The Pardu

The Pardu
Watchful eyes and ears feed the brain, thus nourishing the brain cells.
Showing posts with label Debt Ceiling. Show all posts
Showing posts with label Debt Ceiling. Show all posts

Saturday, February 9, 2013

The Sequester: Federal Government Post George W. Bush




It seems objections to "paying our national debts" via raising the debt ceiling became unacceptable once President Obama took office.  Now, that beckons questions as to why?


Recognizing the Federal Deficit at $16 trillion in 2013 Vs. the following reference to 2011 $14 trillion, we find the follwoing graphic relevant and expedient in locating. 

It is noteworthy to point out Obama's deficit increases are distributed between fighting off an economic depression, healthcare reform and a 'surge' in Afghanistan (foolish decision).


Which US President is "king' of Debt Ceiling increases through 2011? Remember, the 'sequester' was hatched in the fall of 2011. 



As we come closer to yet another artificial deadline in the nation's battles over the deficit, we thought it might be good to find as basic an explanation of the "mess" as we can locate.

Govloop dot com provides such an opportunity.  Emily Jarvis keyed a piece easily readable in three minutes. The piece is also accompanied by an audio embed.

Be honest. You have heard us all talking/worrying/complaining about the potential for sequestration since August of 2011, but do you actually know how it would work? I, for one, only had a loose understanding of the process. 

Todd Harrison is a senior fellow at the Center for Strategic and Budgetary Assessments. He gave Chris Dorobek on the DorobekINSIDER a detailed breakdown of sequestration and its impact government wide.

 
Harrison's Take

First Off: A History Lesson 
Back in July/August of 2011 when we were approaching the debt ceiling, Congress came together for some last minute negotiations to raise the debt ceiling. That agreement was called the Budget Control Act of 2011. The Act formed the Super Committee tasked with finding $1.2 trillion in deficit reductions. But, the Act also created a binding way to force the cuts in the case the Super Committee failed -- that binding resolution was sequestration.

Sequestration was created from an old 1985 law that Congress amended to make sequestration legal. 
Not surprisingly the Super Committee failed. So that leaves us with the January 2nd deadline for all agencies to cut their accounts across the government not just at the Defense Department. 

How Sequestration Actually Works 
Agencies must calculate the amount of cuts required overall. That's roughly $109 billon that they have to find in savings by fiscal 2013. Half of that (roughly $55 billon) will be taken from DoD.
The cuts have to be applied as a uniform percentage cut across all accounts down at the project level. That amounts to a roughly 10% cut on all projects.
There is one exception, the President has the option to exempt military personnel accounts. President Obama has indicated that he will do that. 

White House Sequestration Plan 
Congress started to get nervous with what the cuts would actually look like, so they passed a new law to force the White House outline in a transparent way what sequestration will look like. 
In a 300 page document the White House went line by line through the budget to show what would by cut and by how much. 

Across the Board Cuts 
Across the board cuts are a cop out. But the real problem, is cuts can have some unintended consequences. Imagine your family budget. You budget so much money every month for rent, food, car and insurance. Imagine if you had to cut each of those areas by 10%. Some things like your grocery bill you can cut fairly easily. But your rent for example you just can't cut by 10%. That would mean moving and breaking your lease.
This is the same problem for the DoD.
Take the 200 tomahawk cruise missiles the DoD buys each year from the contractor Raytheon. The contractor is set up to build at that production rate. So if the DoD comes to Raytheon and says I've got to cut 10%, I can only buy 180 units. The government is going to have to break the current contract and negotiate a new deal. Raytheon is going to need to adjust it's production so maybe they have to lay off some people or change the price per unit. So really with that 10% cut you are paying more for each missile. So in the end you don't end up with 180 missiles you end up with fewer for the the 10% cut. 
Some Program Just Can't Be Cut 
For example the Defense Health Program is the military help system. It is not covered under the military personnel exemption so by law it will have to cut its services by 10%. That means about $3 billon will have to come out of the budget. But they system provides health benefits to 10 million active and retired military personnel. It's not possible for them to make the cuts. So they will have to go to Congress and submit a re-programming request and hope for Congressional approval. 

Will Sequestration Happen? 
It may depend on the election outcome.
If Congress/White House maintain the status quo: Its reasonable that there would be an incentive for lawmakers to work out a compromise in the lame duck session.
If there is a significant change in control in either branch: there may be incentive for the party that is going to gain power to delay things and not work out a compromise until they take power. But sequestration goes into effect on the 2nd of January, the President gets sworn in on the 4, and Congress not until the 20th, so in that case sequestration could go into effect.
A last minute compromise is also possible where they delay starting sequestration until April. Pass the ball down the field a little bit to take the pressure off.
Either way, we won't know until the last minute. 
How Should You Prepare? 
Plan for uncertainty. But that's hard because a 10% cut is a big uncertainty.

Agencies should be looking at funding sources and how they would be affected, they should start to develop contingency plans. This is especially important for civilian employees because they will be the first to be affected. So if sequestration happens, furloughs will also happen to reduce funding in all accounts. Contractors have a little more time to deal with sequestration. The impact will be delayed because they depend on the outlays for funding. Sequestration acts on budget authority (how much money an agency actually has). Contractors probably won't feel a huge delay for 3 years. But uncertainty makes it almost impossible for contractors to hire new employees or build new factories. 
Cuts No Matter What  
No matter if sequestration happens are not the government needs to understand that cuts are coming. It's two fold. First we are facing a record federal deficit. Second, we have very low revenues.
The President has proposed reducing the war budget and reducing the DoD's base budget slightly, and then keeping it stagnant for a few years. 

But if you really want to see major deficit reduction you need to look at Medicare and Social Security. Currently the DoD accounts for 15% of the budget, Medicare 14% and Social Security 22%. But the Social Security and Medicare percentages will continue to grow with the babyboomers expected to retire over the next 10 years. We are facing a big deficit no matter what unless we reform those two elements 
We understand US Politics, and we understand the nature of US politics since the late 1970s and early 1980s.  For the informed, we know GOP mantra about fiscal conservatism is nothing more than the party's egregious use of a southern strategy as a campaign tool in national elections.  As tragic as anything political in 2012/13, 47% of voters fell for GOP mantra, political acuity (even with horrid candidates), and mind altering propaganda from highly compensation media demagogues.  We do not understand how people who consider themselves conservatives have little to no influence over forcing their obstructionist representatives to "See the light". The "light" of potential progress in ridding ourselves of the vestiges of the Bush financial record.  How can so many Americans avoid empirical data, and avoid post election observation (post 2010) as factors that influence their votes.

I find so many conservatives expended inordinate energy and cognitive processes following right-wing social biases, bigotry and divisiveness. 

They watch their politicians write and propose legislation after legislation related to abortion while not taking a moment to rial about jobs.  They fully support GOP efforts to cut Human Services programs without one iota of contemplation of future personal need.  And they do so without pressing for reduction defense spending and raising taxes on the nation's wealthy.




The Federal Deficit is fed by expenditures that costume 57% of the nation's discretionary spending.

The GOP lives and breathes defense spending. Yet, for some reason post 2009 after supporting Bush for eight years, they obstruct at paying debts they helped to accumulate.
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Additional Sequester basics source: 2012: http://www.nationalskillscoalition.org/about/summit/2012-summit/2012-materials/nsc_sequestration101_2012-02.pdf
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Monday, January 14, 2013

Mario Piperni Dot Com: Obama Says "Not Playing".


Cross Posted from Marion Piperni Dot Com.....


Obama Tells Republicans: “I’m not paying the ransom.”

JANUARY 14, 2013 BY MARIO PIPERNI



The money quote from President Obama’s press conference.

To even entertain the idea of this happening, of the United States of America not paying its bills, is irresponsible. It’s absurd. As the speaker said two years ago, it would be — and I’m quoting Speaker Boehner now — “a financial disaster not only for us but for the worldwide economy.” So we got to pay our bills. And Republicans in Congress have two choices here: They can act responsibly and pay America’s bills or they can act irresponsibly and put America through another economic crisis.

But they will not collect a ransom in exchange for not crashing the American economy. The financial well-being of the American people is not leverage to be used. The full faith and credit of the United States of America is not a bargaining chip.

And they’d better choose quickly because time is running short. The last time Republicans in Congress even flirted with this idea, our triple-A credit rating was downgraded for the first time in our history, our businesses created the fewest jobs of any month in nearly the past three years, and ironically, the whole fiasco actually added to the deficit.

I’m guessing that Republicans are foolish enough to play their game of chicken all the way to the last second hoping that Obama gets weak-kneed and grants them their grab bag of cuts to screw over the middle class. So far the president has given every indication that he’s hanging tough and will not pay the ransom. Nice.

If you missed Obama’s last press conference of his first term, you can catch it here.
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Check out the MarioPiperniDotCom store for purchase of merchandise adorned with a number of my illustrations.

The Barack Obama source image in the above illustration is a U.S. government work from the White House Flickr Photostream and in the public domain.

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Sunday, December 30, 2012

The Daily GOP Ignominious "Debt Ceiling Anyone?"


No need to be dialectic. Images and so easy to discern.


....And The Band Plays On.....
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Friday, July 29, 2011

The Debt Crisis and' Morning Joe' Producers (What were you thinking)



Debt Crisis!!!!


Yes, the nation's debt is over the top. The fact is not a new phenomena (problem).  What is interesting is how the RIGHT is using the nations' debt to completely stifle all federal government efforts to provide fixes in our economy where fixes are more critical.

If the Congress (Democrats in congress) has not proposed a dozen jobs bills, the word jobs would be completely absent from D.C. 'talk'. Of course, each jobs bill has been voted down by the GOP members of the House and Senate.

All conversation these days is on the debt ceiling. It is an issue that must be resolved but should the issue be such that all industrialized nations live in fear collapse.

The following videos are too long for a one time sit. I believe that one vid is 11:00 minutes long and length of the other vid escapes me.

Each vid was broadcast this morning on The Morning Joe Show, MSNBC... whenever I see Peggy Noonan on the Joe Show I anticipate the following:   Condescending demeanor, Conservatism with a twist of intellect (but still dangerous), loftiness, and a slight bit of moderation.  If you watch the eleven minutes you will come away with a balanced dialogue about this 'fabricated' issue.  The segment is fairly balanced but the inner workings and dynamics of the moments bother me in a total sense .Oh, by the way, what is with the 'hands on her hips' non-natural moment from Noonan:  loftiness and a tad showboaty.

The major reason for my psoitng the firs vid is the dialogue from the two Show guests.   Jeff Milon Harvard University Economics/ Sr. Fellow CATO Institute and Josh Ttyrangiel, Bloomberg BusinessWeek, posit on the nations debt/budget crisis.  There are a fewer interesting dynamics beyond the message for the segment.  After a long and somewhat rambling but relevant introduction from Tyrangeil, Jeff Miron speaks and lays clear (via implication) blame for the current issue on entitlement programs.  Yes, our leaders are guilty of typical American planning (equals none) in not working to fix entitlement programs long before now.  Tyrangiel gets an opportunity to accurately portray the crisis from another perspective: Revenue , entitlements, etc.  The Harvard guy never once mentioned revenue during his first opportunity to speak.  After Tyrangiel laid out a balanced case for pending doom, Milon 'for the rest of the segment, "I agree with Josh...As Josh stated'.

Meanwhile Noonan goes through her, "I am stuck on me' contribution to the segment. I find it really crafty how a conservative like Noonan can almost give off an air of a moderate independent. My compliments on her ability to perform as an effectively cloaked conservative: She may even fool quite a few people.  Watch and listen to her speaking parts if you can skip around a bit.

Back to my point for this article.

While I am not very aware of the CATO Institute, I do not recall ever hearing about the organization as progressives speak. Well, it took me one minute to find out why.  Peruse these exerts from  the CATO Institute web page.

About Cato 
"The Cato Institute is the foremost upholder of the idea of liberty in the nation that is the foremost upholder of the idea of liberty." - George F. Will
The Cato Institute is a public policy research organization — a think tank — dedicated to the principles of individual liberty, limited government, free markets and peace.

I suppose I received my answer about the CATO Institute and I received another little enlightening moment.  Milon is a typical Harvard Business (economist) who is well attached to a conservative 'think-tank'. If not countered by Trangiel of BusinessWeek and specifically questioned about Trangiel's remarks by Mike Barnacle, I have to wonder if Mr. Milon would orchestrate a nice anti-progressive dialogue between he and Noonan.   Informed and less than gullible people are good at watching for nuance. If one buys the Noonan and Milon argument for its surface message, one would walk away thinking the sole problem with our debt ceiling (debacle)/budget issue is social programs.  If Milon was going to start with Social Security, he might have thought to mention that the "CAP" is practice that should be considered for elimination.

In a fairness the segment is a good one, if one approaches it with a strong degree of askance. "UUUUM, why did that person...go there"?  Evidence to support my 'askance' point.  Watch Noonan, ever mindful of the time remaining in the segment, turn to the CATO conservative and ask about '......what type of President?" Well, Ms. Noonan rest assured that the type of president is not embedded in a John McCain and it was not embedded in a George (the Younger) Bush!












The second video below is a segment of the lofty Noonan. If you decide to watch the second video, watch Noonan's, sickeningly condescending non-verbal demeanor.  After exposing yourself to the non-verbals, think about other guest to such shows, ever recall such behavior.  also notice the damned near fall out of her chair as she mentions the debt ceiling crisis.  The crisis is a crisis because Republican and fiscally conservative independents, including libertarians, have made it a crisis.  It is about paying our debts...not a carte-blanche for more spending!  It is not a 'big-government guidepost per se.  Even if it was such, where was Noonan, Milon and the rest of the choir of others who are now taking increasing the debt ceiling to the level of all-out revolution?

After her hyperbolic exhibition of snottiness, NoonanThe Wall Street Journal. I do not read the Journal; gave it up when Murdoch...wait a minute who?  When Ruppert Murdoch purchased the publication and `folded it' neatly into his bag of conservative propaganda outlets-.  I hope Noonan's article was not placed on the WSJ Editorial Page.   




Did Noonan call the President a loser?

Now, ask yourself.  You work for a conservative newspaper which is owned by a far Right-wing (extremely elderly) multi-billionaire, and your earnings from the WSJ may approach seven figures.  Do you think you would find any redeeming qualities in any Democratic President? Now factor-in other dynamics associated with President Obama.

Noonan works for the WSJ!  

Ahhh, the WSJ.

Even John McCain recently spoke sarcastically about the WSJ Editorial page as he approached his knee-dragging butt whipping by, of all people, Sean Hannity.

Sean Hannity could not conduct an interview that would extract 'serial hamburger eater' confession from this guy......
"Will gladly pay you on Tuesday for a Hamburger today"! Wimpy (Popeye and Friends) 

Within seconds of sitting on Hannity's Show, McCain was groveling, demurring and anxiously agreeing with every word from the FOX News PR guy.

The real crisis associated with raising the debt ceiling; The fact that it has developed into such a dangerous issue. It should have been signed months ago and could be signed overnight.  There is time to deal with the deficit and budgets after raising the ceiling.

Alas, raising the ceiling does provide opportunity for the RIGHT to tie-up the President and DEMs  such that they cannot focus on jobs, Infrastructure and other economy improving issues.  But, then I have joined that club of folks who feel that RIGHT does not want an improved economy and they do not appear to want an improved unemployment rate.

President Obama shares some level of blame, I agree.  He has compromised with these people far too often. He also allows the RIGHT to dictate issues for which he becomes immersed.


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Sunday, July 17, 2011

Emotionalism and Lies


A few days have passed and the soliloquy continues from the RIGHT regarding President Obama's alleged lies about catastrophe if a debt ceiling/deficit deal is not reached. 

Sarah Palin  Twits about 'lies'. What a sad state of affairs that one who collects millions from her minions, resorts to such a mediocre media for delivering messages.  When she is not Twitting she sits with Mr. 'facilitation' interviewer Hannity for rambling diatribes that only she and her minions can understand. I suppose that Hannity understands but I suspect he uses his air-time with Palin counting his millions in the background of his brain.
 
I often wonder why people like Hannity do not ask Palin on what basis does she base her drivel. What economist does she consult?  Who on the HILL does she call for inside perspective?  Ultimately it would be nice if someone just asked if she makes up stuff.

Michelle Bachmann, the Rambling Wreck.  "Obama is trying to frighten you".  On what basis can she layout how the nation can pay debts 'off the interest', and 'they can use the taxes that we pay, pay-check to paycheck."

Joe Walsh, The Mouthpiece with a twist of racist, calls the President a liar but offers no real solutions or quotes any credible authority regarding his reason for labeling Obama a "Liar". But, of course, if one can declare the Obama's win in 2008 the fault of 'white guilt', I suppose one can redord any sort of cheap video and You Tube the work.

While the RIGHT is full of talking heads who claim failing to raise the debt ceiling is mere fantasy vs catastrophe, I have listed the most ridiculous and, sorry to go here, the least mental of the bunch.  Those who know better have shut-off the rhetoric and appear to be working on a solution.  Of course, I have little regard for their contribution to the solution as I am certain it will  benefit the nation's wealthy.  They are, however, working vs. continuing to spew ignorance in the form of financial collapse denial.  They offer such denials as consistently as they offer denials of Evolution.  Also, note that each of the mouthy-three are "Tea Party" People!!!!!

OK, so much for the inane and the babbling of the mouthy fools.  I have listed below exerts form an article posted on the HufftingPost website. You will notice that I have also posted the link for a more detailed review of the information.


LINKED





U.S. Default Would Likely Cause Stocks, Bonds, Dollar To Collapse 

 A few exerts to contemplate while RIGHT-WING ignorance and obstructionist exudes.

Exerts start now.
NEW YORK -- Time is running out for Washington to raise the country's borrowing limit and avoid a default. Wall Street isn't panicking yet. But if the unthinkable happens, a default could strike financial markets like an earthquake......
What might markets look like after a default?
There's wide agreement among economists that a default would drive up borrowing costs for everybody. U.S. Treasury yields act like a floor for other lending rates, so raising them makes it more expensive for Americans to take out mortgages, for corporations to finance new spending and for local governments to borrow......
"If I were to draw a flow chart, it becomes so complex it's impossible to analyze the impact of a default," said Guy LaBas, chief fixed income strategist at Janney Montgomery Scott.....

When pressed, investors say the immediate aftermath could look like the financial crisis in September 2008. Stocks would lead the way down. In the month following Lehman Brothers' bankruptcy, for instance, the Standard & Poor's 500 index lost 28 percent......
A deeper fear is that a default could freeze the short-term lending markets that keep money moving throughout the global financial system. Treasury's and other government-backed debt are widely as used collateral for loans in these markets......
But the fallout from a U.S. default could be much worse.

"I don't even want to think of the ripple effects," Briggs said.
Indeed, most analysts agree that if the world's largest economy reneges on its debts, the consequences would be catastrophic....... 

 COMMENT: So who are you going to believe?

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Saturday, July 16, 2011

Ali Velshi (CNN): The Sane one?

I am often critical of CNN due to my perception  that the network does not perform probing interviews.  While Anderson Cooper occasionally performs such interviews from time-to-time, he will not venture with serious questioning on topics for which he seems slightly unschooled.


Time has come for me to pay deep respect and show appreciation for the work of Ali Velshi.  I believe that Velshi comes from a background that includes understanding and reporting on Markets and financial matters. He has stepped to the plate on a network that sorely needs probing-revealing-grit filled interviews during a period of extreme flux in Washington D.C.  I will admit that Velshi of late has taken the RIGHT to task for what appears to be planned 'stone-walling', I suspect he would also aggressively tackle messengers from the LEFT if they practiced same (in his presence).

This article illustrates my point. I have also posted information about the debt ceiling crisis that seems to place all issues into perspective.  Whoever, wrote the posted material seems to have labored to do so without obvious bias.

RUN of the SHOW (to follow)

Videos
A. Velshi interviewing Santorum

B. Velshi interview Norquist

C. Velshi explain the debt ceiling crisis while delineating both LEFT and RIGHT perspectives


Debt Ceiling Cheat Sheet: The Facts



 Grover Norquist and his Taxes Pledge...(Shallowness Personified)



Real interview vs. Fox News 'prompt to talk' interview format



The Facts (according to CNN)

Washington (CNN) -- Here it is -- a cheat sheet to the talks over the national debt. These are the plans on the table, simplified and put in terms a human being can understand:


Key figures
• $14.29 trillion -- current debt limit. That's also nearly the value of the European Union's gross domestic product -- or everything produced in the EU -- last year.

• August 2 -- the date when the federal government is forecast to hit the debt limit and see all new loans cut off. Falls during "Simplify Your Life Week." Really.

• $2.4 trillion -- the increase to the debt limit officials think is needed to get the government through November 2012.

• $4 trillion -- the amount of deficit reduction in a longer, broader, "grand compromise" idea.


Plans in the discussion
From smallest to largest:
1. The "fallback": The McConnell and McConnell/Reid plans
Harry Reid, left, and Mitch McConnell
Harry Reid, left, and Mitch McConnell
These plans are built in case Congress and the White House cannot reach a specific deal on raising the debt ceiling. In theory, they include relatively simple legislation and could lead to an increase in the debt ceiling in a matter of days.


Specifically, Senate Minority Leader Mitch McConnell, R-Kentucky, proposes a shift in how government raises debt ceilings, resting the decision and power more with the White House. McConnell's plan would allow the debt ceiling to go up if a) the president requests a specific increase, b) the president submits proposed budget cuts in an amount greater than the debt ceiling increase and c) if two-thirds of Congress does not vote against it (if one-third supports the debt ceiling increase).


The mechanisms for that plan are complex, but just believe us that those are the bottom lines.
Senate Majority Leader Harry Reid, D-Nevada, is working with McConnell to add more components to this plan.


The two leaders are considering an attachment of $1 trillion to $1.5 trillion in spending cuts. And they are talking about a commission or group that would propose spending cuts and possibly wider reform. This plan is fluid, but right now the idea is to create something similar to the Defense Base Closure and Realignment Commission, guaranteeing the commission's recommendation a straight up-or-down vote in each chamber of Congress. That group could speed up the process to cut spending.


Supporters: This "fallback" could save the U.S. from hitting an unprecedented financial wall. It also takes the politics out of debt ceiling debates.


Opponents: The McConnell plan requires no spending cuts or change in fiscal policy. It demands only proposals, which Congress may or may not pass. Even if the McConnell/Reid spending cuts are included, this idea makes few or no difficult fiscal decisions.


Odds: Increasing rapidly.
2. The 'kick the can' short-term deal


tzleft.can.ts.jpg 
This proposal could take many forms but would raise the debt ceiling for a matter of weeks or a few months, with offsetting spending cuts and/or revenue changes.


It may be as much as $1.5 trillion or as little as a few hundred billion.


President Barack Obama has repeatedly said he will not sign such a deal. But in White House talks Wednesday, House Majority Whip Eric Cantor, R-Virginia, suggested looking at a short-term bill, famously leading to a pronounced pushback and a musical flourish, Jed Bartlet-style moment. "This could bring my presidency down," Obama said, according to Republicans, "but I will not yield." Both sides agree he ended the meeting at that point.


Supporters: The two sides cannot agree, and this deal is the best they can do.


Opponents: It's putting off the tough decisions and barely scratches the surface of the problem.


Odds: Very unlikely. Cantor told reporters that Obama said he would not relent, even if it risked his presidency.


3. The 'just get to 2012' middle-term deal
tzleft.groupdebtsheet.jpg 
This kind of compromise would raise the debt ceiling about $2.4 trillion, giving the government enough funding power to get through next year's elections.


The president insists this time frame is a minimum for any debt ceiling compromise. But thus far, Republicans and Democrats have not been able to agree on any way to offset the $2.4 trillion.


Republicans demand this plan be offset with spending cuts and that it include no revenue increases. Democrats say it's not fair, nor mathematically realistic, to get all the money for deficit reduction from program cuts.


It is not clear if such a deal would include a significant entitlement overhaul but probably not.


Supporters: This is a down payment on the debt problem. It is a first, small bite toward reducing deficits. And it is politically easier (on all sides) than a longer term fix.

Opponents: Whimps! Incompetent procrastinators! This is a long-term crisis, and lawmakers must start coming up with long-term solutions.


Odds: At the moment, more likely than the next one.


4. The 'grand compromise' long-term deal
tzleft.obamadebtsheet.jpg 
This deal would be the most sweeping and would take a significant bite out of the deficit colossus. A plan in this realm would reduce the deficit over the next 10 or 12 years by roughly $4 trillion (though, it does not solve the entire problem).


This compromise would likely include major reform of Medicare, possibly Social Security reform and a potentially sweeping overhaul of the U.S. tax system.


It could mean: changing retirement ages as well as how much seniors pay on Medicare and simplifying taxes so there are fewer deductions but also fewer, lower tax rates.


Obama continues to urge lawmakers on both sides to forge such a deal.


But the politics are the stuff of the "Divine Comedy." The second book.


All sides are warm to broad tax reform. But Democrats sharply oppose anything resembling benefit cuts to Medicare or Social Security. Republicans likewise are fierce in rejection of any net increase in revenue, which seems to be part of the Democratic offer on tax reform.


Supporters: This is why we sent members to Congress, to make difficult political decisions that may be tough for them but that are good for the country in the long run. Our debt crisis won't be solved with lollipops and starlight. It will hurt, but lawmakers need to pull the trigger.

Opponents: No such deal could get the votes to pass. Republicans will block any perceived tax increases and Democrats will stand against benefit cuts to Medicare. It's simply impossible.

Odds: It's not dead. Those rooting for it, see a path toward a late breakthrough. Others say "no way."

Comment: I personally do not possess the level of knowledge to speak completely intelligently about the intricacies of the issue. My perspective is one of a consumer and one who stands to lose significantly if the RIGHT is wrong, the stock plummets, interest rates shoot up, the Nation's Treasury Bonds become junk.  

Bush Era decisions led to enormous loses in the total value of my investment portfolio.  The same Administration laid the nation at the feet of anther Great Depression. Therefore, I am not at all inclined to buy-into what appears to be pure obstructionism from the RIGHT. GOP party leaders have declared their major strategy over the near term was to ensure that President Obama is a one term President. Does such language proved any basis for belief that the GOP will work with the DEMs and the President?

One very intriguing aspect of use of that language is, why?  Why was it necessary for just about all top GOP leaders declare they are workign to unseat the President. The sort answer, in my opinion, to deliver messages to their supporters: Big Business, Far Right conservatives, the Tea Party, and to those in the nation who fell to psychology levels near death when Obama won the elections and Democrats took over majority in both Chamber s of Congress.  I will leave my opinions on GOP obstructionism at that point during this treatise. 

I do not feel that it takes much thought to see what has occurred across the nation once the GOP won back the HOUSE and won many governorships and state legislatures.  

Not a pretty picture!


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Fiscal FactCheck - Long but Historically Relevant

 Of course, you know that I am a devoted fan of FactCheck.org and specifically a fan of their author/investigator and contributor Brooks Jackson.

 

The following information was delivered to my email box and probably delivered to yours as well.  Yet,  there are many who do not subscribe to FactCheck updates, so I am posting the article.  Again, I tried to cut parts of the material and supplant it with links to the original article. You have the original article linked below but I refuse to dissect this work; it is far too relevant and I posit will become part of a national archive of the Obama Administration.

 

I have retained the original font from the article to simply save space on this web page.

 

  Fiscal FactCheck

Does Washington have a spending problem or an income problem? We offer some key facts.
July 15, 2011

Summary

Washington's spending has recently been higher as a percentage of the nation's economic output than at any time since World War II. But by the same measure, Washington's revenues are the lowest in more than 60 years.

So does the U.S. have "a spending problem," as Republicans keep repeating in the current debate over how to reduce the nation's record deficits? Or is the problem that taxes are not high enough? Those questions frame a long-running partisan debate, and as usual we won't offer an opinion one way or the other. But for those seeking their own answers, we can offer some fiscal history and factual context.
Some key facts we think are worth considering:

  • Federal spending ("outlays" in budget jargon) is expected to equal 24.1 percent of the nation's gross domestic product in the current fiscal year, which ends Sept. 30. The figure was 25 percent in fiscal year 2009, highest since 1945.

  • On the other hand, federal revenues are expected to drop to 14.8 percent of GDP this year, lower even than the 14.9 percent attained in both 2009 and 2010. There has been only one year since World War II when revenues have been as low as in any of these years: 1950, when the figure was 14.4 percent.

  • These historically high rates of spending and low rates of taxation have combined to produce a chain of deficits that are also the highest since WWII. The deficit was 10.0 percent of GDP in fiscal 2009. It declined to 8.9 percent last year as the economy started to recover, but is projected to go up to over 9 percent this year. Each of these deficits is larger than in any year since 1945, measured as a percentage of GDP.

  • The U.S. is borrowing about 36 cents of every dollar spent so far this year. It borrowed 37 cents on the dollar last year, and 40 cents in fiscal 2009.

  • The largest components of federal spending are Social Security and Medicare programs for the elderly (33.5 percent of total outlays in 2010) and national defense (20.1 percent). Interest payments on the federal debt alone accounted for 5.7 percent of all federal spending, and that percentage is rising.

  • The federal income tax accounted for 41.5 percent of federal receipts in 2010 (down from 49.6 percent prior to the Bush tax cuts of 2001 – 2003). Corporate taxes brought in only 8.9 percent, also down sharply since the recent recession. Payroll taxes and other "social insurance" payments accounted for 40 percent of total receipts in 2010.
     
It's easy to argue one side or the other by just citing facts that support a particular view, and omitting others. In the Analysis that follows, we offer some graphics, details and documentation in an attempt to give our readers a quick look at the entire picture — both where the money goes, and where it comes from.

Analysis

 

A glance at this chart quickly puts our current fiscal mess in historical context. We created it using historical budget data from the federal Office of Management and Budget, updated with the most recent estimates of the current fiscal year's outlays and receipts from the nonpartisan Congressional Budget Office, issued June 22 as part of CBO's 2011 long-term budget outlook.

Not since the enormous effort required to defeat Nazi Germany and Japan in WWII has the gap between Washington's spending and its revenues been so large, as a portion of the economy. Then, taxes were increased sharply to pay for the war, but spending increased even faster. In recent years, Washington has increased spending while cutting taxes.

The current situation is a marked change from the booming 1990s. In those years revenues increased, due to a 1993 tax increase, which fell most heavily on those making more than $200,000 a year. Meanwhile spending decreased relative to the rapidly growing economy, partly because of an absolute decline in military spending following the collapse of the Soviet Union in 1991. Deficits were erased, and the government posted surpluses in fiscal 1998, 1999, 2000 and 2001.

But then a string of deficits began in the fiscal year 2002, and there is no end in sight. For the current year, the administration originally projected in February a deficit equal to 10.9 percent, a new postwar record. The Congressional Budget Office in April, using different economic assumptions, projected that enacting the president's budget would produce a deficit of 9.5 percent of GDP, and that making no changes to current law would result in a deficit of 9.3 percent of GDP.



  • Income-tax receipts are down sharply since the Bush tax cuts. In fiscal 2000, the year before the cuts began to take effect, receipts from the federal income tax on individuals amounted to 10.2 percent of GDP. That figure was down to 6.2 percent of GDP last year.

  • Spending for the military and for homeland security has risen substantially since the attacks of Sept. 11, 2001. Spending for national defense rose from 3.0 percent of GDP that year to 4.8 percent last year.

  • Non-military spending also has continued to rise. President George W. Bush pushed through an expensive prescription drug benefit for seniors in 2003, the largest expansion of Medicare in its history. In the financial crisis of 2008, Bush also pushed for and signed for a massive banking bailout. In early 2009, President Barack Obama pushed for and signed an expensive stimulus measure, and after a long fight in Congress he signed another expensive plan, the health care law, in March of last year, aimed at expanding coverage for millions who lack health insurance.

  • Two economic recessions have had their effect. The recession of 2001 began in March and lasted until November. And the worst downturn since the Great Depression began in December 2007 and continued until June 2009. In both cases unemployment remained high for long after business activity began to recover, holding back both wages and the taxes that jobless workers would have paid on them.
We won't attempt to assign blame to one party or the other for the deficits. There is plenty of blame to go around, some of which rests with an American public that won't accept cuts in the largest categories of public spending, and also resists tax increases on anybody but "the rich."


Where Does It Go?
The biggest share of federal spending now goes for Social Security (20.4 percent in 2010) and Medicare (13.1 percent), the two entitlement programs that big majorities of Americans want to protect from any reductions, according to a recent poll. Together these two programs for senior citizens consume more than one-third of spending, far more than national defense, which accounts for just 20.1 percent, despite the increases of recent years.

Some categories that are unpopular with much of the public turn out to represent a fairly small part of total spending. Foreign aid, for example, amounts to less than 1 percent of the entire budget — even counting in military assistance to Israel, Egypt, Iraq and Afghanistan. All agriculture programs — including farm subsidies — make up just over one-half of 1 percent.

Where Did It Go?
Major components of the $3.5 trillion spent in fiscal 2010
Social Security 20.4%
National Defense 20.1%
Medicare 13.1%
Medicaid/CHIP 8.1%
Interest 5.7%
Low-Income Assistance 5.3%
Unemployment Compensation 4.6%
Education & Training 3.7%
Federal Employee Retirement 3.5%
Veterans 3.1%
Transportation 2.7%
Other health care  2.6%
Parks & natural resources 1.3%
Space/Science 0.9%
Foreign aid 0.9%
Agriculture 0.6%
Everything else 3.5%
The wildly unpopular TARP program, used to finance banks, a big insurance company and two U.S. auto companies, is now actually bringing billions back into the Treasury, as old loans are repaid and government-owned stock is sold to the public. The nonprofit investigative project Pro Publica figures that $322 billion has now flowed back into the Treasury, of the $573 billion loaned, invested or spent originally. And even the Obama administration's $787 billion stimulus program, so excoriated by Republicans, has nearly run its course. It was enacted in 2009, and according to the official Recovery.gov website, had spent 84 percent of the total as of June 30. That included 90 percent of the tax benefits, 83 percent of entitlements, and 78 percent of contracts, grants and loans.


Borrowing 36 Cents on the Dollar
The current gap between tax revenue and congressionally approved spending is so great that so far this fiscal year the federal government has borrowed an average of 36 cents of every dollar paid out. According to the most recent "Monthly Budget Review," issued by the Congressional Budget Office on July 8, the total spent through the end of June (the first nine months of the current fiscal year) was estimated at $2.705 trillion. But government receipts fell $973 billion short of spending, CBO estimates.
The good news — if it can be called that — is that the huge deficit is running at $31 billion lower than last year at this time. Spending is higher (Medicaid is up 6 percent over last year, for example), but federal income tax receipts are running higher as well. CBO credited "higher wages and more employment" than last year for the increase in tax revenue. And borrowing 36 cents on the dollar is an improvement of sorts. For all of fiscal 2009, the deficit amounted to 40 cents of every dollar spent, and it was 37 cents in fiscal 2010.


Where the Money Comes From
Taxes make up the vast bulk of federal revenues, of course. Individual income-tax payers supplied 41.5 percent of all federal revenues in fiscal 2010, but Social Security and Medicare payroll taxes paid both by workers and their employers made up nearly as much. Combined with federal unemployment insurance taxes and a few others, these social insurance taxes made up 40 percent of revenues. The income tax on corporations brought in just under 9 percent, while excise taxes, on such things as gasoline and diesel fuel, alcoholic beverages and telecommunications services, brought in just over 3 percent.

We found a surprising bit of news buried in the "other" category, which made up 6.5 percent of all revenue.

Breakdown of "other" in 2010
(Percent of total revenues)
Federal Reserve 3.5%
Customs 1.2%
Misc 1.0%
Estate & Gift 0.9%
Total "Other" 6.5%
It turns out that in 2010, more than half of that category came from profits made by the Federal Reserve System, whose lending operations expanded dramatically to address the financial crisis that started in 2007. The Fed's payments to the Treasury made up 3.5 percent of all federal revenue in 2010 — nearly $76 billion. The rest of the "other" category is made up of customs duties (1.2 percent of all revenue), federal estate and gift taxes (0.9 percent), and miscellaneous sources.



Who Pays?
Who pays all of these taxes? The best information on that comes from the Congressional Budget Office, which has tracked the tax burden for many years. The most recent complete data cover 2007. CBO figured in that year more than half of all federal taxes was paid by the top 10 percent of income earners. They paid 55 percent of all federal taxes in 2007, CBO said.

That's a comprehensive figure, counting the income tax, payroll taxes, excise taxes and even the corporate income tax (borne by stockholders in the form of reduced dividends and appreciation). And perhaps surprisingly, the top 10 percent of earners pay a greater share of federal taxes now than they did before the Bush tax cuts, which Democrats constantly criticize as a giveaway to "the rich." The top 10 percent paid 50 percent of all federal taxes in 2001.

However, that comes in spite of lower tax rates at the top, not because of it. The reason the most affluent 10 percent pay a greater share of taxes is that they are getting a greater share of all income. Their share of all pre-tax income went from 37.5 percent in 2001 to 42 percent in 2007.

One figure that gets a lot of attention is the percentage of individuals and married couples who pay zero federal income taxes. Those figures come from the nonpartisan Tax Policy Center. The TPC's most recent report was released June 14, and it shows that this year 46.4 percent of "tax units" (individuals or married couples) had zero federal income tax liability. That's because of various exemptions and tax credits aimed at reducing the income-tax burden on lower-income workers and families with children. The figure is down from 2008 and 2009, when the percentage topped out at 50.8 percent.

But practically all workers (and their employers) pay Medicare taxes on every dollar of wages, and Social Security taxes on every dollar of wages up to $106,800. Consequently, those who pay no federal income or payroll taxes at all amount to only 18.1 percent this year, the Tax Policy Center figures.

There's plenty more where these figures came from. We could focus more closely on what was paid and earned by the top 1 percent, for example. Or we could zoom in to examine the role of rising medical and drug costs in pushing up spending for Medicare and Medicaid. We may well visit those subjects in future articles. For now, we've tried to give a quick, accurate and balanced look at the big picture: Both where Washington spends, and where its money comes from.
– by Brooks Jackson



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