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986 Billion Shades of Grey: Debt Deal Dodges Big Decisions
On the evening of October 16th, Congress sent H.R. 2775 to President Obama, who promptly signed it into law. The legislation temporarily restores funding for certain parts of the federal government and suspends the debt limit. Though many members of the political and economic community greeting this development with relief, passage of H.R. 2775 isn’t cause for a celebration – it contains mixture of both good and bad policies. More than anything, the bill buys Congress a few additional months to work on the most critical fiscal issue facing the nation: the long-term debt crisis.
When it comes to the federal debt, fiscal conservatives should be disappointed by the bill’s failure to meaningfully address the problem. Tackling the issue isn’t easy, as it requires reforms to popular programs like Social Security, Medicare, and Medicaid, but doing so is imperative for the nation’s fiscal well-being. The agreement provides barely a glimmer of hope for entitlement reform by requiring House and Senate negotiations on a budget. Taxpayers should demand much more from Congress. Between now and February 7, when the debt ceiling will need to be readdressed, lawmakers should pursue spending reductions in an amount that is at least commensurate with the debt ceiling hike.
On the positive side, the bill preserves the sequester – although it could have been better in this regard. It funds the federal government at a rate of $986 billion, which is higher than the sequestration spending cap of $967 billion. Congress should have simply reduced funding to the statutory requirement, but instead chose to rely on the sequestration mechanism to bring spending in-line with the law. This is acceptable – as long as Congress keeps the sequester in place. To make sure they do, taxpayers must be extremely vigilant, as many big-spenders in Washington are already working to undo it. In fact, Senate Majority Leader Harry Reid (D-NV) reportedly rejected a proposal that would have given the executive branch more flexibility in adjusting to the cuts precisely because he feared doing so would make it more difficult to trash the sequester. Keeping the sequester spending caps in place will be one of the biggest policy battles over the next several months. You can help NTU’s efforts to “Keep the Caps” by clicking here.
Oftentimes when Congress considers “must-pass” pieces of legislation, Washington lobbyists frantically try to tack on unrelated bills or amendments that benefit their clients. Thankfully, H.R. 2775 did not contain any major extraneous provisions, like the Internet sales tax or an extension of the Farm Bill. However, it did include a number of smaller, unnecessary add-ons. For example, the bill featured a $2.9 billion authorization for a dam project in Kentucky. Also included was a $174,000 payout to the widow of the late Sen. Frank Lautenberg. While it is customary to provide a year’s salary to the families of deceased lawmakers, in light of the Lautenberg family’s vast wealth, other benefits available to survivors, and the urgent nature of this bill, Congress could have foregone this extra payment.
On the issue of revenues, taxpayers may have dodged a bullet on H.R. 2775. It contained no new taxes or, as they are sometimes called, revenue-raising “loophole closures”. Once again, taxpayers must be vigilant on this issue. As Congress looks to reduce debt, many left-leaning politicians will attempt to hike taxes despite the fact that the Congressional Budget Office expects that revenues will soon exceed their 40-year averages. Please stay tuned as NTU will be engaged on this important issue and will need informed citizens like you to help us fight against tax hikes.
Overall, H.R. 2775 was a mixed bag of policies – good, bad, and ugly. Now that passage has occurred, it’s time for Congress to really get to work. Tell your elected officials to pass meaningful reforms to entitlement programs and Keep the Caps by protecting the sequester.0 Comments | Post a Comment | Sign up for NTU Action Alerts
On Monday, NTU Foundation released a line-by-line study of what Newark Mayor Cory Booker and former Bogota Mayor Steve Lonegan would support if elected as Senator of New Jersey. We found that, of the policies we were able to quantify and score, Mayor Booker would increase spending by $33 billion and former Mayor Lonegan would decrease the federal budget by $68 billion. However, that's not the whole story. Both candidates had large holes in their agendas by either offering proposals that were too vague to be matched with current legislation or CBO cost estimates or they failed to even address an issue category (both said nothing regarding changing veterans programs).
What you should take away from this study: While it appears that Booker would grow the federal government and Lonegan would shrink it, both needed to offer taxpayers more information and details on exactly what they would do. This is something that plagues many campaigns and races, be it Senate races in 2010 or the 2012 GOP primaries. Both candidates touted themselves as the best choice for New Jersey and for improving the lives of Americans but neither laid out how they would accomplish such goals.
What you should espeically pay attention to: The largest proposal of each candidate. Booker would seek to pass comprehensive immigration reform legislation that has already worked its way through the Senate. The bill would increase spending by $20.2 billion each year and, similar to previously introduced measures, would increase border security spending and remake the immigration process. Lonegan has pledged to repeal the Affordable Care Act, which NTUF found would result in a $63.9 billion spending decrease each year.
NJ Senate Race: Booker, Lonegan Separated by $101 Billion
On Wednesday, New Jerseyans will vote in a special election to decide who will replace outgoing U.S. Senator Jeffrey Chiesa, a Republican and former state attorney general who was appointed by Governor Chris Christie to fill the seat vacated after Frank Lautenberg's death in June. Ahead of the election, National Taxpayers Union Foundation has released its line-by-line analysis of the proposals made by the leading candidates: former Newark mayor Cory Booker, who won the Democratic nomination in August, and his Republican challenger Steve Lonegan, the former mayor of Bogota.
During any election cycle, candidates propose and debate a variety of policies, which can give voters some insight into how they would spend (or save) the tax dollars they send to Washington. Unfortunately for taxpayers, it can be difficult to translate these proposals into specific dollar figures. Using data and methodology from the BillTally project, NTUF has analyzed the campaign promises of would-be Senators and Representatives since 2000 in order to make the budgetary implications of their agendas clearer for interested voters.
For the New Jersey election, NTUF sifted through each candidate's official campaign materials, public statements, and media appearances in order to determine which of their proposals could affect federal spending.
For links to analyses of each candidate's proposals, as well as a number of summary graphs and other information on the studies, check out today's special edition of the Taxpayer's Tab online here.0 Comments | Post a Comment | Sign up for NTU Action Alerts
The Budget Control Act of 2011 (BCA) was a law passed by Congress and President Obama during tense negotiations over the “debt ceiling.” The intent of the law was to provide fiscal discipline and reduce the long-term debt. One of the most important things the BCA did was to create discretionary spending caps to reduce the amount of money Congress can expend. When Congress can’t meet these caps, a mechanism called the “sequester” automatically reduces discretionary spending in an across-the-board fashion. While far from perfect policy, the BCA and sequester are important tools to rein in Washington’s out-of-control spending.
Here are 10 reasons why:
1. Spending is falling: Spending is on track to fall below $3.45 trillion by the end of FY13. This is the first time, since the end of the Korean War, federal expenditures have fallen two years in a row.
It’s important to remember though, that the sequester is only the first step toward getting our fiscal house in order. Larger bills loom on the horizon in the form of mandatory entitlement spending that threatens to bury our nation in debt. That’s why it’s so essential that we make the tough choices now, before the debt becomes unmanageable. There’s still a lot of work to do, but we must start by urging Washington to “Keep the Caps!”
To learn more about this important issue and take action, visit KeeptheCaps.com.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Government ‘Shutdown’: Day 9
‘Shutdown’ Theater: Fox News compiled a list of seven operations that were halted over the last nine days that saved practically no taxpayer funds. The list includes scenic spots on the sides of roads to jogging paths that happen to be on public land.
Obamacare phones: The state of Tennessee’s healthcare co-op is offering new enrollees in the healthcare exchanges free smart phones if they enroll. The plan originally received a federal grant of $73 million. Read more at the Daily Caller.
Failure to report: One in five companies that received taxpayer assistance from the state of Wisconsin have not filed a report detailing where the money went. The reporting system was created in response to the revelation of $12 million of overdue loans from previous years. Find out more details from the Milwaukee Journal Sentinel.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Subscribe to NTU's podcast "Speaking of Taxpayers" via iTunes!
NTUF's Demian Brady joins the podcast to talk Debt Ceiling and the federal budget, and the Outrage of the Week! hammers one government so-called "shutdown" casualty that should concern taxpayers.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Government Shutdown Day 7:
Tribal fraud: An internal audit of Native American tribal areas across America has revealed extensive waste and fraud totaling tens of millions of dollars. “Embezzlement, paychecks for do-nothing jobs and employees who over-billed hours and expenses,” were commonplace, yet the acts have gone unpunished for years. Read more at WSLS.
Parking lot shutdown: The National Park Service has closed the parking lot at the home of George Washington, Mt. Vernon due to the government shutdown. Although, the park is privately owned and remains open. Read more shutdown stories at the Daily Caller.
Furniture fiasco: An investigation of Chicago public school contracts showed major discrepancies. Certain furniture ordered by schools was not up to specifications when delivered and overcharging routinely occurred. As a result of a local news investigation, the schools have instituted major reforms and are investigating the issues. ABC7 has more details.0 Comments | Post a Comment | Sign up for NTU Action Alerts
As Congress continues to play budgetary chicken, prolonging the government shutdown, another debate is brewing that might or might not be fixed with a budget deal: the debt ceiling. The last time we came close to the federal borrowing limit, Congress pushed through the Budget Control Act, which put in place budget caps in exchange for an increase in how much debt the government can issue. However, BCA lacked any real entitlement reform and taxpayers are again looking at a divided and dysfunctional Congress as the debt ceiling deadline ticks down to zero. If the ceiling is not raised, the U.S. could default on our debt, sending shockwaves through the global economy. However, it might be the jump start that the U.S. needs to bring about true reforms and fiscal sanity.
To supplement this week's Taxpayer's Tab, NTUF compiled some information so that folks can get a read on where the government is at on the debt and how we got in this position (hint: entitlements).
Do you think the U.S. should raise the debt ceiling? If not, how would you get the country's finances back in order (especially because a default would likely lower our credit rating)?1 Comments | Post a Comment | Sign up for NTU Action Alerts
Today’s Taxpayer News!
Low Voltage: General Motors reported that the brand’s much hyped and subsidized Chevy Volt continued its dismal sales pace in September. Volt sales saw a 38% decline from year to year. Taxpayer funded credits for September were over $13 million. The National Legal Policy Center has more details.
Corruption crackdown: After more than 30 lawmakers from New York State have been embroiled in ethics issues over the last seven years, a commission appointed by Gov. Andrew Cuomo has proposed new rules that would strip corrupt politicians of their taxpayer funded pension. Read more from today’s New York Times.
Taxpayer toilet: The Federal Bureau of Land Management used spent over $98,000 for a single outhouse on a park trail in Alaska. CNSNews has more.0 Comments | Post a Comment | Sign up for NTU Action Alerts
As the clock struck 12:01 this morning, the federal government found itself in a situation we haven't seen since 1996: a shutdown. Because Congress was unable to come to an agreement on how to fund certain federal agencies whose budgets depend on annual appropriations, they've been forced to "shut down", and in some cases completely halt all activity.
While the term does sound dramatic, this is actually the 18th time since 1976 that the government's been forced to temporarily shut down. The other 17 episodes have lasted anywhere from a single day to nearly three weeks, stemming from political squabbles over issues like abortion to budgetary debates that simply couldn't be settled in time.
So what will happen until Congress is able to pass a budget or agree to a short term fix? Under federal law, all government agencies are required to have official contngency plans that specify which employees and duties are "essential" and "non-essential" (or "excepted" and "non-excepted"). This ensures that the government will still act in limited ways to protect public health & safety, and it continues benefits like Social Security and certain types of assistance for veterans. The Congressional Research Service has an excellent overview of the legal issues the government must consider during a shutdown, as well as examples of how certain government services and functions were affected. Some 800,000 federal employees are likely to feel the effects of the latest shutdown either in the form of furloughs or unpaid leave. The Departments of Health and Human Services, Commerce, and Interior are expected to be among the hardest hit.
While the last shutdown in 1995-1996 may offer some precedent when it comes to how the current one might play out, there are contextual differences to consider.
The charts below (using Office of Management and Budget data) illustrate U.S. spending on mandatory & discretionary programs in 2012 compared to 1996:
A major point of contention in the most recent budget battle that caused today's shutdown was how (and whether) to fund the President's health care reform law. Mandatory spending -- which includes funding for entitlement programs like Social Security, Medicaid, and Medicare -- has increased dramatically in recent years, and will likely remain a primary focus of budget debates as long as it makes up the majority of federal spending.
There is also growing concern over the amount of funding required to keep up with interest payments on America's debts. As the government borrows more to finance its existing programs, interest payments have increased significantly. So far, the government has spent about $396 billion on these payments in Fiscal Year 2013 alone, not including the month of September. In 1996, that total was $344 billion.
While the debate over budget priorities and even the shutdown itself aren't new on Capitol Hill, this time around, the fiscal trends framing the discussions are.0 Comments | Post a Comment | Sign up for NTU Action Alerts