The senators want at least $3 trillion slashed from the deficit over the next decade. In addition, they plan to press the committee to pass a major tax overhaul to lower rates and close special-interest loopholes, as well as changes to entitlement programs such as Medicare, according to several participants.
One Step….Two Step
December 5, 2012
Does everyone know how to do….
The one step….. two step?
Tim Geithner presented the….
Democratic
Reach for the sky
Fiscal cliff solution
That landed like a lead balloon
It was the same offer from 2011
I guess it took them a long time
To come up with that?
The Republicans huddled and….
Went to their files
And pulled out their proposal
From…..
2011.
That is what I call progress
It has been 1 month since
The presidential election….
And these are my sins….
We are still back in 2011.
I have been reading a lot about this topic
Since Finance is my bag
Nobody wants to pay more taxes….
But the Government cannot
Continue to spend
33% more than they take in.
Raising the taxes from 35% to 39% for
The 2% highest earners
Is mostly symbolic
That does not mean they will actually
Be paying higher taxes
Without touching the deductions and loopholes
They will still be paying
14%
In order to increase revenue
You can’t just increase the rates
You have to close loopholes
That would bring in more revenue
Taxing the highest earning 2%
Will not solve the deficit issue
It only scratches at the surface
We are going to have to stick our heads
Into unchartered waters
When social security was started
The retirement age was 65 years old
The average life expectancy was
69 years old
The program was set up with the intention
That it had to provide benefits
On average for about 4 years
The average life expectancy today
Is 84 years old
That means that…..
Social Security is now expected
To cover
On average
A span of 19 years
Not…….4 years
Can you see why there
May be a problem
With this program
We all pay into it….
But as the boomers age
The support base diminishes
Where can we possibly look to
Save money in the budget
Let’s take a quick look at defense spending
1974
That was the last time we saw…
The defense budget under
$100 billion dollars
By the year 2000
The defense budget grew to
$372 billion dollars
That took 26 years
In a mere 12 years
2000 – 2012
The Defense Budget
Has more than doubled
And comes in at
$816 billion dollars
I think we can possibly find
Some savings there?
There has been a lot of talk about
Health Care
Currently the US spends
About 18% of GDP
On Healthcare
Other comparable nations spend
On average about 12%
A recent study by
Harvard Business Review states
“The proper goal for any health care delivery system
Is to improve the value delivered to patients.
Value in health care is measured
In terms of the patient outcomes
Achieved per dollar expended.
It is not the number of different services provided
Or the volume of services delivered that matters
But the value.
More care and more expensive care
Is not necessarily better care.”
Studies show that savings in Health Care cost
Can range from $700 billion to $1 Trillion dollars
Just by increasing the
Efficiencies of service.
These are just a couple examples
Every program should be reviewed
I believe there will be
A lot of finger pointing
While the Government works
Towards a solution
But it is in the best interest
Of all concerned
That a compromise
Is made
True saving can be found
In all programs
Without effecting
The integrity of any program
America is here for the long term
We just have to make smart decisions
To make sure we remain the
Beacon of light
That all other countries look
To emulate
GOP Policy Riders Complicate Year-End Spending Bill In Congress
December 8, 2011
As reported in Huffington Post 12/08/11 by Andrew Taylor
WASHINGTON — Conservative flashpoint issues from abortion and abstinence education to President Barack Obama’s health care law are the biggest obstacles to Congress completing a massive year-end spending bill next week that would keep the government running through next September.
Going into end-game negotiations this weekend on the $900-plus billion bill, Republicans expect to lose on most of the policy provisions, or “riders,” they added to House versions of the must-do spending measures. But the White House and Democrats are poised to make concessions on some environmental rules, wetlands regulations and, in all likelihood, on continuing a ban on government-funded abortions in the nation’s capital city.
“We’re meeting heavy resistance from the White House and Democrats in the Senate,” said House Appropriations Committee Chairman Harold Rogers, R-Ky., who is pressing for provisions to help the coal industry. “So, we’ll get as many as we possibly can.”
Among most popular targets for Republicans are environmental regulations they say hamper the economy, such as proposed Environmental Protection Agency rules on coal ash, large-scale discharges of hot water and greenhouse gases from electric power plants, and emissions from cement plants and oil refineries.
If past is prologue, most of the issues will end up on the chopping block. That’s what happened last spring during negotiations on a spending bill for the budget year that ended in September.
“There’s a lot of opposition to these and they know they need Democratic votes in the House to pass it,” said Rep. Norm Dicks of Washington, senior Democrat on the Appropriations Committee. “So we have made this very clear to the other side. … If you expect our votes you’ve got to get rid of the controversial riders.”
But some riders will be needed to win GOP support for the measure in votes next week. And many of the provisions are important to powerful members of the appropriations panel in both parties.
“We don’t want to be wholly inflexible,” said Rep. James Moran of Virginia, top Democrat on the spending panel responsible for the EPA’s budget. That measure is studded with riders.
“Virtually every rule the EPA has come up with, they’re trying to come up with a rider to stop it,” said Scott Slesinger, legislative director of the Natural Resources Defense Council.
// // The roster of environmental riders is indeed lengthy.
For coal interests, there is a rider to block clean water rules opposed by mining companies that blast the tops off mountains as well as a rider to block proposed labor rules to limit miners’ exposure to coal dust, which causes black-lung disease. Electric utilities would benefit from delays of rules on traditional air pollution and emissions of carbon dioxide. Painting contractors would benefit from a delay in a 2008 rule that requires them to be certified by the EPA in order to remove lead paint.
“We’re pretty clear that we find these riders as unacceptable,” said Sen. Jack Reed, D-R.I. “We’re being very emphatic.”
On social issues, there are proposals to ban needle exchange programs that help stem the spread of HIV among drug users; cut off federal funding to Planned Parenthood, the nation’s leading provider of abortions; and adopt an abstinence-only approach for grants to reduce teen pregnancy.
Those riders, in addition to GOP efforts to block implementation of the new health care law – a nonstarter with Democrats and the White House – are among the reasons the labor, health and education chapter of the omnibus spending measure is at risk of being left out of the final bill.
“It’s from soup to nuts,” said Rep. Rosa DeLauro, D-Conn. “They just designed an ideological agenda.”
In addition to proposing to eliminate federal family planning funding, Republicans would block the District of Columbia government from providing abortions to poor women, which is a top priority of anti-abortion activists.
The D.C. abortion rider was in place when Republicans controlled the White House but was lifted after Obama took office. He reluctantly agreed to reinstate the funding ban this year, prompting Washington’s mayor and city council members to march on Capitol Hill. Democrats continue to fight the rider, but GOP leaders are likely to insist on it.
At the same time, Republicans are trying to reverse a loss earlier this year when they tried to block taxpayer money from going to Washington’s needle exchange program.
Some of the riders aren’t contentious. For instance, even though the EPA has no interest in regulating methane emissions from cow burps and flatulence, there’s a rider to block the agency from doing so. That’s fine with Democrats.
Then there are riders that have no practical effect but set a precedent that agencies would prefer to avoid. One would block the EPA from officially delineating any new wetlands in counties affected by flooding this year. It turns out that the agency has no plans to do so, so this might be a rider Democrats and the White House would accept.
Another battle involves an attempt to block the Obama administration’s 2009 policy lifting restrictions on travel and money transfers by Cuban-Americans to families remaining in Cuba. That provision drew an explicit Obama veto threat earlier this year and will probably be dropped in end-stage negotiations.
The White House warned last week it’ll play a strong hand in trying to keep the final measure as free of riders as possible. “There should be no miscalculation about the intensity of (Obama’s) feelings,” White House budget director Jacob Lew told reporters.
Reported by Sam Stein
WASHINGTON — As the United States Senate considers yet another variation of the payroll tax cut, there appears to be little common ground over how the measure should be paid for. Democrats, along with one Republican, continue to argue for a small surtax on millionaires. Republicans either balk at that proposal or say they don’t support extending the payroll tax cut at all.
The impasse is unlikely to be bridged by the time the newest bill comes to the floor on Thursday, leading operatives to suggest that it would simply be easier to pass the payroll tax cut extension without paying for it.
Longtime anti-tax advocate Grover Norquist said he would prefer to see the tax cut accompanied by an equivalent reduction in spending to make up for the decrease in revenue. He and other conservatives said that if spending offsets do not accompany the tax cut, it would be harder for Democrats to argue against other such tax cuts, including a repatriation holiday on corporate taxes.
“No to a tax increase, yes to extending it without a quote, unquote ‘pay for,’ and the preference is to do it with spending cuts as the offset,” said Norquist. “The worst thing you can do would be to extend it with a permanent job-killing marginal tax increase. You would end up with permanent marginal tax rates in exchange for a temporary reduction in tax rates on Social Security.”
When the payroll tax cut was first introduced at the end of 2010, there was no talk about how it would be offset. Instead, it was passed as part of an agreement to extend the Bush tax cut for an additional two years. The estimated $860 billion price tag was simply put on the books.
So why not do the same now, when the price tag is significantly lower — $185 billion to reduce the employee’s share from 4.2 percent to 3.1 percent of wages, along with other tax policy changes — and Republicans have, as a matter of ideological principle, argued that tax cuts pay for themselves?
The question was posed to two senior Obama administration officials during a briefing with reporters yesterday. And while they continued to argue that there were easy ways to cover the payroll tax cut — while needling Republicans for suddenly insisting that tax cuts be offset — they never explicitly said it had to be paid for.
// // “So we still think that the payroll tax, unemployment insurance, any other jobs measures can be paid for in a responsible way,” one said. “The important thing here, though, is that this get done.”
Reminded that, at least as far as unemployment insurance is concerned, the president has consistently held that such emergency expenditures don’t need to be offset, the official replied: “I don’t think the president’s longstanding position on that has changed. But there is a way of paying for it that was put forward in the American Jobs Act.”
And therein lies the problem. While both Republicans and Democrats privately admit that they have been and would be comfortable with letting tax cuts continue without offsets, neither will say so publicly, lest their commitment to deficit reduction be questioned.
Top congressional Republican aides argue that a payroll tax cut extension without offsets isn’t necessarily easier to pass than one paid for by a millionaire’s surtax. But the reasoning behind that argument has more to do with timing than philosophical disputes.
Congress will be voting on major appropriations bills before the Christmas recess. To have them turn around and stack $185 billion on the deficit would be too much to ask, the logic goes.
“The president said in his speech to Congress and in speeches since, that ‘everything’ in the bill will be paid for,” Don Stewart, a spokesman for Senate Minority Leader Mitch McConnell (R-Ky.), said in an email. “I think it will be MUCH easier to pass it if they take out the poison pill of a tax hike on job creators; a tax hike, by the way, that has bipartisan opposition.”
A top House aide was more blunt. “I don’t think either would pass the House,” the aide explained, when asked about a payroll tax cut extension without offsets and one that was paid for with a millionaire’s surtax. “So it’s a ‘would you rather burn to death or drown’ type of question.”
By Peter Wallsten, Published: September 8
The effort comes as the 12-member supercommittee begins what is expected to be a grueling process to map out its plans before a November deadline — and it threatens to undercut the chances for President Obama to win passage for portions of a jobs plan expected to cost hundreds of billions of dollars in the short term.
“I don’t think I’m speaking out of school that it was a unanimous feeling among a large group of senators from both sides of the aisle,” said Sen. Bob Corker (R-Tenn.), one of the meeting participants. “Most people are far more focused on this supercommittee than any speech the president’s going to give.”
Another in the group, Sen. Joseph I. Lieberman (I-Conn.), said the senators want to “encourage” the supercommittee “to reach for a higher number.” He said the committee should “compromise with one another and do what parts of each party will not like, for the greater good, because that’s really what most of the people in the country want.”
Obama, too, is expected to press the committee to exceed its deficit-reduction goal. In his speech Thursday night, he called on Congress to increase the supercommittee’s deficit-cutting goals to cover the costs of his jobs plan, and he said that a week from Monday he will announce a more detailed plan “that will not only cover the cost of this jobs bill, but stabilize our debt in the long run.”
Several people familiar with the discussions said the lawmakers felt that, after the pomp and ceremony of Obama’s joint-session speech fades, the center of political and policy gravity on Capitol Hill will be the work of the special committee, chaired by Sen. Patty Murray (D-Wash.) and Rep. Jeb Hensarling (R-Tex.).
Under last month’s debt-ceiling deal struck by Obama and GOP lawmakers, deep cuts would automatically take effect in national security and other areas if the supercommittee fails to reach agreement or if Congress fails to pass legislation by December.
One senior Democratic aide called Obama’s jobs plan largely “dead on arrival” because its expected price tag would roughly cancel out the one year’s worth of savings many lawmakers hope the supercommittee will find.
The Senate on Thursday blocked a resolution of disapproval for an additional $500 billion increase in the debt ceiling. The procedure is required by the legislation to raise the borrowing limit in phases by at least $2.1 trillion.
A Senate staffer familiar with the senators’ private discussions said the effort was intended to be “complementary” to the work of the supercommittee but also to offer a gentle nudge.
The staffer said the senators’ push would “demonstrate there can be some support and safety if they choose to go beyond their charge.”
Both aides spoke on the condition of anonymity in order to discuss the private deliberations.
The private gathering this week, held Wednesday in a Capitol meeting room, included about 25 centrists from both parties. It was organized by Sens. Mark R. Warner (D-Va.) and Saxby Chambliss (R-Ga.), two members of the “Gang of Six,” which tried unsuccessfully to engineer a grand deal patterned loosely after the plan laid out by the deficit commission headed by former Clinton White House chief of staff Erskine Bowles and former senator Alan Simpson.
At least a third of the Senate at one time had indicated some level of support for the broad framework being negotiated by the Gang of Six, according to people familiar with that group’s discussions.
As reported in Huffington Post
WASHINGTON — Standard & Poor’s says it downgraded the U.S. government’s credit rating because it believes the U.S. will keep having problems getting its finances under control.
S&P officials on Saturday defended their decision to drop the government’s rating to AA+ from the top rating, AAA. The Obama administration called the move a hasty decision based on wrong calculations about the federal budget. It had tried to head off the downgrade before it was announced late Friday.
But S&P said it was the months of haggling in Congress over budget cuts that led it to downgrade the U.S. rating. The ratings agency was dissatisfied with the deal lawmakers reached last weekend. And it isn’t confident that the government will do much better in the future, even as the U.S. budget deficit grows.
David Beers, global head of sovereign ratings at S&P, said the agency was concerned about the “degree of uncertainty around the political policy process. The nature of the debate and the difficulty in framing a political consensus … that was the key consideration.”
S&P was looking for $4 trillion in budget cuts over 10 years. The deal that passed Congress on Tuesday would bring $2.1 trillion to $2.4 trillion in cuts over that time.
Another concern was that lawmakers and the administration might fail to make those cuts because Democrats and Republicans are divided over how to implement them. Republicans are refusing to raise taxes in any deficit-cutting deal while Democrats are fighting to protect giant entitlement programs such as Social Security and Medicare.
S&P so far is the only one of the three largest credit rating agencies to downgrade U.S. debt. Moody’s Investor Service and Fitch Ratings have both issued warnings of possible downgrades but for now have retained their AAA ratings.
The rating agencies were sharply criticized after the 2008 financial crisis. They were accused of contributing to the crisis because they didn’t warn about the dangers of subprime mortgages. When those mortgages went bad, investors lost billions of dollars and banks that held those securities had to be bailed out by the government.
Ratings agencies assign ratings on bonds and other forms of debt so investors can judge how likely an issuer – like governments, corporations and non-profit groups – will be to pay the debt back.
Asked when the United States might regain its AAA credit rating, Beers said S&P would take a look at any budget agreements that achieve bigger deficit savings. But the history of other countries such as Canada and Australia who saw cuts in their credit ratings, shows that it can take years to win back the higher ratings.
Administration sources, who briefed reporters on condition of anonymity because of the sensitivity of the debt issue, said the administration was surprised by the timing of the announcement, coming just a few days after the debt agreement had been signed into law.
Treasury officials were notified by S&P of the imminent downgrade early Friday afternoon and spent the next several hours arguing with S&P. The administration contended that S&P acknowledged at one point making a $2 trillion error in their computations of deficits over the next decade.
But S&P officials said the difference reflected the use of different assumptions about how much spending and taxes will come to over the next decade. The S&P officials said they decided to use the administration’s assumptions since the $2 trillion difference in the deficit numbers was not going to change the company’s downgrade decision.
In a Treasury blog posting Saturday, John Bellows, the Treasury’s acting assistant secretary for economic policy, said he was amazed by that decision.
“S&P did not believe a mistake of this magnitude was significant enough to warrant reconsidering their judgment or even significant enough to warrant another day to carefully re-evaluate their analysis,” Bellows wrote.
S&P officials said their decision hadn’t been rushed. They noted that S&P had been warning about a potential downgrade since April.
Some critics, the debacle of 2008 still in mind, raised questions about S&P’s actions now.
“I find it interesting to see S&P so vigilant now in downgrading the U.S. credit rating,” Sen. Bernie Sanders, I-Vt., said Saturday. “Where were they four years ago?”
Standard & Poor’s roots go back to the 1860s. One of its founders, Henry Varnum Poor, was a publisher of financial information about the nation’s railroads. His company, then called Poor’s Publishing, merged in 1941 with Standard Statistics Inc., another provider of financial information.
S&P’s website said both founding firms warned clients well before the 1929 stock market crash that they should sell their stocks.
The company has been owned by publisher McGraw-Hill Cos. since 1966.
Nation’s Unemployed Hung Out To Dry In Debt Ceiling Deal
August 1, 2011
As reported in Huffington Post
WASHINGTON — The long-term unemployed have been left out of a deal between congressional negotiators and the White House to enact massive spending cuts and raise the nation’s debt ceiling before its borrowing limit is reached on Tuesday.
Under the so-called grand bargain President Obama tried to strike with House Speaker John Boehner (R-Ohio), federal unemployment benefits would have been extended beyond January 2012, when they are set to expire.
But those negotiations collapsed in July. On Sunday, congressional leaders and the administration crafted a not-so-grand bargain that will cut spending without raising taxes or preserving stimulus programs like federal unemployment insurance.
Asked Sunday night why spending to help the unemployed had been left out of the deal, a White House official said, “because it had to be part of a bigger deal to be part of this.”
In other words, Democrats need significant leverage to get Republicans to agree to additional spending on the unemployed. Federal unemployment insurance programs, which kick in for laid off workers who use up 26 weeks of state benefits, cost a lot of money: Keeping the programs through this year required an estimated $56 billion. In December, Democrats only managed to keep the programs alive for another 13 months by attaching them to a two-year reauthorization of tax cuts.
Anyone laid off after July 1 is ineligible for extra weeks of benefits under current law. People who started filing claims in July who exhaust their six months of state benefits in January will be on their own. (People who are in the middle of a “tier” of federal benefits will probably be able to receive the remaining weeks in their tier, but they will definitely be ineligible for the next level up.) Since 2008, layoff victims could receive as many as 73 additional weeks of benefits, depending on what state they lived in.
Nearly 4 million people currently claim benefits under the two main federal programs (known as Emergency Unemployment Compensation and Extended Benefits), according to the latest numbers from the Labor Department. Another 3 million are on state benefits.
// // The White House official suggested it would be easier for the administration to preserve a Social Security payroll tax cut enacted as part of the December deal because Republicans would view its expiration as a tax increase. “The payroll tax cut will be extended because if they do not that would be a tax increase on every American, something I’m confident, if you believe Speaker Boehner when he says we will not have tax increases, it will have to be [extended],” the official said.
Asked if the White House would continue to push for a reauthorization of federal unemployment benefits, the official said, “Absolutely, we will absolutely keep pushing for that.”
The unemployment rate is not expected to come down anytime soon, and economic forecasters said earlier versions of the deal currently awaiting action in Congress would significantly slow economic growth because of reduced government spending.
Judy Conti is a lobbyist who deals with Congress and the administration for the National Employment Law Project, a worker advocacy group. She agreed with the official that unemployment benefits would have to be part of a big deal.
“Things like the payroll tax holiday and unemployment insurance are controversial and increasingly partisan issues. In order for those to be resolved so far in advance before their expiration there would have had to have been a very significant deal,” Conti said. “Once the grand bargain died, the chance for any meaningful stimulus died as well.”
Sam Stein contributed reporting.
The Unwisdom of Elites
May 10, 2011
By PAUL KRUGMAN
Published: May 8, 2011
The past three years have been a disaster for most Western economies. The United States has mass long-term unemployment for the first time since the 1930s. Meanwhile, Europe’s single currency is coming apart at the seams. How did it all go so wrong?
Well, what I’ve been hearing with growing frequency from members of the policy elite — self-appointed wise men, officials, and pundits in good standing — is the claim that it’s mostly the public’s fault. The idea is that we got into this mess because voters wanted something for nothing, and weak-minded politicians catered to the electorate’s foolishness.
So this seems like a good time to point out that this blame-the-public view isn’t just self-serving, it’s dead wrong.
The fact is that what we’re experiencing right now is a top-down disaster. The policies that got us into this mess weren’t responses to public demand. They were, with few exceptions, policies championed by small groups of influential people — in many cases, the same people now lecturing the rest of us on the need to get serious. And by trying to shift the blame to the general populace, elites are ducking some much-needed reflection on their own catastrophic mistakes.
Let me focus mainly on what happened in the United States, then say a few words about Europe.
These days Americans get constant lectures about the need to reduce the budget deficit. That focus in itself represents distorted priorities, since our immediate concern should be job creation. But suppose we restrict ourselves to talking about the deficit, and ask: What happened to the budget surplus the federal government had in 2000?
The answer is, three main things. First, there were the Bush tax cuts, which added roughly $2 trillion to the national debt over the last decade. Second, there were the wars in Iraq and Afghanistan, which added an additional $1.1 trillion or so. And third was the Great Recession, which led both to a collapse in revenue and to a sharp rise in spending on unemployment insurance and other safety-net programs.
So who was responsible for these budget busters? It wasn’t the man in the street.
President George W. Bush cut taxes in the service of his party’s ideology, not in response to a groundswell of popular demand — and the bulk of the cuts went to a small, affluent minority.
Similarly, Mr. Bush chose to invade Iraq because that was something he and his advisers wanted to do, not because Americans were clamoring for war against a regime that had nothing to do with 9/11. In fact, it took a highly deceptive sales campaign to get Americans to support the invasion, and even so, voters were never as solidly behind the war as America’s political and pundit elite.
Finally, the Great Recession was brought on by a runaway financial sector, empowered by reckless deregulation. And who was responsible for that deregulation? Powerful people in Washington with close ties to the financial industry, that’s who. Let me give a particular shout-out to Alan Greenspan, who played a crucial role both in financial deregulation and in the passage of the Bush tax cuts — and who is now, of course, among those hectoring us about the deficit.
So it was the bad judgment of the elite, not the greediness of the common man, that caused America’s deficit. And much the same is true of the European crisis.
Needless to say, that’s not what you hear from European policy makers. The official story in Europe these days is that governments of troubled nations catered too much to the masses, promising too much to voters while collecting too little in taxes. And that is, to be fair, a reasonably accurate story for Greece. But it’s not at all what happened in Ireland and Spain, both of which had low debt and budget surpluses on the eve of the crisis.
The real story of Europe’s crisis is that leaders created a single currency, the euro, without creating the institutions that were needed to cope with booms and busts within the euro zone. And the drive for a single European currency was the ultimate top-down project, an elite vision imposed on highly reluctant voters.
Does any of this matter? Why should we be concerned about the effort to shift the blame for bad policies onto the general public?
One answer is simple accountability. People who advocated budget-busting policies during the Bush years shouldn’t be allowed to pass themselves off as deficit hawks; people who praised Ireland as a role model shouldn’t be giving lectures on responsible government.
But the larger answer, I’d argue, is that by making up stories about our current predicament that absolve the people who put us here there, we cut off any chance to learn from the crisis. We need to place the blame where it belongs, to chasten our policy elites. Otherwise, they’ll do even more damage in the years ahead.
Trying to Make Sense of It
April 11, 2011
WASHINGTON — Congressional negotiators held what were described as “productive” talks Tuesday afternoon in an effort to pass a spending measure that would cut tens of billions of dollars from the federal budget. But with just days remaining before the federal government runs out of money, there was only muted optimism that lawmakers would be able to avert a government shutdown.
The above paragraph was ripped from the headlines on Wednesday April 6th.
What do you make of all this talk?
You can turn on any cable channel and the coverage is 24/7. The American press seems to be obsessed with the moment.
Japan??? ………That happened over a month ago
Libya…….That sound bite may last 30 seconds
Now we are faced with a Government shutdown!!!!….
Is it possible?
Will it happen?
I found myself being drawn to this topic. Numbers are constantly being discussed.
What are we really dealing with?
Can we just focus on making cuts to 12% of the budget and tackle the deficit issues?
What about the sacred cows!!!!!!
Defense….Social Security….Medicare…..Medicaid
Let’s look at some numbers:
On February 14, 2011, President Obama released his 2012 Federal Budget.
The report updated the projected 2011 deficit to be $1.645 trillion.
This is based on estimated revenues of $2.173 trillion and outlays of $3.818 trillion.
Observations
The federal deficit of $1.645 trillion is for 1 year (2011)
The federal deficit of $1.645 trillion is 75.7% of the $2.173 trillion total revenue the Government brought in last year.
The US Government is currently funding only 56.9% of their current expenses ($3.818 trillion) with the total revenue they received ($2.173 trillion).
The federal deficit of $1.645 trillion helps fund 43.1% of the $3.818 trillion in expenses.
You hear Congress arguing over whether to cut $30 billion or $40 billion in expenses.
That number may seems like a large amount, but what is it in the scheme of things?
Let’s take a quick look at where we are spending this money.
The federal budget in 2011 was projected at $3.83 trillion in total spending.
Below is a breakdown of the budgeted expenses for 2011. (This budget has never been passed, yet!!!)
Obama’s new 2012 budget calls for reducing these cost by $12 billion dollars to $3.818 trillion from the proposed 2011 figure of $3.83 trillion.
You can now……. all play along….
Where do you want to take the $12 billion from?
$787.6 billion in pensions, $898 billion in health care expenditures, $140.9 billion for education, $928.5 billion in defense spending, $464.6 billion in welfare spending, $57.3 billion in protective services such as police, fire, law courts, $104.2 billion for transportation, $29 billion in general government expenses, $151.4 billion in other spending including basic research, and $250.7 billion on interest payments.
Let’s not get too aggressive…..
What are our options?
How do we reduce cost and lower the deficit?
There is some talk of cutting all the expenses, 5% across the board.
They’ll be no discrimination, everyone will take a hit.
That would reduce overall cost by $190.9 billion.
Guess what…..
the deficit would still be $1,454.1 trillion for this year.
Now what?
…………..I’m thinking…….I’m thinking
More factors to think about
The overall deficit is just under $15 trillion,
Our existing $1.645 trillion deficit makes up just under 11% of the overall deficit.
Recently, Robert Gates said the Pentagon has identified $178 billion in cuts for the five years from fiscal year 2012 to 2016. The Pentagon plans to reinvest about $100 billion of that into its own services, leaving the remainder for deficit reduction.
Hmmmmm!
Gates can identify $178 billion in cuts but wants to keep 57% of it?
This week, Portugal was looking to raise money by selling 6 month T -Bills for 5.117%.
Just 60 days ago the same T Bill was selling for 2.984%.
The US is currently selling T Bills for under 0.5%.
What do you think will happen if there is a Government shutdown?
There is the looming question of raising the debt ceiling.
How long before the world loses confidence in our ability to control cost?
Somehow I think we really took our eye off the ball.
Just this morning, experts were discussing the fact that the Government is expected to run with a deficit,
But……. $4 to $5 trillion is a more acceptable number.
How do we get from $15 trillion to $5 trillion?
Let’s try cutting the deficit by $1 trillion a year.
That means ………
In 10 years we can be within the acceptable numbers.
If we have already budgeted for a deficit of $1.645 trillion; to save $1 trillion this year, we would have to cut expenses $2.645 trillion dollars.
That means, we cut expenses from $3.818 trillion to $1.173 trillion.
We would only have to cut expenses by 70%!!!!
That doesn’t sound too promising!
How about we take 20 years to get the deficit from $15 trillion to $5 trillion?
Then we would only have to cut expenses 35%.
Do I hear 30 years?
Where am I going with all this fuzzy math?
I wish I knew!!!
No one seems to want to stand up and address any of these questions?
Ask anyone, we already feel we pay our fair share of taxes.
Can the American public be asked to pay more?
If you want to get reelected,
you better not be talking about raising taxes!
Cut our taxes but don’t dare cut our programs….
Is the US Government up for the challenge?
Will they be able to make the tough choices?
Or will the push the ball forward.
At HBS we pride ourselves on providing Smart Solutions for Smart Business
I am not sure where we would place this budget category?
I am just trying to make some sense of it.
Your comments are welcomed.
You may email george@hbsadvantage.com
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Posted by: Mitchell Hirsch on Feb 17, 2011
As reported by Unemployedworkers.org
UPDATE: FEB. 17 – UNEMPLOYMENT INSURANCE SOLVENCY BILL INTRODUCED IN SENATE
Senator Richard Durbin (IL), with Senators Jack Reed (RI) and Sherrod Brown (OH), today introduced the Unemployment Insurance Solvency Act of 2011, which offers immediate tax relief to cash-strapped states and employers, preserves UI benefit levels, and creates strong incentives for states to restore their UI programs to solvency while also rewarding states that have managed their UI trust funds effectively.
In a statement, NELP Executive Director Christine Owens said, “Jobless workers, and we hope employers too, should be grateful for the leadership of Senator Richard Durbin and his colleagues Sherrod Brown and Jack Reed on the issue of unemployment insurance solvency. Following the President’s FY 2012 budget, the introduction of the Unemployment Insurance Solvency Act sets the stage for a serious conversation on how to make sure that the safety net tens of millions of Americans have counted on during the tough times of the last few years will be financially secure into the future.”
The new bill is similar to the plan outlined by President Obama in his remarks last week, but adds further protections for benefits and additional opportunities and incentives for states to return to solvency in the long run.
Original Post: Feb. 11
Unemployment insurance is just that — insurance — and it’s financed by premiums paid on workers’ paychecks and deposited into a trust fund. However, the unemployment insurance (UI) trust funds in many states are not only insolvent, but now face heavy debt burdens due to their increased need for federal borrowing during this prolonged period of high unemployment. Restoring them to financial health is essential to ensure that unemployment insurance benefits are there for workers when they’re needed, both today and in the future. The Administration has outlined a significant framework to address the problem, which would provide needed debt and tax relief to states and businesses.
A new plan from the National Employment Law Project (NELP) and the Center on Budget and Policy Priorities (CBPP) would build on that framework, further strengthening the long-term solvency of state UI systems while avoiding benefit cuts and employer tax increases. Workers need to pay attention to this issue. The last time UI trust funds got hit this hard, in the 1980s, 44 states cut back benefits for workers.
Many states UI trust funds have been hit in recent years by a double-engine freight train. First, for years many states have inadequately financed their UI funds, both by keeping their taxable wage base for UI too low relative to inflation-adjusted dollar values, and by taking a dangerous “pay-as-you-go” approach, which failed to build adequate reserves during periods of economic growth. The graph below shows the substantial erosion in the inflation-adjusted value of the wage base that is subject to the UI taxes that fund state systems. What does this mean? It means that the employer of a dishwasher pays the same unemployment premium as the employer of a banker. It does not take a degree in actuarial science to know that this is not going to work.
And oh yeah, second — well, then came the Great Recession with millions of workers’ jobs being lost and the vastly increased need for unemployment benefits to help sustain unemployed job-seekers and their families.
Now, 30 states have exhausted their UI trust funds and are borrowing from the federal government.
The lead editorial in The New York Times yesterday, titled ‘Relief for States and Businesses’, explained the need for the Obama administration’s approach. Here are some excerpts:
So many people now receive jobless benefits that 30 states have run out of their unemployment trust funds and are borrowing $42 billion from the federal government. Three of the hardest-hit states — Michigan, Indiana and South Carolina — have borrowed so much that they triggered automatic unemployment tax increases on employers, and the same thing is likely to happen to 20 more states this year.
….
On Tuesday, the Obama administration unveiled a smart proposal to delay those tax increases and provide some relief to both employers and state governments. Congressional Republicans reflexively objected to the idea, which could produce higher taxes in three years, but this plan provides relief that might stimulate hiring now when it is most needed.
….
Under the plan, which is subject to Congressional approval, there would be a two-year moratorium on the increased taxes that employers would otherwise have to pay to support the unemployment insurance system, which could save businesses as much as $7 billion. During those same two years, states would be forgiven from paying the $1.3 billion in interest they owe Washington on the money they have borrowed.
….
In 2014, when the economy will presumably have recovered somewhat, employers will have to make up for the moratorium by paying higher unemployment taxes to the states. Specifically, they will have to pay taxes on the first $15,000 of an employee’s income, instead of the current $7,000. But, even then, unemployment taxes will be at the same level, adjusted for inflation, as they were in 1983, when President Ronald Reagan raised them.
The administration is proposing to cut the federal unemployment tax rate in 2014 so that employers would pay the same amount to Washington as they do now. States, if they choose to do so, could collect more from each employer to repay the federal government and restock their own unemployment trust funds.
….
The full details of the plan’s costs and benefits will be available when President Obama submits his 2012 budget to Congress next week. When he does, both parties should take a close look at the numbers and seize the opportunity to keep this fundamental safety net solvent.
“It is a major step forward for the President’s FY 2012 budget to address the UI trust fund crisis,” said Andrew Stettner, deputy director of the National Employment Law Project and a co-author of the new joint NELP-CBPP policy proposal. “Our proposal rests on the same core principles — giving employers and states relief now while taking concrete steps to restore the long term solvency of the UI trust fund as the economy recovers. The plan endorses two key aspects of what the Administration’s proposal reportedly includes — raising the taxable wage base up from the inadequate, outdated level of $7,000 and endorsing a two-year moratorium on federal UI tax increases.”
The NELP-CBPP plan, detailed in a new report, would enable states to restore the solvency of their UI trust funds, avoid significant tax increases on employers during a weak economy, and prevent damaging cuts in UI eligibility and benefits for jobless workers, without increasing the deficit. The plan also suggests additional debt relief for states and positive incentives for employers, rewards states that have maintained sound financing packages, and builds on existing federal protections of state benefit levels.
In a statement, the groups provide a summary of the plan:
• The federal government would gradually raise the amount of a worker’s wages subject to the federal UI tax (i.e., the FUTA taxable wage base). This would automatically raise the floor for the taxable wage bases in the states which by law cannot be lower than the federal wage base, helping those states rebuild their trust funds. (The federal UI tax rate would fall, however, so that overall federal UI taxes did not go up.)
• The federal government would provide a moratorium, until 2013, on state interest payments on their UI loans.
• The federal government would also postpone, for two years, the FUTA tax increases required to recoup the loan principal in borrowing states.
• The federal government would offer immediate rewards and future incentives for states that currently have and continue to maintain adequate trust fund levels.
• The federal government would excuse a state from repaying part of its loan if the state (a) enters a flexible contractual agreement with the U.S. Labor Department to rebuild its trust fund to an appropriate level over a reasonable number of years, and (b) agrees to maintain UI eligibility, benefit levels, and an appropriate tax rate over the loan-reduction period.
This plan would produce the following benefits:
• Employers would not pay higher federal UI taxes until the beginning of 2014, saving them $5 billion to $7 billion while the economy remains weak and $10 billion to $18 billion over the next five years. Also, employers would pay no additional assessments to cover interest payments in 2011 or 2012, saving them $3.6 billion.
• In addition, partial loan forgiveness that comes from a state’s commitment to build adequate trust funds would save employers about $37 billion by the end of the decade. Counting the interest payments on this principal as well, employers could save as much as $50 billion.
• All or nearly all states would assume a path to permanent solvency.
• Employers in responsible states would receive concrete rewards and a more level playing field between the states.
• Adequate trust funds would stabilize UI tax rates over time, avoiding the roller-coaster tax rates common in many states — very low during healthy economic times, rising rapidly during recessions — that harm businesses and the economy.
• States would maintain current UI benefit and eligibility levels.
• The federal deficit would not rise as a result of these policies.
“States face a tremendously urgent crisis when it comes to their unemployment insurance trust funds,” said Michael Leachman, assistant director of the Center’s State Fiscal Project and co-author of the report. “If federal policymakers address this crisis using our plan, employers could save as much as $50 billion in taxes and states would maintain the critical benefits they provide to people who lose their jobs.”
American Competitiveness, and the President’s New Relationship with American Business
January 23, 2011
Robert Reich
Fmr. Secretary of Labor; Professor at Berkeley; Author, Aftershock: ‘The Next Economy and America’s Future’
Posted: January 22, 2011 11:18 AM
Whenever you hear a business executive or politician use the term “American competitiveness,” watch your wallet. Few terms in public discourse have gone so directly from obscurity to meaninglessness without any intervening period of coherence.
President Obama just appointed Jeffry Immelt, GE’s CEO, to head his outside panel of economic advisors, replacing Paul Volcker. According to White House spokesman Robert Gibbs, Immelt has “agreed to work through what makes our country more competitive.”
In an opinion piece for the Washington Post announcing his acceptance, Immelt wrote “there is nothing inevitable about America’s declining manufacturing competitiveness if we work together to reverse it.”
But what’s American “competitiveness” and how do you measure it? Here are some different definitions:
- It’s American exports. Okay, but the easiest way for American companies to increase their exports from the US is for their American-made products to become cheaper internationally. And for them to reduce the price of their American-made stuff they have to cut their costs of production in here. Their biggest cost is their payrolls. So it follows that the simplest way for them to become more “competitive” is to cut their payrolls — either by substituting software and automated machinery for their US workers, or getting (or forcing) their US workers to accept wage and benefit cuts.
- It’s net exports. Another way to think about American “competitiveness” is the balance of trade — how much we import from abroad versus how much they import from us. The easiest and most direct way to improve the trade balance is to coax the value of the dollar down relative to foreign currencies (the Fed’s current strategy for flooding the economy with money could have this effect). The result is everything we make becomes cheaper to the rest of the world. But even if other nations were willing to let this happen (doubtful; we’d probably have a currency war instead as they tried to coax down the value of their currencies in response), we’d pay a high price. Everything the rest of the world makes would become more expensive for us.
- It’s the profits of American-based companies. In case you haven’t noticed, the profits of American corporations are soaring. That’s largely because sales from their foreign-based operations are booming (especially in China, Brazil, and India). It’s also because they’ve cut their costs of production in the US (see the first item above). American-based companies have become global — making and selling all over the world — so their profitability has little or nothing to do with the number and quality of jobs here in the US. In fact, it may be inversely related.
- It’s the number and quality of American jobs. This is my preferred definition, but on this measure we’re doing terribly badly. Most Americans are imprisoned in a terrible trade-off — they can get a job, but only one that pays considerably less than the one they used to have, or they can face unemployment or insecure contract work. The only sure way to improve the quality of jobs over the long term is to build the productivity of American workers and the US overall, which means major investments in education, infrastructure, and basic R&D. But it’s far from clear American corporations and their executives will pay the taxes needed to make these investments. And the only sure way to improve the number of jobs is to give the vast middle and working classes of America sufficient purchasing power to get the economy going again. But here again, it’s far from clear American corporations and their executives will be willing to push for a more progressive tax code, along with wage subsidies, that would put more money into average workers’ pockets.
It’s politically important for President Obama, as for any president, to be available to American business, and to avoid the moniker of being “anti-business.” But the president must not be seduced into believing — and must not allow the public to be similarly seduced into thinking — that the well-being of American business is synonymous with the well-being of Americans.
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