Budget deal gives White House everything it wanted

The House of Representatives, which controls the nation’s purse strings, is dominated by Republicans.  But they just agreed to a budget deal that includes $680 billion in new spending and special-interest tax cuts.  The White House is claiming total victory.  The deal gives the Obama administration what it wanted on Obamacare, immigration, and the environment.  Planned Parenthood will keep its government funding.  Pretty much the only thing Republicans got in return was an end to the ban on oil exports.  Rush Limbaugh is calling for the Republican Party to be disbanded. See this for details.

UPDATE:  The House adopted the budget.

UPDATE:  So has the Senate, and the President has signed it.  Look, this budget does some good things, like give more money to the military, including giving troops a raise.  But it’s a return to the old deficit spending, reversing the budget reforms (for example, the agreement to balance new spending by making cuts elsewhere) of a few years ago.

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Where your tax dollars go

The Heritage Foundation has an interesting report entitled  The Breakdown of Where Your Tax Dollars Go.  After the jump, an informative graphic. [Read more…]

Republicans are now playing nice on the budget

Republicans in Congress tried to cut the deficit by letting the government shut down, being willing to dive over the fiscal cliff, and sequestering expenditures, but those measures didn’t go over very well politically.  So now Congressional Republicans are going along with the Democrats, and they are close to an agreement on a budget deal.   Is that good news or bad news? [Read more…]

Leaks in the federal budget

Feds spend at least $890,000 on fees for empty accounts – The Washington Post.  (Every time the federal government sets up a grant, it opens an account.  When the grant money is spent, the account can’t be closed, according to government rules, until a full accounting of the program has been made.  That takes time and money.  So some 13,712 accounts with no money in them still exist, at the cost of $65 per year.)

The IRS paid $11 billion in faulty Earned Income Tax Credits last year.  (Not because taxpayers did anything wrong but because the rules for the EITC are so complicated that IRS officials calculated them incorrectly.)

In $75 billion program to prevent mortgage defaults, 46% of participants are defaulting.

Maxed out

As of yesterday, the federal government is officially maxed out on the  great national credit card.  We reached our credit limit of $14.294 trillion.   Government accountants think they can keep the bills paid using accounting tricks until August 2.   In the meantime, Congress needs to raise the debt ceiling.  Otherwise, the government could go into default.

Usually, raising the debt ceiling was more or less automatic, like passing resolutions celebrating Flag Day, but this time fiscal conservatives in Congress are threatening to keep that from happening unless the current administration agrees to major expenditure cuts.

Should Congress up the limit?  If it doesn’t, a default would surely be devastating for the economy, sending the dollar, government bonds, and foreign investment into a nosedive.  Would it be worth that to make a statement about out-of-control budget deficits?

President Obama’s deficit-reduction plan

It’s basically to raise taxes:

President Obama called for cutting the nation’s combined budget deficit by $4 trillion over the next 12 years on Wednesday, countering Republican budget plans with what he said was a more balanced approach that relies in part on tax increases for the wealthy as well as on spending cuts.

Mr. Obama spoke in strikingly partisan tones in parts of the 43-minute speech, offering a blistering critique of the Republican approach to reducing the deficit and laying down political markers that are sure to please even his most skeptical Democratic allies. The president vowed not to extend tax cuts for the wealthy or to dismantle the government-run health care systems for the elderly and poor. And he said there was “nothing serious or courageous” about the proposals Republicans offered this month.

Still, as he laid out the administration’s opening bid in negotiations over the nation’s fiscal future, Mr. Obama conceded a need to cut spending, rein in the growth of entitlement programs and close tax loopholes. At the same time, he insisted that the government must maintain what he called investment in programs that are necessary to compete globally. And he made clear that, despite his compromise with Congressional leaders in December, he would fight Republicans to end lowered tax rates for wealthy Americans that have been in place since President George W. Bush championed them in the last decade.

“There’s nothing serious about a plan that claims to reduce the deficit by spending a trillion dollars on tax cuts for millionaires and billionaires,” Mr. Obama said of budget proposals put forward by Republicans in the House. “There’s nothing courageous about asking for sacrifice from those who can least afford it and don’t have any clout on Capitol Hill. And this is not a vision of the America I know.”

In his remarks, delivered at George Washington University, Mr. Obama offered an impassioned defense of the popular Medicare and Medicaid programs against Republican proposals for sweeping changes in them. “We are a better country because of these commitments,” he said. “I’ll go further — we would not be a great country without those commitments.”

To the likely disappointment of some of his most liberal supporters, though, Mr. Obama signaled that he agreed with Republicans about the need to cut spending.

He acknowledged that some people would oppose cutting spending now, “mostly folks in my party,” the president said. “I’m sympathetic to this view, which is one of the reasons I supported the payroll tax cuts we passed in December. It’s also why we have to use a scalpel and not a machete to reduce the deficit.”

“But doing nothing on the deficit is just not an option,” he said.

Among his proposals is a “debt fail-safe” mechanism that would force lawmakers into much more severe action if the deficit has not contracted significantly by 2014.

The provision would impose across-the-board cuts on most government programs, officials said, adding that it was intended to provide an incentive to motivate potentially reluctant lawmakers to take difficult but necessary steps.

via Obama’s Deficit-Cutting Plan Balances Cuts With Tax Increases – NYTimes.com.

So do you think this approach will work?  Is this better than Paul Ryan’s plan?


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