So Here’s the Deal

This is the final deal Reid and McConnell negotiated:

The government will be funded until January 15.  The debt ceiling is raised until February 7.

There will be income verification for those getting subsidies under Obamacare.

There will be yet another committee appointed to negotiate a budget for the rest of the fiscal year that ends September 30, 2014.  It must report back by December 13.  Good luck with that.

Treasury is allowed to use “extraordinary measures” to delay hitting the new debt ceiling.  They’ve been using such measures this time around since May, when they technically ran out of money.

Agency heads don’t have flexibility to move money around to deal with the sequester.

The Senate will vote first.  Boehner has indicated he will bring it to the floor of the House even if it’s not supported by a majority of the GOP majority.  We should be able to get both houses to vote and the Prez to sign by midnight.

Buried Under the “Scandal” Avalanche

There is some really good news out of Washington, if you look under the rocks of Benghazi, the IRS, and the AP.

The budget deficit is projected to drop to $642 billion for FY 2012, which ends on September 30.  That’s a whopping $200 billion less than the CBO estimated in February, when it adjusted the deficit downward to account for sequester spending cuts and 2012 tax increases.  This new projection comes strictly from higher-than-expected tax revenue.  This will be the first time the deficit has been under a trillion since 2009.

Things are so rosy that the deficit might be only a smidge over 2% of GDP by 2015, compared to more than 10% of GDP back in 2009.

In fact some economists, like Jared Bernstein, think the deficit may be coming down too quickly, keeping unemployment high.


Government Shutdown Averted

The House today passed, 318-109, the continuing resolution that the Senate passed yesterday to keep the government funded for the rest of FY 2013, through September 30.  The sequester stays, but some money gets moved around, especially at the Defense Department.

The House also passed, 221-207, the Ryan budget that balances the federal budget in ten years, with both drastic spending cuts and tax cuts for the rich.  That was a symbolic vote, since that budget has no chance of passing the Senate.

Avoiding Government Shutdown

On a 73-26 vote, the Senate passed a continuing resolution to keep the government funded through the rest of FY 2013, which ends September 30.

They moved money around within the Defense Department to avoid sequester-related problems, and made a number of other similar fixes, such as making sure we will have meat inspections and that the State Department can provide non-lethal aid to Syrians.


Yet Another Phony Number

We here at Embattled Farmers want you to make up your mind based on accurate numbers.  That’s why we pointed out that the real sequester number for FY 2013 is about $44 billion (from the Congressional Budget Office), not the $85 billion that keeps getting thrown around.

Today’s phony number is $1.5 trillion, the amount the GOP claims the Dems want to raise taxes.

The Dem budget actually calls for $975 billion in taxes and an equal amount in spending cuts.

Where does the GOP get the extra billions?  By not recognizing that the Dem budget is an alternative to sequestration and assuming that the sequester is permanent.  Under that assumption, you’d have to come up with more than $975 billion, $1.5 trillion to be exact, to pay down the sequester.  But that’s a false premise.

For more, see “Republicans Falsely Claim Dem Budget Increases Taxes $1.5 Trillion,” Brian Beutler, Talking Points Memo

The President Is Squandering His Credibility

I don’t understand why the Obama people are so great at campaigning and so lousy at governing.

They don’t recognize when they have leverage and when they don’t.

They had tremendous leverage on the fiscal cliff because aside from the payroll tax “holiday” ending, federal income taxes were going up for the middle class as well as the rich at the same spending cuts would take effect, so Obama had a great argument to make to the American people.  Even the GOP recognized it was too much austerity, too fast, and we’d go back into recession.

But the sequester?  If the fiscal cliff was an inside straight for Obama, the sequester is more like a pair of three’s.  Obama’s pulling the same scare tactics this time, but without the substance of the fiscal cliff to justify them.  They may be touting $85 billion in cuts officially, but if you work in the White House, you know it’s really only $44 billion (as you know if you read this blog).  And you know that $44 billion out of a $3.8 trillion budget isn’t even a start, let alone the end of civilization as we know it.

The truth is that most Americans won’t feel the cuts personally.  For some people they will be real and painful, but not enough to overload the phone lines at the Capitol.  Much of the pain will be felt in Northern Virginia, and the rest of the country hates Northern Virginia for surviving the Great Meltdown so comfortably because of the cushion of government spending.  So, payback’s a bitch, McLean and Arlington.

The president should have emphasized the irrationality of these particular cuts rather than imagining an enormous impact.  He should have said that he was going to do whatever he could to cut the most expendable items.  He should have supported the GOP’s effort to give him even more flexibility on the cuts.

This round goes to the GOP.

A Smarter Sequester

The GOP’s funding bill that will keep the government from shutting down on March 27 moves about $10.4 billion to the Pentagon’s operations and maintenance account.  The money will be shifted from personnel, R & D, and equipment procurement.

The bill also provides $2 billion more than last year for diplomatic security, along with $40 million more for fighting wildfires, $363 million more for nuclear security, $129 million more for FBI salaries.   These increases are achieved by moving money around.  The bill doesn’t increase funding for Customs and Border Protection from last year, but requires them to keep current staffing and detention beds.

The GOP is doing full appropriations bill for both DoD and Veterans Affairs, rather than just a continuing resolution which works out better for them.  Indeed, defense contractors have been more upset about dealing with a continuing resolution that dealing with the sequester.

The GOP bill fixes some of the arbitrariness of the sequester and makes the cuts more rational.

For more, see “House government funding bill seeks to soften sequester’s blow,” Erik Wasson and Jeremy Herb, The Hill

Government Won’t Shut Down

Based on comments from Boehner and the White House, it looks as if there will be a continuing resolution to keep the government funded at the sequester levels.

The GOP is picking its battles carefully.  The sequester cuts?  Meh…  People not getting their Social Security checks?  BFD.

So there won’t be a government shutdown on March 27.

Next up is the debt ceiling in May.

Prez Has More Sequester Flexibility Than WH Admits

From On The Money blog; The Hill; Erik Wesson, Jeremy Herb and Keith Laing:

“The White House has made the case it has almost no flexibility….

“But budget experts say some nuances within the law do give the administration some room to maneuver, though they acknowledge it is limited.

“For example, the administration has broad authority to define ‘program, project and activity,’ according to Barry Anderson, a former budget official under President George H. W. Bush.  He said this would allow some flexibility in making cuts.

“OMB said Friday that it will be issuing the sequester order on the account level and agencies will determine the program, project and activity definition.”

The WSJ argued that the President has a lot of flexibility in its op-ed  “The Sequester Revelation”:
“[T]he White House says it must now cut across the board regardless of how important a given PPA is.
“Not so fast.  Programs, projects and activities are a technical category of the federal budget, but the sequester actually occurs at the roughly 1,200 broader units known as budget accounts.  Some accounts are small, but others contain hundreds of PPAs and the larger accounts run to billions of dollars.  For the Pentagon in particular, the distinction between PPAs and accounts is huge.”
The President’s hands may be tied, but we’re not going to see any burn marks from this sequester.  If they wanted to send the Harry Truman to the Persian Gulf tonight, they certainly could.