The *Budget Fight* Thread (Jan-Feb-March 2013 Edition)

[Gallen5862]

http://www.washingtonpost.com/busine...=al_comboPNE_p

Senate votes to temporarily suspend federal debt limit


Congress gave final approval Thursday to a plan to temporarily suspend the legal limit on the national debt, permitting the Treasury Department to keep borrowing and lifting the threat of a government default until early August.

The measure, approved by the Senate 64 to 34, now goes to the White House for President Obama’s signature. Without congressional action, the administration had predicted that the Treasury would run out money to pay the nation’s bills by early March.



On May 19, the debt limit will kick back in and automatically reset at a higher level, reflecting the additional borrowing. Treasury officials can then begin taking what they call “extraordinary measures” to continue paying the nation’s bills.

The Bipartisan Policy Center predicts that the Treasury will run up about $450 billion in additional debt during that period and that the date of a potential default will be postponed until the beginning of August. In recent days, administration officials have advised lawmakers that the center’s analysis matches the White House calculations.

[skinsmarydu]

If economy slows at the rate of Gov't spending decreases, shouldn't somebody be happy about something?(Repubs to say "we need less gov't" and Dems to say "told ya so"?)
Or should I just say "nevermind, I can live on cat food, especially if I already have cats?"

Seriously. Those Gov't jobs and programs eliminated kept a lot of money out of the economy.
I just work in a restaurant. What do I know?
I'm good at what I do. Been at it for a long time. Bought a home, sold a home. Would just like to make sure I get out what I put in. If folks don't feel confident in where they put their money, it's over. Especially in a corporate restaurant...stay local, with small owners. Corporations make stores deal with no soup bowls, proper glassware or, (in my case), no lilttle coffee creamers. I know, a Mexican restaurant shouldn't need a buttload of coffee creamers, but you'd be really surprised at how many people want coffee with their Mexican food.
(I know, it blew my mind.)
Point is, WE BETTER COMPROMISE on just about everything, and learn to get along. I know I'm rather liberal, but I was a very staunch Rebublican at one time (when I was in the Navy, haha).

You gotta have coffee creamer, even if just some of the people want it. (do not ask me to extend this to folks who want military weapons in the civilian world. jmho...)

[Fergasun]

TheHill.com: Obama Demands Sequester Delay

President Obama on Tuesday demanded that Congress approve legislation to replace at least some of the $85 billion in automatic spending cuts set to hit the government on March 1. Obama offered no concrete plan on how to replace the cuts, but warned that if Congress allowed them to go forward, it would hurt the economy. “We have seen the effects that political dysfunction can have,” said Obama. “It will cost us jobs and hurt our economy.” The president said the cuts should be replaced by both spending cuts and tax hikes, calling on Congress to agree to a “balanced mix of spending cuts and more tax reform” that would at least delay sequestration for a “few months.”

The game is afoot! To some, this is Presidential leadership. To others, this is Obama falling into the GOP's carefully crafted trap where they'll force the sequester to go through, and then BLAME OBAMA!

Does the GOP really believe that the American people really believe that taxes on those making over $450k is enough? All they have to do is point out how folks making between $250k and 450k are still very rich; and can also be taxed. Especially since everyone between $0 and $120k saw a social security tax increase.... [but I do think some spending cuts should be in order as well]

[GibbsFactor]

Dan Mitchell ‏@danieljmitchell
If Spending Is Capped So It Grows at the Rate of Inflation, the Budget Is Balanced in 2018 http://j.mp/X4c3eq

[Larry]

Dan Mitchell ‏@danieljmitchell
If Spending Is Capped So It Grows at the Rate of Inflation, the Budget Is Balanced in 2018 http://j.mp/X4c3eq

Hey. All we have to do, for example, is mandate that the number of people collecting Soial Security not only stays constant, but that whenever somebody dies, he's replaced by a retiree who makes the same as what the dead guy was making.

And we could mandate that the number of people on Medicare remains constant, AND that medical care doesn't go up faster than inflation.

----------

Seeing the problem?

[Byebye]

Whatever else one my find this to be (simplistic, partisan, erroneous, whatever) i thought it was worth posting and will take any heat for that choice. <insert missing and mourned grin smiley>

Interesting video, but it portrays it as the President vs Congress. Isn't the debt ceiling used so that Congress has a limit on their spending (limit itself)?

[Larry]

Interesting video, but it portrays it as the President vs Congress. Isn't the debt ceiling used so that Congress has a limit on their spending (limit itself)?

That may be a claim. But it obviously doesn't fit what's been happening.

The ceiling does not in any way inhibit Congress from mandating spending that it hasn't provided a way to pay for.

And yes, when the government hits the ceiling? They blame the President.

[Byebye]

The ceiling does not in any way inhibit Congress from mandating spending that it hasn't provided a way to pay for.

Yes it does...they have to vote to raise the debt ceiling.

And yes, when the government hits the ceiling? They blame the President.

Not sure who "they" is...but I blame Congress as they control the allocation of the spending.

[Larry]

Yes it does...they have to vote to raise the debt ceiling.

After the President spends the money which Congress has already mandated that he spend, without providing a way to pay for it.

That's why we hit the debt ceiling. Because Congress:

a) Mandates spending.
b) Doesn't pay for it.
c) And forbids the President from borrowing, to make up the difference.

If Congress didn't do A and B, then C would never be an issue.

Not sure who "they" is...but I blame Congress as they control the allocation of the spending.

Well our politicians aren't as noble as you. They blame the deficits, and the debt, on the President.

(And a great many voters believe it. Many of them repeat it. Including here in Tailgate.)

[Byebye]

After the President spends the money which Congress has already mandated that he spend, without providing a way to pay for it.

That's why we hit the debt ceiling. Because Congress:

a) Mandates spending.
b) Doesn't pay for it.
c) And forbids the President from borrowing, to make up the difference.

If Congress didn't do A and B, then C would never be an issue.



Well our politicians aren't as noble as you. They blame the deficits, and the debt, on the President.

(And a great many voters believe it. Many of them repeat it. Including here in Tailgate.)

I guess that is true. I've seen people credit Clinton for the surplus, blame Bush for the deficits, etc... Hopefully people learn what branch of government controls what..

[Fergasun]

I'm trying to think if this sequestration is really a brilliant tactical move by politicians in both parties to force the Federal budget into the spotlight. They really didn't get any traction in 2010, 2011... finally 3 years later, we can talk about it. Right-side folks may not believe it, but the GOP is doing some real, no-joke, Charlie Sheen "winning" recently.
TalkingPointsMemo.com: Reid: Senate Dems will Introduce Sequester Replacement Plan This Week

Senate Democrats will introduce a plan this week to avert the deep, automatic spending cuts -- known as sequestration -- that are set to take effect next month, the Democratic leader told reporters Tuesday. "Later this week, we'll introduce a plan to temporarily replace sequester with a balanced approach the American people want and deserve," said Senate Majority Leader Harry Reid (D-NV). "The bills being drafted will include equal amounts of revenue and cuts, because Democrats believe the right way to reduce the deficit is to target waste and abuse by pairing smart spending cuts with closing tax loopholes, asking the wealthiest Americans to contribute more."

...

After Reid spoke, Senate Minority Leader Mitch McConnell (R-KY) said he expects the sequester to take effect. "It's pretty clear to me that the sequester is going to go into effect," McConnell told reporters. Referring to the resolution of the so-called fiscal cliff, he said, "Read my lips: I'm not interested in an 11th hour negotiation."

This would be the first time Democrats lay out their idea of the type of cuts needed in the Federal budget. I also take no heed to McConnell... the GOP finds itself in exactly the same place the Democrats were right before the end of the year. Doing nothing and letting the Bush tax cuts expire was a left-sider's wet dream on January 1. Yet, contrary to what someone would think, the Democrats came to the table and compromised on the tax issue. I really think that taxes still need to increase for those between $250k and $400k. I'm certain they will be able to come together and do something about the sequestration. It was intentionally designed to be punitive so as to bring everyone to the table.

Look at this next article:
The Hill: Defense, Domestic Groups Ally for Last Minute drive to halt Sequestration

The defense industry is joining forces with health, education and other domestic sectors to wage a last-minute push to stop the across-the-board sequestration cuts from taking effect. The new approach from the Aerospace Industries Association (AIA) and domestic spending advocates is an attempt to convince lawmakers who care about defense that they should align with lawmakers worried about cuts to domestic programs. AIA and three groups representing health and education and other domestic programs are holding a joint press conference Monday to present a united front on the danger of sequestration, which would reduce the 2013 discretionary budget by $85 billion.

Defense and domestic spending are aligning? Guess who they are rightly going to attack (and probably be effective advocates at attacking?). Social insurance programs... this is exactly the type of strategy that is going to pave the way for the "big grand bargain" on the Federal budget everyone seems to want. More so than the super committee or any other Congressional proposals. I don't even know if this is intentional or not; but it seems brilliant to me. You all know I'm a Fed employee, and my complaint over the hits we've taken related to the budget is not that I have to take the medicine, it's that the medicine is being doled out unfairly.

[Fergasun]

MSNBC: Senator Coburn: Sequestration Will Happen

“We’re gonna have a sequestration. we’re gonna have some pain because the politicians on the Hill aren’t going to make cogent, smart decisions about alternatives to this until they start feeling some pain,” Coburn said on Wednesday’s Morning Joe. “It’s a stupid way to govern, but that’s the way we’re doing it right now. I think the blame lies on everyone’s shoulders including the president’s. Then we’re going to start coming around and picking and choosing what’s important and eliminating what’s not of great value and what we can’t afford.” Coburn believes the pain is necessary to motivate both sides into making tough cuts and hard choices. “Sequestration will be some very bitter medicine that will draw some people to their senses,” he said. “People will start getting pressure from home and all of a sudden people’s positions are gonna change a bit and become a lot more cooperative.”

[China]

Treasury Department Reports $3 Billion Budget Surplus In January, Shrinking Deficit

WASHINGTON — The federal government reported a rare surplus for January and is on track to run the lowest annual deficit since President Barack Obama took office.

The Treasury Department said Tuesday that the government took in a surplus of $2.9 billion in January, helped by nearly $9 billion more in Social Security taxes. Last month Congress and the White House allowed a temporary cut in Social Security taxes to expire.

The monthly surplus was the first since September.

...

The Congressional Budget Office forecasts that the deficit will total $845 billion when the budget year ends on Sept. 30. If correct, that would be first time the government has run annual deficit below $1 trillion since 2008.

Click on the link for the full article

[Fergasun]

I think it's more fun to fight in the *Budget Fight* thread (maybe in September, I can call it *Fiscal Fight*. I'm quoting a bunch of folks from the "I'm an angry DoD civilian with a 20% pay cut hanging over my head." thread.

Now we all know Bob Woodward is a corporate media right wing tool..

Obama’s sequester deal-changer

[T]he final deal reached between Vice President Biden and Senate Minority Leader Mitch McConnell (R-Ky.) in 2011 included an agreement that there would be no tax increases in the sequester in exchange for what the president was insisting on: an agreement that the nation's debt ceiling would be increased for 18 months, so Obama would not have to go through another such negotiation in 2012, when he was running for reelection. So when the president asks that a substitute for the sequester include not just spending cuts but also new revenue, he is moving the goal posts. His call for a balanced approach is reasonable, and he makes a strong case that those in the top income brackets could and should pay more. But that was not the deal he made.

I don't see why Woodward is making this such a big deal. In 2011, GOP did not agree to tax increases as part of a debt ceiling deal. Maybe in 2013, after losing an election in which one of the main points for the winner was "we need a balanced approach" the GOP might agree to tax increases as part of a budget deal. I would call this "the 2012 election results sequester deal-changer." I believe also Mitt Romney is on record as against the sequestration.

One thing the sequestor angst by the Presdient has definatively proven is that the President is absolutely opposed to any all attempts to limit the expansion of government spending.

That's why he's managed to put in place a cap on discretionary spending. For certain, both parties did this, but they did the discretionary cap plus sequestration. No one is talking about raising the discretionary caps (I would bet that part of a deal would be some of the discretionary caps get lowered).

They will recieve the blame because Obama is seen as the guy who is willing to comprimise...

Let's not go overboard.

Do we have to go through the fiscal cliff deal again? Did Obama have to compromise on taxes at the $250k level? He could have slammed everyone making an income between $250k and $400k with a nice tax increase. Yet, Obama negotiated. He really didn't have to.

If you say Obama is trying to negotiate, it's a flat out lie, but if you have a link showing Obama is attempting to circumvent it and work with Repubs, post a link.

No, Obama isn't working with Boehner. You can talk out of the side of your mouth, but you can't post evidence of him working now that the deadline is here.

Politico: Obama Calls Boehner, McConnell

President Barack Obama called GOP congressional leaders on Thursday to discuss a number of issues, including the looming sequester cuts, the White House said. Press secretary Jay Carney said the president spoke with Senate Minority Leader Mitch McConnell and House Speaker John Boehner. Carney did not describe the conversations or elaborate on the subjects they spoke about. “There are a number of issues that need to be discussed. Certainly the sequester is one of them, but I don’t have any characterization of those phone calls. ” he said. Spokesmen for Boehner and McConnell declined to comment.

RollCall.com: Boehner Tells Reid That Senate Must Act First on Averting Sequester

Speaker John A. Boehner met with Senate Majority Leader Harry Reid in the Capitol on Thursday morning to tell him that the Senate needs to move first on a bill to avert more than $1 trillion in indiscriminate spending cuts set to begin next month. The meeting comes as Senate Democrats said they will unveil a temporary replacement for the nine-year sequester cuts composed of spending reductions and tax increases, which would buy Congress more time to work out a permanent solution.The automatic cuts of $85 billion are set to begin March 1. “For the last two years, the House has done its work. We’ve passed legislation that has tackled the tough challenges that America faces only to see our Senate colleagues do nothing,” Boehner told reporters. “Well, those days are over. The House will continue to meet our obligations, but the Senate Democrats must begin to do their work.”

Yes. Obama is just sitting on his hands. The parties have no interest in cancelling sequestration. It wouldn't even surprise me if we heard at some point this week there was a bi-partisan group of Senators coming together on sequestration cuts.

Which reminds me: sequestration acts differently in FY13 than any of the other years because *NO ONE BUDGETED FOR SEQUESTRATION* in FY13. The way I understand the discretionary caps, is that from FY14-2012, the discretionary caps are agreed to and will be in the budgets. In FY13, the budget was passed via continuing resolution; thus none of the agencies have spent or budgeted for sequestration. It's probably a "glitch" or "feature" depending on what party you talk to. If the GOP gives up the FY13 "sequestration" they will achieve $1.1T in discretionary savings by putting the budget caps in place. What they are arguing over now isn't $1.2T, it's $85B. The FY14 budget proposal from Obama hasn't come out; but it will be interesting to see if he adheres to the discretionary caps (I bet he does). Of course its really horrible optics for the GOP to cancel the FY13 sequestration to take effect. I didn't realize it until now... but they were using an $85B penalty to incentivize the parties to agree on, what is it; something like $1.2T more in deficit reduction?

They didn't fund FY13 at FY12 levels with sequestration into effect. Congress funded FY13 with FY12 levels without sequestration; and then kicked sequestration down the road in January. The more I think about it; the more I think this is freakin' silly and all about one of the parties trying to save face and score political points. Certainly things would have changed if there was a different President.... maybe President Romney would try to cancel the defense cuts but none of the other cuts. However, once again, the country voted in Obama and I think it's clear he doesn't want any of the sequestration cuts to take effect...

Am I right, or wrong here? Does the Tea Party understand it's a huge victory to get discretionary caps, that there is a miniscule difference between $1.1T and $1.2T, and that it's not the discretionary part of the budget that is causing a "spending problem"?

[Fergasun]

Back to talking to myself.

In the past days I've read some media articles; and I definitely think that the GOP/right-wing talking point needs to be debunked. Something about "cutting $85B out of a $3.7T Federal budget is no problem, that's 2.2 %!" So, I'm going to use this thread, and the Department of Defense budget to debunk that. I'm surprised that no one in "talking point land" has come up with a counter to this. In regards to the Defense budget I've seen many articles saying, "It's $45B out of a $520B budget". Again, this is a false argument.

1) The Federal budget is ~ $3.7T.
2) Spread out over the entire budget, these cuts would be 2.2% over the year.
3) The problem: 2/3rds of the Federal budget are exempt from these cuts.
4) We are currently ~ 1/2 through the FY13 budget year, so in reality, the remaining budget is $1.85B
5) No Department has budgeted for these cuts, spreading over the whole government it would be a 4.4% cut.
6) But again, remember 2/3rd of the Federal budget are exempt from these cuts.

Let's look at the Department of Defense.
1) Overseas contingency operations (such as Afghanistan, and whatever remaining military/civilian personnel in Iraq) are exempt.
2) The base Department of Defense budget is $520B.
3) The sequester amount for the Department of defense is $45.5B.
4) The Department of Defense remaining budget is $260B.
5) The Department of Defense cuts are essentially a 17.5% cut to the defense budget.

Is the GOP really so anti-defense now that they can cut 17.5% of the defense budget? Does the Tea Party not fear that many defense contractors will influence the 2014 election to protect themselves? Given what we know about money and politics, I would bet YES and pro-defense Democrats may be an area of growth for the 2014 House elections.

This logic also applies to the other accounts that are being sequestered. While the overall yearly amount was something like 8.2%, Congress gave a full authorization, and when they agreed to delay sequestration, they agreed to make the cuts more severe (16 % of the remaining budget).

Now, I'm going to go on the record with what I think the type of deal we will see take place. The Republicans essentially have a number of leverage/pressure points with each yearly budget. My opinion is that the Democratic goal should be to settle the FY13 budgets by the March 27 continuing resolution deadline. Their goal should also be to get in place some framework for FY14 budgets by the August debt-ceiling raise. I don't know what type of leverage the GOP will have on entitlement reform, given how averse the general public is to Social Security/Medicare/Medicaid reforms. While the public is alarmed by the high debt levels; they in general don't want to make the necessary cuts to do so. It's quite an interesting paradox.

This is what I think will happen.
Right now the Democratic proposal to avert sequestration through January 1, 2014 ($110B) is the following:
$55B in Taxes
1a) Buffett Rule Tax (ensures rich cannot pay at lower tax rates than the middle class) on those making incomes of over $1M (this is most of the $55B)
1b) Remove oil industry subsidies
1c) Remove tax breaks for companies that move jobs overseas.

$27.5B in ending direct payments to farms
2) Saves $27B on removal of direct farm subsidies (over 10 years)

$27.5B less in defense spending through FY21
3) Adjust the defense spending caps from FY15-FY21 to remove $27B

The "GOP Mainline" plan appears to be to allow sequestration to happen but provide more flexibility to the Executive Branch on where the cuts are coming from. I do think there are enough GOP Senators (think McCain, Collins, Graham) that would be willing to come up with some type of deal to avert the damage to defense.

I think this is likely to happen:
3) I can see the GOP for moving around the cuts from FY13. In my opinion this is a no brainer (I don't understand why the Dems aren't trying to move domestic spending cuts)
2) Likely to happen.
1) Unlikely to happen.

So they may be able to avert $55B of the $85B in cuts. The Tea Party could claim that because of them, they were able to get $30B in cuts. Unfortunately Romney lost the election. I think the GOP strategy is to simply get the country sick of crisis to crisis budgeting (and maybe Obama feels this way too).