Tag Archives: spending cuts

Let Them Eat Cat Food

Y’all will recall that GOP presidential primary debate where candidates were asked to raise their hands if they would accept a budget deal that had $10 in spending cuts for every $1 in tax increases.  Not a single hand went up.  It was pretty breathtaking.

Well, today on “Meet the Press,” House Majority Whit Kevin McCarthy (R-CA) said there is no ratio the GOP would accept — not $100 in spending cuts for every $1 in tax increases, not $1,000 in spending cuts to every $1 for tax increases.

He said, “There are no new tax increases because you don’t need it.”  Translation — “Hey, old people, have you tried some of those new cat foods?  They’re quite tasty.”

 

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

March Will Come In Like a Lion, But Won’t Go Out Like a Lamb

This could be a true bounce-back year for the economy, with the recovery really gathering steam.  Housing, which has been such a drag on GDP for six years, is finally expected to add to GDP, by about 1%.  Just as a downturn feeds on itself and takes us spiraling down, a definitive upturn would feed on itself and lift us up higher and faster.  More consumer spending leading to more jobs, leading to more consumer spending and even more jobs.

But…

The sequester looms on March 1, with the GOP saying they won’t raise taxes and will accept only spending cuts, and the Dems saying there must be a combination of cuts and taxes.   Without an agreement, the automatic cuts will start draining billions of dollars a month from our economy.

And by the end of March, government funding under the continuing budget resolution will run out, and we face the possibility of a government shut down.

So we could quickly and needlessly slide back into recession.

It is ironic that as the private sector comes back, the government-hating GOP may use government power to depress the functioning of the free market and give the “invisible hand” a vicious slap.

But they believe they have to destroy our economy in order to save it.

 

 

 

 

The Deficit? Fuhgeddaboudit.

A little Krugman* to get your weekend off to a good start:

“The budget deficit isn’t our biggest problem, by a long shot.  Furthermore, it’s a problem that is already, to a large degree, solved.  The medium-term budget outlook is great, but it’s not terrible either — and the long-term outlook gets much more attention than it should.

“Recently the nonpartisan Center on Budget and Policy Priorities took Congressional Budget Office projections for the next decade and updated them to take account of two major deficit-reduction actions:  the spending cuts agreed to in 2011, amounting to almost $1.5 trillion over the next decade; and the roughly $600 billion in tax increases on the affluent agreed to at the beginning of this year.  What the center finds is a budget outlook, that, as I said, isn’t great but isn’t terrible:  It projects that the ratio of debt to G.D.P., the standard measure of America’s debt position, will be only modestly higher in 2022 than it is now.

“The center calls for another $1.4 trillion in deficit reduction, which would completely stabilize the debt ratio; President Obama has called for roughly the same amount.  Even without such actions, however, the budget outlook for the next 10 years doesn’t look at all alarming.

“Now, projections that run further into the future do suggest trouble, as an aging population and rising health care costs continue to push federal spending higher.  But here’s a question you almost never see seriously addressed:  Why, exactly, should we believe that it’s necessary, or even possible, to decide right now how we will eventually address the budget issues of the 2030s?

“It’s time to focus on other stuff — like the still-depressed state of the economy and the still-terrible problem of long-term unemployment.”

Instead of wringing our hands about the deficit/national debt, we need to roll up our sleeves and focus on growth and good jobs.  That’s the best thing we can do for the 2030s right now.

* “The Dwindling Deficit,” NYT

90 Day Can Kick

The House GOP has agreed to raise the debt ceiling for 90 days, if the House and Senate use that time to pass a budget.

They had been demanding a dollar in spending cuts for every dollar the ceiling was raised, while President Obama has said that he won’t negotiate at all on the ceiling, arguing that Congress has an obligation to pay the bills for money it has already spent.

And if both houses don’t pass a budget?  Boehner says members won’t get paid.  But if one house passes a budget, its members will be paid.  Well, what if both houses pass very different budgets?  I assume then members of both houses would get paid, but we still wouldn’t have a budget!  Sounds like more poorly-thought-out GOP gibberish to me.

We still have the sequester coming up on March 1 and the continuing budget resolution expiring on March 27.

Don’t Be Fooled By All the Loose Talk of Default

I want to quote from a Politico article about the GOP’s willingness to refuse either to raise the debt ceiling or to pass a continuing spending resolution, but before I do, I want to point out that their discussion of default and pretty much all you’re reading and will read about default is wrong.

In order to default, the government would have to stop paying its “public debts,” which means the servicing of our bonds.  The Treasury takes in about $200 billion in taxes every month, which is more than we need to pay those debts.  We can avoid default without raising the debt ceiling, and there is no real reason for financial markets to freak out or for our credit rating to be downgraded.

On the other hand, Social Security payments are not “public debts,” and failing to send those checks is not a default.

If you don’t have enough money to pay all your bills, but you pay your mortgage and your car loan, you may not have enough to heat that house or put gas in that car, but you are not in default on your home or car loan.

From “Double trouble:  House GOP eyes default, shutdown,” Jim VandeHei, Mike Allen, and Jake Sherman, Politico:

“House Republicans are seriously entertaining dramatic steps, including default or shutting down the government, to force President Barack Obama to finally cut spending by the end of March.

“The idea of allowing the country to default by refusing to increase the debt limit is getting more widespread and serious traction among House Republicans than people realize, though GOP leaders think shutting down the government is the much more likely outcome of the spending fights this winter.

“GOP officials said more than half of their members are prepared to allow default unless Obama agrees to dramatic cuts he has repeatedly said he opposes. Many more members, including some party leaders, are prepared to shut down the government to make their point.”

Quote of the Day

“My debt limit nightmare scenario goes something like this: Nothing of any substance happens for the next month or so. Then, a few days before the government’s borrowing authority lapses, House Republicans pass legislation pairing deep spending cuts — some specific, some asterisked — with a debt limit increase. The Senate, gridlocked by filibuster, can’t pass a clean debt limit bill, so instead they pass nothing. Republicans skip town claiming they’ve done their job, leaving Democrats to choose between surrender and economic havoc.”

Brian Beutler, Talking Points Memo

McConnell Draws Battle Lines

President Obama said that he won’t negotiate on the debt ceiling and that he will be looking for more tax increases (through tax reform).  Senate Minority Leader Mitch McConnell has a new op-ed telling the Prez to fuhgeddaboudit and that the fiscal cliff deal “was the last word on taxes.”

McConnell says the debt ceiling won’t get raised without negotiations on spending cuts:

“Now the conversation turns to cutting spending on the government programs that are the real source of the nation’s fiscal imbalance. And the upcoming debate on the debt limit is the perfect time to have that discussion.

“We simply cannot increase the nation’s borrowing limit without committing to long overdue reforms to spending programs that are the very cause of our debt.”

So now we have more of a chasm than a cliff.  Let’s see Biden solve this one.

House GOP Says Not So Fast

The House GOP has decided to amend the Senate fiscal cliff bill to add spending cuts.  They are figuring out if they can get enough votes for this plan.  If they can, they will vote tonight.

The bill would then go back to the Senate, but action would have to wait for the new Congress, which takes over on Thursday.