakers made no changes. Households making between $500,000 and $1 million would pay an average of $13,474 in higher federal taxes. … Top earners would be subject to a minimum tax rate of 30 percent, limits on their deductions and an increase in the estate tax rate to 45 percent from 40 percent. They also would have limits on the ability to contribute to tax-favored retirement accounts and wouldn’t get to pay lower capital-gains rates on their carried interest. 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