Free Markets, Free People

budget


Observations: The QandO Podcast for 17 Jul 11

In this podcast, Bruce, Michael, and Dale discuss the fight over the debt limit.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.


Observations: The QandO Podcast for 10 Jul 11

In this podcast, Bruce, Michael, and Dale discuss the L.A. Counties harrassment of desert dwellers, and the ongoing budget negotiations.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.


The QandO Podcast for 05 Jun 11

In this podcast, Bruce, Michael, and Dale discuss Weinergate, employment, and the budget.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.


Fact Check Org fact checks Obama’s budget speech and is not impressed–factually speaking

President Obama’s speech on April 13th was used as an opportunity to spread false information about the GOP’s budget plan authored by Rep. Paul Ryan (R-WI) according to Fact Check.org.  Among the deceptive claims were these:

-  Obama claimed the Republicans’ "Path to Prosperity" plan would cause "up to 50 million Americans "¦ to lose their health insurance." But that worst-case figure is based in part on speculation and assumptions.

-  He said the GOP plan would replace Medicare with "a voucher program that leaves seniors at the mercy of the insurance industry." That’s an exaggeration. Nothing would change for those 55 and older. Those younger would get federal subsidies to buy private insurance from a Medicare exchange set up by the government.

-  He said "poor children," "children with autism" and "kids with disabilities" would be left "to fend for themselves." That, too, is an exaggeration. The GOP says states would have "freedom and flexibility to tailor a Medicaid program that fits the needs of their unique populations." It doesn’t bar states from covering those children.

-  He repeated a deceptive talking point that the new health care law will reduce the deficit by $1 trillion. That’s the Democrats’ own estimate over a 20-year period. The Congressional Budget Office pegged the deficit savings at $210 billion over 10 years and warned that estimates beyond a decade are "more and more uncertain."

-  He falsely claimed that making the Bush tax cuts permanent would give away "$1 trillion worth of tax cuts for every millionaire and billionaire." That figure — which is actually $807 billion over 10 years — refers to tax cuts for individuals earning more than $200,000 and couples earning more than $250,000, not just millionaires and billionaires.

-  He said the tax burden on the wealthy is the lowest it has been in 50 years. But the most recent nonpartisan congressional analysis showed that the average federal tax rate for high-income taxpayers was lower in 1986.

You may say, “hey, those aren’t really that big of a deal – they’re not giant fibs”.  Well yeah, they are – and collectively they paint a completely false picture of both the Ryan plan and the Obama plan  because the way he presented each was to try to present them in such a way that you bought into the premise his falsehoods painted.

Had he just stuck with the facts, the GOP’s wouldn’t have sounded too bad and his wouldn’t have sounded very good (for instance the claim that ObamaCare will save $1 trillion assumes the “doc cut” will actually be made when there is absolutely no indication it will ever be made).

So he just made stuff up out of thin air or presented it in a highly-partisan way to make it sound much worse than it is.

We should expect better than that from the President of the US shouldn’t we?

And wasn’t he the guy who promised such “hope and change” in DC with his administration?  That’s one campaign promise (among many others) that simply will never get the green checkmark in the box beside it.  It is a complete and total “no-go”.

~McQ


Observations: The QandO Podcast for 17 Apr 11

In this podcast, Bruce, Michael, and Dale discuss this week’s battles over the budget.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.


The $32.5 billion in cuts are real cuts

They’re not all smoke and mirrors as some are alleging.  But you have to understand the budget process to know that.  Quin Hillyar explains:

Anyway, yes, the cuts are not of the high quality of cuts we might like. Yes, there are a few which can only be characterized as smoke and mirrors. But no, the bulk of these cuts are not meaningless; most of them actually will keep money from being spent that otherwise would, yes, be spent. In other words, most of the complaints are groundless.

Here’s why. This is an Appropriations bill. Approps bills are primarily expressed through "budget authority," not through "outlays." A project in an Approps bill that receives budget authority in FY 2011 might not actually get spent — there may not be an "outlay" of the full amount — in 2011. If it is a construction project, that will almost certainly be the case. This late in the fiscal year — which began last October 1, and thus is more than halfway over — some of these projects may not even get the contracts signed before the end of the fiscal year. So cutting that project would not cut a single dollar from actual spending this year. But that does NOT — NOT NOT NOT NOT NOT — mean that cutting the project is a waste of time. If the budget authority is removed, it means that the money that absolutely would have been spent in future years now CANNOT be spent, by law. It saves real money.

Hillyar worked on the staff of the House Appropriations Committee during the time Republicans balanced the budget and brought Bubba to the table to sign kicking and screaming all the way (you remember Clinton’s "can’t be done" statement, right?).

More clarity about the process:

The savings are real. It’s the same thing with a lot of the items that critics are calling "smoke and mirrors" just because they don’t cut this year’s outlays. The criticism is utterly ill-informed and baseless.

Granted, there also are accounts that contain leftover money that supposedly wasn’t going to be spent anyway — so in this case, say the critics, cutting the budget authority doesn’t save money; it’s just forcing the official accounting to catch up with the reality of the unspent funds….. Well, yes and no. Or rather, maybe. The dirty little secret about unobligated funds is that many of them are in accounts that aren’t impressively tight. Executive branch bureaucracies, without approval of Congress, often can tap into those funds (in effect) for other purposes, merely by shifting them among accounts. Most funds are fungible. That’s why Sen. Tom Coburn is making such a big deal, overall (apart from this battle), about cutting hundreds of billions in unobligated funds: because as long as they remain on the books, they still can get spent, and in most cases will get spent. Therefore, eliminating the budget authority for these programs does indeed save real money. It’s not just an accounting trick. It takes away all legal authority to spend that money. It means the taxpayers will not be on the hook for the money.

So while maybe not ideal in terms of the amount of “high quality” cuts we would have preferred, believing the narrative that they’re all smoke and mirrors is just wrong.  When a program has budget authority, it is funded and those funds will be spent – by someone.  That authority has now been withdrawn and thus the ability to spend even a penny of the formerly allocated funds goes with it.

An even better silver lining (again something you have to understand about the process to appreciate the impact):

Also important is that they force the overall spending baseline lower. So much of what happens in Washington budgets involves comparing spending year to year. If you take away budget authority EVEN FOR PROGRAMS THAT NEVER WOULD GET SPENT, you also make the official baseline for future years lower. It thus becomes far harder for the left to demagogue GOP spending proposals, because the proposals will be compared to a lower starting point than they would if the programs in question still remained on the official books. Anybody who doesn’t think this is an important budgetary victory is either ignorant or a fool.

Or both.

All of these things are important.  Removing the budget authority essentially defunds a program, or, as mentioned, stops it in its tracks and removes the money from being available to the program being defunded.   It also removes it from the grasping, greedy fingers of bureaucrats ready and eager to take whatever money they can get their hands on and spend it.

Best of all worlds?  Probably not.  But certainly not at all the worst of all worlds.  Anytime we can save money and force the spending baseline lower seems to me to be a victory.

~McQ


Musing about government shut down

Obviously the first and most important point to be made about the possibility of the government shutting down this week is the fact that had Democrats, who held a majority in both the House and Senate last year, done their basic job of passing a budget, this wouldn’t be an impending problem.

Now, unsurprisingly, it has devolved into a political battle pitting the Republicans on the side of cutting spending as their constituency insists upon (and voted for) against Democrats who, failing to do their job last year, now are dragging their feet in the Senate (the House passed a continuing resolution to fund government 46 days ago) and making veto threats from the White House.

Funny, how politics works, isn’t it?  Those who didn’t do their job last year or provide any leadership on the subject are now actively working against passage of a stop-gap funding measure and prepared to blame those who are attempting to fix the problem for any government shutdown which might occur.

While he had every opportunity to weigh in on the budget last year when Democrats didn’t pass one, now that he sees political advantage in weighing in (he just started his 2012 re-election campaign remember) we finally hear from President Obama:

“What we can’t be doing is using last year’s budget process to have arguments about abortion; to have arguments about the Environmental Protection Agency; to try to use this budget negotiation as a vehicle for every ideological or political difference between the two parties. That’s what the legislature is for, is to have those arguments, but not stuff it all into one budget bill.”

Now he takes a stand.  When his party failed to pass a budget last year?  Crickets.  Apparently fully prepared to live on continuing resolutions during the tenure of the Democratic controlled Congress, now he’s putting his foot down.  Instead of working to ease the situation and negotiate a settlement that would be acceptable to both parties, he threatens a veto.

“On the issue of a short-term extension, we’ve already done that twice. We did it once for two weeks, then we did another one for three weeks. That is not a way to run a government.

No kidding.  But where in the heck was the president last year when Congress failed in its duty and set this predicament up?  The government has been working on “short-term extensions” since October of last year.  Now, suddenly, they’re a problem.

I don’t disagree with Obama’s points, I just am disgusted by the disingenuousness of the argument.  Not that it surprises me, however, at all.

But when government shuts down, and the blame game begins, remember the reason that such a situation even developed in the first place.  Congressional nonfeasance and lack of presidential leadership.

~McQ


Obama’s budget would double public debt by 2021

If you thought President Obama was serious about his rhetorical appeals to fiscal responsibility, one only has to look at the latest CBO report to know better.  There is nothing in the report to support any such contention by the administration.  To the contrary it points to a level of fiscal irresponsibility that is unprecedented in the history of this republic.  Obama’s budget would, if executed, double the public debt by 2021 to $20.8 trillion or 87% of the GDP.  That is if our economic and financial systems, not to mention the dollar, last that long:

In 2012, the deficit under the President’s budget would decline to $1.2 trillion, or 7.4 percent of GDP, CBO estimates. That shortfall is $83 billion greater than the deficit that CBO projects for 2012 in its current baseline. Deficits in succeeding years under the President’s proposals would be smaller than the deficit in 2012, although they would still add significantly to federal debt. The deficit would shrink to 4.1 percent of GDP by 2015 but widen in later years, reaching 4.9 percent of GDP in 2021. In all, deficits would total $9.5 trillion between 2012 and 2021 under the President’s budget (or 4.8 percent of total GDP projected for that period)—$2.7 trillion more than the cumulative deficit in CBO’s baseline. Federal debt held by the public would double under the President’s budget, growing from $10.4 trillion (69 percent of GDP) at the end of 2011 to $20.8 trillion (87 percent of GDP) at the end of 2021.

Given the outright deceit we’re regularly treated too by Democrats concerning their seriousness in addressing the problems we face, or their outright disinterest in  actually doing so (Harry Reid’s recent “see me in 20 years about Social Security” or his whining about defunding “cowboy poets”), it shouldn’t really surprise anyone that we’re in the shape we’re in or that this administration is actually offering these budgets on the one hand while claiming to understand that we can’t continue spending as we are on the other.

We even have Nancy Pelosi claiming Democrats have always been for fiscal responsibility.

It boggles the mind to even consider these numbers and yet we have an administration offering them as the way to go for the future and doing so with a straight face.  

Note the chart included here.  The “baseline projection” is what we’d spend under current law.  CBO claims one of the problems is a decrease in revenues under the President’s proposed policies with, you guessed it, an increase in outlays.  And we’d also see – and this isn’t unexpected at all, given the amount of money we continue to borrow – an increase in the percentage of outlays required to service the debt:

In particular, net interest payments would nearly quadruple in nominal dollars (without an adjustment for inflation) over the 2012–2021 period and would increase from 1.7 percent of GDP to 3.9 percent. Total outlays under the President’s budget would equal 23.6 percent of GDP in 2012, decline slightly as a share of GDP over the following two years, and then rise for the rest of the 10-year projection period. They would equal 24.2 percent of GDP in 2021—about 0.3 percentage points above CBO’s baseline projection for that year and well above the 40-year average for total outlays, 20.8 percent.

So if the President’s budgets were enacted, we’d see government outlays – that’s spending for the rest of us – hit almost a quarter of the GDP and the debt in total about 87% of GDP in 10 years.

Meanwhile Democrats continue to fight against almost every cut for the most inane reasons while we see the debt numbers continue to climb.  Republicans are at least are making an attempt at cutting spending, no matter how weak, but Democrats have given up all pretense.  And all credibility.  The President’s budgets are the final nail in the Dem’s faux “fiscal responsibility” coffin.

~McQ


David Brooks: austerity, “death panels” and spending exemptions

David Brooks helps demonstrate the problem we face in doing anything meaningful about the fiscal mess our government has gotten itself in.  To give him his due, he is trying, at some level, to address the problems facing the country. But he manages to end up putting himself in precisely the position which seems  prevalent today among those not really serious about doing what is necessary to put the fiscal house in order (but like to pretend they are)  – that is “we want budget cuts but don’t touch my favorite programs”.

Let me give you an example from his column today entitled “The New Normal”.

He begins by acknowledging that there is going to be (needs to be?) a whole lot of deficit cutting over the next few years.  And, his first principle of austerity, as he calls it, is that lawmakers must, as he inartfully but correctly puts it, “make everybody hurt”.  He’s right – no exemptions.  Every program, department, echelon, you name it, associated with government (yeah, that means you public sector unions) are going to have to sacrifice something.  Fine to that point.  When you’re looking at 1.3 trillion in a single year deficit, everyone does have to “hurt” if you hold any hope of eliminating it.

However, in this column  he launches into his second principle of austerity and loses me immediately.

A second austerity principle is this: Trim from the old to invest in the young. We should adjust pension promises and reduce the amount of money spent on health care during the last months of life so we can preserve programs for those who are growing and learning the most.

This “principle”  is based in a very nasty premise that “we” are in control of all the money “spent on health care” during the last months and should use that power to help balance the budget (and the fact is, with Medicare, that premise is true).  In other words, “we” will decide to pull the plug on the treatment for oldsters in favor of treatment/”investment” in youngsters.  Not the old folks themselves, mind you.  They’ll have no say in it. He’s talking about the collective “we”.  But don’t you dare say “death panels” you hear me?  And note, he immediately violates his first principle of making “everyone hurt” by claiming that if we throw the oldsters under the bus, we can “preserve programs” for the young.  Where’s the cut in spending when we’re “preserving”?

Oh, it’s not “spending” … we’ll call it “investing”, shall we?

Brooks then expands his “for the children” campaign with this bit of nonsense where he takes a shot at House GOP members:

In Washington, the Republicans who designed the cuts for this fiscal year seemed to have done no serious policy evaluation. They excused the elderly and directed cuts at anything else they could easily reach. Under their budget, financing for early-childhood programs would fall off a cliff. Tens of thousands of kids, maybe hundreds of thousands, would have their slots eliminated midyear.

You’d think Brooks, someone the NYT pays to be informed about how government works, would understand that the legislation he questions isn’t a budget, but a continuing resolution (CR) to fund government in the current fiscal year.   That’s not where you make “serious policy evaluations”.  You do that in budget legislation, something which the Democrats in the House failed to pass last year.   The government has been running on a series of CRs all year.  That doesn’t remove the crying need for cuts in spending, but the only spending under their control in a CR is discretionary spending.  And that’s where they’re cutting.

Brooks prefers to ignore those facts in favor of the emotional argument that they’re going after children in favor of old folks.

What is instructive about the Brooks argument is this is precisely the type arguments that you’re going to see from now on.  Arguments like the one Brooks puts forward here are going to begin with statements like “we must make cuts” and then spend the entire rest of the time arguing against making them.   And 90% of those arguments are going to be based in emotion, not facts or sound reasoning.

Mr. “Make Everyone Hurt” then advances his third austerity principle:

Which leads to the third austerity principle: Never cut without an evaluation process. Before legislators and governors chop a section of the budget, they should make a list of all the relevant programs. They should grade each option and then start paying for them from the top down.

I don’t necessarily disagree with the point, but it is again inconsistent with his first principle, isn’t it?  If everyone has to “hurt”, then something must come from every spending point – to include children’s programs and education.  What Brooks wants is some sort of arbitrary “evaluation” which will – wait for it – justify or rationalize exempting certain programs, policies, departments from spending cuts.

Any guess as to which programs he wants exempted?  Certainly not those effecting older Americans.

Brooks isn’t really serious about cutting spending.   Like many politicians and pundits, he mouths the words and makes the point about all of us sacrificing something, but he really doesn’t mean it. When pressed, he falls right into the “cut everything else but don’t cut my favorite program” group in which you find much of the populace today.  That’s not “shared sacrifice”.

Its hard to take someone seriously who doesn’t seriously address the fact that we have massive debt, massive deficits staring us in the face, a huge new entitlement program on the books and and conclude there’s an urgent need to cut spending in all areas, period.   Brooks should have stopped with his first principle, if he actually wanted to be taken serious.  That is the “new normal”.

~McQ


Pure joy? Seeing Ms. Pelosi rendered "irrelevant"

There are those that are important and those that are irrelevant, and, in terms of the budget, it is delightful to see the minority leader of the House of Representatives in the irrelevant category:

House Minority Leader Nancy Pelosi (D-Calif.) is showing no enthusiasm for the new proposal from Republicans to avoid a government shutdown, putting her at odds with Senate Majority Leader Harry Reid (D-Nev.).

Pelosi said in a statement that the GOP’s plan for a two-week spending bill cuts funding for critical programs.

“Republicans want to cut an additional $4 billion, which includes stripping support for some pressing educational challenges without redirecting these critical resources to meet the educational needs of our children,” Pelosi said in a statement. “This is not a good place to start.”

Well heck, then get the votes together to stop it. What’s that? Don’t have them?

Oh.

Well, thanks for stopping by.

~McQ