Disposal Day #173: You’re late

STORY #1: The general revenue drain

Manitobans who are reasonably informed about government budgets have come to dread the term “general revenue”; around here, it’s considered a code word for “the money they use to pay bureaucrats.” While I can’t confidently say the same about the U.S. federal budget, I can say two lawmakers, Reps. Janice Hahn (D-CA) and Ted Poe (R-TX), have identified a relevant problem. They’re drafting a bill that would funnel revenue from the Harbor Maintenance Tax into . . . well, harbor maintenance.

How many problems around the country would be solved if these specialized taxes were actually used for their stated purpose? I would like to see legislation that requires this of all federal taxes resembling the Harbor Maintenance Tax, with exceptions for funds unspent by the end of the fiscal year, or extenuating circumstances (recession, national emergency, war). Any industry that depends on seaports suffers from shabby harbors. The economy will benefit from getting them in shape – and this move could reduce some overall budget bloat.

STORY #2: The non-starters

Sen. Mitch McConnell (R-KY) really doesn’t thrive on competition all that much. If he did, he might be more open to forming a conference committee on the House and Senate budgets without his proposed “framework.” His requires preconditions that the budget not include tax hikes or debt ceiling increases. Contrast this with Rep. Paul Ryan’s (R-WI) proposed framework, buried in this article, which would be “centered on elements of commonality” in President Obama’s budget proposal and his. Hey, it’s better than McConnell’s idea.

Not that Sen. Patty Murray (D-WA) is an angel when it comes to conferencing; she says Ryan’s proposal for partial Medicare privatization is a “non-starter.” Obama, for his part, isn’t willing to compromise on the debt limit, demanding that Congress develop a grand bargain on the debt and avoid any scrambling to raise the ceiling. Does that mean he’d veto any budget that didn’t meet his criteria of a grand bargain? That would be completely understandable. I just wouldn’t want him to get his hopes up that it’ll only take him one try after about four other tries.

STORY #3: Attempted compromise

Here’s one reason why the topic of compromising on the debt ceiling has come up: The Full Faith and Credit Act, which would allow the government to borrow above the limit should they hit it, but only to pay bondholders and fund Social Security. You know why Obama doesn’t want it; Democrats don’t because, according to them, it leaves federal programs behind, mostly for China. I’m inclined to agree with the GOP on this one. If nothing else, it could demonstrate to the Democrats why ceiling hike after ceiling hike is getting them all nowhere.

Death by 294 billion cuts

Here’s something many of you probably never expected me to say: There is a kernel of sense in the idea of using war savings to replace the sequester. That idea comes to us from none other than Senate Majority Leader Harry Reid (D-NV), out of desperation to reverse some high-profile cuts such as air transportation. While others alternately blame the Obama administration, Congress and the Federal Aviation Administration (FAA) for cuts leading to problems with flights, Reid may be the only congressional leader left staying on task.

Reid is eyeing the Defense Department’s (DOD) Overseas Contingency Operations (OCO) fund, which he estimates contains $650 billion at present. For its part, the DOD says it has saved $81 billion that would have been spent but for President Obama’s decision to begin withdrawing U.S. troops from Afghanistan. Republicans have repeatedly decried factoring in war savings as a “budget gimmick” and are continuing to do so after Reid proposed this idea.

Here’s the kernel of sense: Earlier this week, John Makin of the American Enterprise Institute (AEI) – which isn’t what you’d call fiscally liberal – calculated that spending cuts and tax increases already made have put the deficit on track for substantial reductions over the next five years, culminating in the deficit amounting to 2.5 percent of gross domestic product (GDP) by 2018. The debt-to-GDP ratio is estimated to take a similar trajectory, from 77 percent next year to 73.1 percent by 2018. Makin concludes that current short- and medium-term austerity measures have gone “far enough.”

What that means is that a certain level of discretionary spending is needed to maintain economic stability, as many European countries have learned. Reid’s suggestion that we rely on the OCO fund has a different problem; while that fund was primarily used for the wars in Iraq and Afghanistan until recently, the U.S. continue ought to keep using it for, well, overseas contingencies. (Or, given recent events, domestic contingencies that may require military resources.) But it’s fair to call for renewed discretionary spending – under one circumstance:

We could do it for five months. During this five-month period, we could come up with something that was longer term.

Exactly. Allow some basic spending while you work on long-term debt reform that could cease to make these problems repeat themselves. After repeated disappointments on the long-term reform front, I wouldn’t advise anyone to be optimistic about the prospects of Congress using that five-month period effectively, if they go through with Reid’s plan at all. But he gets an A for effort.

One political plus for Reid is that voter frustration over flight delays gives him a great way to frame his recommendation. How many members of Congress will dispute that they’ve become a headache?

This budget looks familiar . . .

President Obama released his own budget proposal yesterday, so let’s get the review over with. (Remember when I used to think his economic proposals might change from one year to the next and greeted his pitches with some enthusiasm? Yeah, me neither.)

$1 billion: 15 manufacturing innovation institutes. I don’t understand this at all. Marketable innovations come from a creative spark, not a federal institute.

$50 billion: Infrastructure. Either no significant infrastructure spending has been authorized since Obama took office, since he always pitches this, or U.S. infrastructure is more “crumbly” than I thought.

High-speed rail. Having seen a map of a potential nationwide rail network (no Twin Cities-Seattle link? No stop in Boise? Come on!), I actually think this would be a good idea. So it’s probably going nowhere.

Universal pre-K, funded with increased tobacco taxes. Well, many studies will tell you that quality preschool has great benefits for kids, even lasting into adulthood. I just hope he doesn’t expect all parents to take advantage of it.

The Buffett rule. Don’t worry, this budget also includes (some) loophole closures. But if loopholes are the reason the wealthy often pay such low tax rates, why would we still need the Buffett rule?

More tax credits. 10 percent for “small businesses that hire new employees or increase wages,” plus one encouraging them to offer retirement plans. Should we shift tax credits for stimulus purposes, or halt them for budget purposes? Discuss.

Designate low-income communities as “Promise Zones” for incentivized investment. Well, I’m glad this includes something for low-income communities. But is this a proven strategy?

Minimum wage raised to $9/hour. Your opinion is based on what you expect it to accomplish. The proposal says it will “reward hard work” – no guarantee, as minimum-wage workers can be as lazy as anyone else – and help earners reach “a decent living.” No consensus on its efficacy.

“Addressing financial deterrents to marriage.” Adam and I decided not to get married until each of us can afford to live independently. If that’s what Obama is talking about, I’m not sure the federal government has much of a role here.

$400 billion in health savings. Not sure what kind of savings he’s talking about. Cost containment in terms of actual health care, sure; cost containment in terms of health programs, not good enough.

Reductions to farm subsidies. Ah, if only he had the stones to phase them out.

Chained consumer price index (CPI) adjustments for entitlements. I’ll go for it, but his base won’t.

Disposal Day #168: They’ll think about it tomorrow

STORY #1: It begins at home

In the past week there have been some positive signs of bipartisanship in the Senate. The “Gang of Eight” tasked with comprehensive immigration reform is making considerable progress; Sens. Chuck Schumer (D-NY) and Joe Manchin (R-WV) haven’t been quite as successful with gun control, and will probably be even less successful when they release their final draft (which may also go for the Gang), but they’re plugging away. About debt, however, there’s been either no action at all or no action anyone is willing to discuss. You can tell because only these guys have been talking about tax expenditures lately.

Of all the deductions and loopholes in the entire tax code, the charitable deduction is by far the most politically tricky. How dare they make it harder for people to give to the less fortunate? Surely there are other deductions to roll back, the revenue generated thereby making rolling this one back unnecessary! There aren’t many special interests who wouldn’t use that exact reasoning to justify keeping their favorite expenditures; we shouldn’t be afraid to discuss losing any of them. I happen to believe a good charity will rake in donations regardless of how much donors get back in April.

STORY #2: Oh, crap

The same problems are at hand among cancer clinics across the U.S. Already turning away patients after seeing their federal funding fall victim to the sequester, they’re ready for an all-out lobbying assault to get it back, with 50 congressional offices agreeing to help. Worse yet, they’ve got their sights set on the White House, which has “the power to save” those clinics.

I’d like to say the silver lining in all of this is that it may push Congress to work on a debt deal that would not only make the sequester go away, but ensure that it will never again be an issue. But the sequester itself was supposed to do that, as were the multiple instances of nearly hitting the debt ceiling, followed by a last-minute bill to raise it. If the interest groups were to band together and point that out, we may have a spark. Or they’ll be ignored until the Dow loses 500 and then we’ll have a spark. Take your pick.

STORY #3: And yet . . .

Kudos to various Obama administration officials for giving up parts of their salary, however pathetically small those parts are. As for the Senate, who passed by voice vote a non-binding measure encouraging them to donate 20 percent of their salaries to charity or return it to the U.S. Treasury? Only five of them are doing it. Scroll down that link a bit for House Minority Leader Nancy Pelosi’s (D-CA) opposition to subjecting congressional salaries to sequestration. If you didn’t already want to punch her over something, you will today.

Paul Ryan’s budget ideas in ten words

Surely to the disappointment of many, Rep. Paul Ryan (R-WI) isn’t going quietly into the night after a failed bid for the vice-presidency. Yesterday he unveiled a budget proposal that slashes $5.7 trillion in spending and balances the budget within a decade. Today I’m going to pick out some of the more high-profile ideas in said proposal and post my ten-word reactions to them.

Close loopholes, then cut top income tax rate to 25 percent: Which loopholes? I get the theory, but that cut’s big.

Give seniors the option of buying private insurance and provide “premium support” payments: Good option, but there’s no talk of means-testing here.

Require president and Congress to reform Social Security: Didn’t specify how. Focus on Medicare gives Democrats a weapon.

Increase defense spending by $500 billion over 10 years: Why would he do that? That needs some reductions, too.

Count $600 billion in revenue in fiscal cliff deal as budget savings, plus predicted new revenue from economic growth. Only the former is a sure thing. Predict extra wisely.

Repeal Obamacare. If he thinks President Obama will sign that, he’s nuts.

Provide capped block grants to states for Medicaid and food stamps. Might work, if states are encouraged to draft own reforms.

Cap Pell Grants. Would take seriously if he discussed higher education cost controls.

Cut the federal workforce by 10 percent. Better than furloughs, as long as it’s just pencil-pushers.

“Streamline” elementary school and job training programs. “Streamline” sounds good, but that needs a lot more detail.

Stop purchases of “unnecessary” federal land to allow further energy development. Who decides what “unnecessary” means? Just whatever can be developed?

Approve Keystone XL. Nice idea, but Congress has tried this many other times.

End supports for Fannie Mae and Freddie Mac. Good to discuss, but end in one fell swoop? Irresponsible.

Revisit Dodd-Frank financial reform law to prevent future bailouts. Does that mean breaking up banks? I can support that.

Reduce funding for high-speed rail projects. Now may not be the time, but endeavor is worthwhile.

Reduce farm subsidies. Does that mean long-term change to program? It better.

Block federal welfare waivers. We told you it wouldn’t gut work requirement. Shut up.

In non-sequester fiscal policy news . . .

Just so everyone knows, should the sequester go into effect tomorrow, I will not give Congress Fail of the Week, because they’ve already gotten it for debt-related reasons (checks) twice in the past three months, as well as some non-FotW ranting. Today we’ll focus on some more optimistic debt news. (I know. Me. Optimism. Crazy, right?) It may surprise some of you deficit hawks to learn that the government sometimes neglects to spend all of its appropriations on time. A number of congressional Republicans have better ways to use the money.

Sen. Marco Rubio (R-FL), Rep. Tom Price (R-GA) and others have proposed the Decrease Spending Now Act, which would require that the White House Office of Management and Budget (OMB) rescind $45 billion in funds currently going unspent by federal agencies, and put it toward debt reduction. To put it in perspective, the sequester will cut $85 billion in spending; these “unobligated funds” amount to more than half of that. The OMB will have 60 days to report to Congress on how much money was rescinded, and from where.

This bill would apply to all federal agencies except the Departments of Defense and Veterans’ Affairs, plus the Social Security Administration. The Centers for Medicare and Medicaid Services (CMS) are not exempted, which is curious, seeing how these original exemptions keep the two other “big reform” areas safe. Expect Democrats to demand that CMS is added to that list, if not the entire Department of Health and Human Services (HHS), although Rubio’s press release will tell you this has plenty of bipartisan support to begin with.

Other than that, I support this bill, although I have thought of a way to make it a little more interesting:

1. Instead of rescinding the money right away, the OMB will put it back before Congress.
2. Congress will then have one business week – that’s one week, no more – to come up with some proven, cost-effective, bipartisan ways to spend the money immediately.
3. If they can’t pass this by the end of the week, the OMB will rescind the money for good, and it’ll go toward the debt.

And since there’s likely zero chance of Congress making good on step #2, they’ll end up paying down the debt faster, anyway. You might call this a waste of their time, but if it keeps them in session long enough to work on some more important matters of the week, it won’t be quite as wasteful.

Just one question: Why are Rubio et al. only applying this to this year’s $45 billion in unobligated funds? This should be on the books for every fiscal year. I’d think Rubio, of all people, would think more long-term than that. But maybe his throat was so dry that he couldn’t bring it up. (Sorry, couldn’t resist.)

Disposal Day #162: (le sigh)

STORY #1: So much for a reboot

With the first version of the Simpson-Bowles debt reduction plan proverbially gathering dust on a shelf somewhere, former Sen. Alan Simpson (R-WY) and former White House Chief of Staff Erskine Bowles have decided to try a second version. So far it’s being all but ignored in Congress and derided within the punditocracy, and not just by the wingers. The reaction I’ve seen so far amounts to disappointment that Simpson and Bowles have traded in ballsy for bearable, as SB.2 calls for lower total cuts than SB.1, raise just over half the original tax revenue projection and save four-fifths of the original health spending projection.

Disappointing? To deficit hawks, absolutely. But I can’t imagine that either Simpson or Bowles was overjoyed about writing this stuff down. They want Congress to pass something with their stamp on it, and if it’s not evident to you by today that SB.1 won’t be that something, it will be on Monday. Nonetheless, part of me wonders if an extravagant reminder of SB.1 would have prompted to Congress to get its collective head out of the sand. (Now you’re really talking crazy, Jess. Just stop it.)

STORY #2: Meh?

This may be the real reason Congress, as well as voters (see below), doesn’t seem all that worried about the sequester: because, as many a commentator has noted, it will only amount to a $44 billion budget cut, or one-quarter of 1 percent of the U.S. gross domestic product (GDP). No wonder Sen. Rand Paul (R-KY) called the cuts a “pittance.” (Doesn’t he look like Ontario Premier Kathleen Wynne without the glasses in that video?) The total number may not mean much to anyone; however, the actual cuts are indiscriminate, and the effect on specific departments and the citizens who benefit from them will be considerably larger.

Perhaps, as some suggest, we should let the sequester happen so everyone can get a much truer sense of what an austerity-ridden America will look like, thereby prompting Congress to get a real deal together. As much as that isn’t completely insane, I would rather avoid even temporary austerity and get it done now. We know it’ll need to get done at some point – why not now?

STORY #3: Poor, unfortunate John

You know Speaker John Boehner’s (R-OH) brilliant method of getting Americans to blame the sequester on the Democrats? How he and the other House Republicans would tell the Senate Democrats to come up with a plan first? How they would argue that the chamber controlled by President Obama’s party was full of the real slackers? How everyone would immediately get it and lay off him for once? Well, guess what? It isn’t working. But if it’s any consolation, voters don’t care very much, so I guess this will have nothing to do with Boehner’s approval rating compared to Obama’s. (Oh, wait.)

GAAAAAAAAH I CAN’T TAKE THIS ANYMORE

It’s time once again for The Future American’s FAIL OF THE WEEK! Every Saturday, I name a person or group who has spent the past seven days behaving in a particularly idiotic way. Since it’s my belief that idiocy knows no politics, nobody is safe.

This week’s fail – and the inspiration for what I believe is the first all-caps headline I’ve ever used on this blog – was brought to you by all but four House Republicans and the Senate as a whole. I leave out those four Republicans and all House Democrats because they had the sense to vote against taking all of next week off for Presidents Day (which, to clarify, still lasts one day). Ironically, the president whom Americans honor on that day would probably have the same reaction to that vote as I did, which can best be described with this meme. (OK, maybe he’d be a little calmer about it.)

Why the rage? Because as of today, Congress is T-minus 12 days away from budget sequestration. When they get back to work on February 25, they’ll be T-minus four days away. Senate Democrats have written a bill that would delay the sequester until next year, plus “shift and reduce” the planned spending cuts and raise even more taxes than planned. House Republicans have said they won’t move on any sequester-related bill unless the Senate does first. For their part, House Democrats wanted to go to work next week so the House could “work on a sequester replacement plan.”

Once again, they’re all missing the point. Their job isn’t to delay the sequester replace it with something that has the same general economic impact, but different details. Their job all along has been to eliminate the sequester by coming up with a goddamn grand bargain on the debt. If history is doomed to repeat itself – and it must be, because Congress has consistently failed to learn from it – nothing will happen until December, and then they’ll delay the sequester again at the last possible minute.

Actually, I shouldn’t say nothing will happen. Something will: chambers and parties passing the buck between each other for months on end. Need I point out that this is the most important issue facing the American economy in this decade? If they refuse to bargain, they should at least be falling all over each other trying to draft their own best debt reduction legislation. Not even that’s happening, because comprehensive fiscal reform is haaaaaaard, you guys. (Please. It’s a damn computer game.)

Could you imagine George Washington, or Abraham Lincoln, or Ronald Reagan, or Dwight Eisenhower, or Harry Truman, or even Millard frickin’ Fillmore putting up with this garbage? Why isn’t President Obama at least speechifying about why they should get their asses in gear? Why have I had to give multiple Fails of the Week to Congress, in whole or in part, over sequestration? What is going through these people’s minds?! (Oh, hell with it. I’m going to brunch now.)

Disposal Day #160: Cliff diving

STORY #1: Whose job is it anyway?

“The Require Presidential Leadership and No Deficit Act.” That may be the most hilariously named piece of legislation I’ve ever covered; amazing the lengths lawmakers will go for an acronym. (The colloquial name is the Require a PLAN Act, with the D for Deficit having mysteriously vanished.) That’s Rep. Tom Price’s (R-GA) effort to get President Obama to step up on deficit reduction. It would require him to submit a budget with a date estimating a budget balance, or, failing that, a date estimating when the deficit will be eliminated and how that elimination should happen.

Of course, that’s Congress’s job, not that they’ve been doing it lately. At least this is an improvement over recent legislation from Rep. Mo Brooks (R-AL), who wanted to make deficits an impeachable offense. (Treason. Bribery. High crimes and misdemeanors. Those are impeachable offenses. The Constitution says so. Read it.) Keep in mind that any president is working with impossible mandatory spending that they can’t alter on their own. Imagine what these two would say if Obama tried it.

STORY #2: (sigh)

And so the debt ceiling has gone up again, and will remain up until May 19. I’m starting to sympathize with people who think the ceiling should be abolished; at least we wouldn’t have to deal with nonsense like this multiple times a year.  Bear in mind that this does not change the sequestration deadline, which is in March, or the deadline to keep funding the government, also in March. So, really . . . this was completely pointless.

You know what it represents? Complete failure on the part of the Republicans. Sen. Rob Portman (R-OH) did try (see below), but ultimately they got none of what they wanted, at least none of what the House side wanted. And this time, what they wanted wasn’t completely awful. Politicians never have guts when you need them to. Not even the ones who typically have more guts than common sense.

STORY #3: What Portman did

Portman offered two amendments to the above bill, both rejected:

• Required one dollar in spending cuts for every dollar increase in future debt ceiling extensions. (The link says “for every dollar increase in future the debt ceiling extensions.” Copy editing?)
• Automatic continuous spending resolutions if Congress fails to agree on appropriations bills.

The first would turn out to be excessively focused on discretionary spending, which is second in importance to mandatory spending. The second would incentivize the failure to agree on appropriations bills, even if it helps avoid unnecessary votes on continuing resolutions. These are the best ideas anyone had today.

Haven’t we had enough populist budgeting?

An amusing aspect of politics is watching party hacks and policy wonks haggle it out (usually indirectly) over the appropriate balance between populism and utilitarianism. On the one hand, in a completely populist environment, you’d be putting a lot of systems and institutions at risk by managing them according to the evolving and wildly divergent whims of voters. On the other hand, in a completely utilitarian environment, you’d lack empathy. Which brings us to Sen. Patty Murray (D-WA), the new chair of the Senate Budget Committee, and her brainchild, MyBudget:

Welcome to MyBudget, an online platform for members of the public to weigh in as our nation works to tackle our budget and economic challenges. . . . Share your stories about how federal budget decisions have impacted your family, your community, and your job. Let us know what issues we should be focused on. And pass along your ideas for how we can tackle our budget challenges responsibly.

Having already witnessed the problems with online citizen outreach through the We the People petition program – Death Star, Jerry Jones, Piers Morgan, I could go on – I’m surprised Murray thought this was a good idea. Sure, it sounds good, letting citizens have a direct say in the most important domestic issue of this decade. But I was interested to know what they actually would say. So I offered my own suggestion for saving money, and it was the most cold and clinical suggestion I could think of:

Switch to the chained CPI method for calculating Medicare and Social Security payouts.

What will they do with it? I have no idea. All that popped up after I filled out the “Tell Us Your Ideas” form was “Thank you for your submission.” There are separate forms for “Share Your Story” and “What Are Your Budget Priorities?,” which seems like a waste of web space. Also, I offered Manitoba as my state and provided a Canadian postal code, and the site didn’t challenge that. Just saying.

But you can’t read anyone else’s submissions on this site, which diminishes the “discussion” aspect a bit. And it doesn’t indicate at any point what Murray or the committee will do with the submissions. They just want to hear them for some reason, probably so they can count how many people agree with them on something and use that as leverage during meetings. And how many of them are going to make suggestions that would be good for the economy as a whole, really?

Factoring in the impact of budgeting on everyday people is one thing. But given the magnitude of the debt they’re dealing with, they need to focus on numerical impacts. They’ve let Americans keep too many expensive budget gifts already, just because they like having them. But do they need them? Don’t be afraid to ask.