From: Investors.com
When Republicans took control of the House in January, they pledged to make deep cuts in federal spending, and in April they succeeded in passing a bill advertised as cutting $38 billion from fiscal 2011's budget. Then in August, they pushed for a deal to cut an additional $2.4 trillion over the next decade.
Some analysts have blamed these spending cuts for this year's economic slowdown.
But data released by the Treasury Department on Friday show that, so far, there haven't been any spending cuts at all.
Higher Spending, Deficits
In fact, in the first nine months of this year, federal spending was $120 billion higher than in the same period in 2010, the data show. That's an increase of almost 5%. And deficits during this time were $23.5 billion higher.
These spending hikes haven't stopped many analysts from claiming that the country is in an age of budget austerity, one that's hurting economic growth.
A July article in USA Today, for example, claimed that "Already in 2011, softer government spending has sapped growth."
Jared Bernstein, former chief economic adviser to Vice President Biden, wrote over the summer that "government spending cutbacks have been a large drag on growth in recent quarters and have led to sharp losses in state and local employment."
Economist and New York Times columnist Paul Krugman argued in September that "the turn toward austerity (is) a major factor in our growth slowdown."
If government spending is related to growth, as these and others claim, then the economy presumably should be growing faster, not slower, given the current higher rates of federal outlays.
State Spending Higher Too
Nor does the claim that state governments sharply cut spending stand up well to closer scrutiny.
Overall state spending continued to climb right through the recession, when all money from state general funds and other funds, federal grants and state bonds is combined.
Total state outlays in 2010 were almost 10% higher than in 2008, according to the National Association of State Budget Officers' annual State Expenditure Report.
And general fund spending — which makes up about 40% of total state spending — is expected to climb 5.2% in 2011 and 2.6% next year, according to the association's latest survey.
NASBO says that states were able to sustain spending growth through 2010 only because the federal government was pumping more money in via the $830 billion stimulus, and that these funds are now all but exhausted.
As the survey report notes, the tapering off of the stimulus "combined with a slow recovery in state revenue collections, will continue the tight resource environment for states in fiscal 2012."
Meanwhile, the claim that state and local government jobs have been severely cut is, at the very least, open to some debate.
"We know that the biggest problem that we've had in terms of unemployment over the last several months has not been in the private sector," President Obama said at a recent press briefing. "It's actually been layoffs of teachers and cops and firefighters."
Monthly data from the Bureau of Labor Statistics do show that from December 2007 — when the recession officially started — until the end of 2010, state and local governments shed 221,000 jobs. And they've cut another 234,000 jobs so far this year.
But a separate annual survey from the Census Bureau shows that "full-time-equivalent" state and local employment climbed 200,000 between 2007 and 2010 (the latest year for which these census data are available.) The differences come from the methodologies used.
In any case, even using BLS data, the number of state and local government jobs has fallen just 2.3% since December 2007. That compares with a decline of 5.4% for private-sector jobs.
Showing posts with label Budget. Show all posts
Showing posts with label Budget. Show all posts
Tuesday, October 18, 2011
Monday, April 18, 2011
Budget Deficit: Government Handouts Top Tax Income
From: Fiscal Times
For the first time since the Great Depression, households are receiving more income from the government than they are paying the government in taxes. The combination of more cash from various programs, called transfer payments, and lower taxes has been a double-barreled boost to consumers’ buying power, while also blowing a hole in the deficit. The 1930s offer a cautionary tale: The only other time government income support exceeded taxes paid was from 1931 to 1936. That trend reversed in 1936, after a recovery was underway, and the economy fell back into a second leg of recession during 1937 and 1938.
As then, the pattern now reflects two factors: the severe depth of the 2007-09 recession and the massive fiscal policy response to it. The recession cut deeply into tax payments as more people lost their jobs, and it boosted payments for so-called automatic stabilizers, such as unemployment insurance, that ramp up payments as the economy turns down. Plus, policy actions, including the Recovery Act, boosted payments to households by expanding and extending jobless benefits and creating other income subsidies while extending the Bush-era tax cuts and adding new reductions in income and payroll taxes.
- Households received $2.3 trillion in government income support in February.
- Government cash accounts for79 percent of household income growth since 2007.
- Since 2007, household tax payments have fallen by $312 billion.
For the first time since the Great Depression, households are receiving more income from the government than they are paying the government in taxes. The combination of more cash from various programs, called transfer payments, and lower taxes has been a double-barreled boost to consumers’ buying power, while also blowing a hole in the deficit. The 1930s offer a cautionary tale: The only other time government income support exceeded taxes paid was from 1931 to 1936. That trend reversed in 1936, after a recovery was underway, and the economy fell back into a second leg of recession during 1937 and 1938.
As then, the pattern now reflects two factors: the severe depth of the 2007-09 recession and the massive fiscal policy response to it. The recession cut deeply into tax payments as more people lost their jobs, and it boosted payments for so-called automatic stabilizers, such as unemployment insurance, that ramp up payments as the economy turns down. Plus, policy actions, including the Recovery Act, boosted payments to households by expanding and extending jobless benefits and creating other income subsidies while extending the Bush-era tax cuts and adding new reductions in income and payroll taxes.
Stocks plunge after S&P shifts rating on US debt to negative
From: The Hill
“Today’s announcement makes clear that the debt limit increase proposed by the Obama Administration must be accompanied by meaningful fiscal reforms that immediately reduce federal spending and stop our nation from digging itself further into debt,” House Majority Leader Eric Cantor (R-Va.) said in a statement.
Standard & Poor’s Ratings Services announced Monday it was lowering its outlook on U.S. debt from “stable” to “negative.”
Markets immediately fell on the news, with the Dow Jones Industrial Average dropping 214 points or 1.74 percent, as of 1 p.m.
Republicans cast the report as a wake-up call underlining their arguments that the administration should accept significant spending cuts in exchange for raising the nation's debt ceiling, while the White House said it underscored the need for a bipartisan deal.
Administration officials downplayed the report and said S&P was underestimating the ability of Congress and the White House to reach a deal.
White House press secretary Jay Carney predicted the “political process will outperform S&P expectations.”
“We think a reminder that we need an agreement on fiscal reform is always valuable,” he added at the White House press briefing.
Separately, House Democrats seized on the report as an argument that the GOP should allow a “clean” vote on a measure to raise the nation’s $14.3 trillion debt ceiling. Republicans have been demanding spending concessions from the administration in exchange for raising the debt ceiling.
House Minority Leader Nancy Pelosi (D-Calif.) said the S&P report highlights the need to participate in debt talks to begin next month under the leadership of Vice President Joe Biden. She pointed out in a release that she has named Reps. Jim Clyburn (D-S.C.) and Chris Van Hollen (D-Md.) to the Biden talks. The GOP has yet to name participants.
President Obama and Republicans for the last week have exchanged shots over the deficit, and some Republicans argued the president’s harsh criticism of the House GOP budget would make it tougher to reach an agreement.
Thursday, April 14, 2011
Was Obama's speech too fiery? Why he was so harsh on GOP budget plan.
From: Christian Science Monitor
A day after President Obama savaged the Republicans’ 2012 budget proposal, while delivering his own framework for deficit reduction, Republicans are still smarting.
Rep. Paul Ryan (R) of Wisconsin, chairman of the House Budget Committee, told a forum Thursday that he and other House Republicans attended the president’s speech expecting an olive branch, and instead “we got front-row seats to President Obama’s reelection campaign speech.”
“I knew we were going to get a lot of partisan attacks,” Congressman Ryan, the author of the GOP budget plan, told an event organized by the conservative think tank e21. But, he added, he “didn’t expect it from the commander in chief,” saying that Obama had brought himself down to the level of a “partisan mosh pit.”
Mr. Obama usually prefers to stay above the fray. But in his speech Wednesday, he seemed to use as much verbiage pounding the Ryan plan as laying out his own. Some Republicans have said they felt the president was even calling the Ryan plan “un-American,” when he said that it “would lead to a fundamentally different America than the one we've known – certainly in my lifetime.”
Ryan’s plan would transform Medicare from an entitlement to a system of “premium support,” in which the government helps seniors purchase private insurance, with consideration for income level and health needs.
Obama characterized it this way: “It says, instead of guaranteed health care, you will get a voucher. And if that voucher isn't worth enough to buy the insurance that's available in the open marketplace, well, tough luck – you're on your own."
Ryan rejects the use of the term “voucher,” and calls Obama’s description of his proposal a “dramatic distortion.”
At his daily briefing Thursday, White House press secretary Jay Carney called Obama’s address “a policy speech,” not “a campaign speech.” He also said that “the president believes that Chairman Ryan’s very sincere,” and that all Obama did was “describe one vision and then describe his own.”
A day after President Obama savaged the Republicans’ 2012 budget proposal, while delivering his own framework for deficit reduction, Republicans are still smarting.
Rep. Paul Ryan (R) of Wisconsin, chairman of the House Budget Committee, told a forum Thursday that he and other House Republicans attended the president’s speech expecting an olive branch, and instead “we got front-row seats to President Obama’s reelection campaign speech.”
“I knew we were going to get a lot of partisan attacks,” Congressman Ryan, the author of the GOP budget plan, told an event organized by the conservative think tank e21. But, he added, he “didn’t expect it from the commander in chief,” saying that Obama had brought himself down to the level of a “partisan mosh pit.”
Mr. Obama usually prefers to stay above the fray. But in his speech Wednesday, he seemed to use as much verbiage pounding the Ryan plan as laying out his own. Some Republicans have said they felt the president was even calling the Ryan plan “un-American,” when he said that it “would lead to a fundamentally different America than the one we've known – certainly in my lifetime.”
Ryan’s plan would transform Medicare from an entitlement to a system of “premium support,” in which the government helps seniors purchase private insurance, with consideration for income level and health needs.
Obama characterized it this way: “It says, instead of guaranteed health care, you will get a voucher. And if that voucher isn't worth enough to buy the insurance that's available in the open marketplace, well, tough luck – you're on your own."
Ryan rejects the use of the term “voucher,” and calls Obama’s description of his proposal a “dramatic distortion.”
At his daily briefing Thursday, White House press secretary Jay Carney called Obama’s address “a policy speech,” not “a campaign speech.” He also said that “the president believes that Chairman Ryan’s very sincere,” and that all Obama did was “describe one vision and then describe his own.”
Wednesday, April 13, 2011
Saturday, April 09, 2011
The GOP did just fine
From: American Thinker
There is more good in the budget deal than is revealed in the budget cut number agreed on last night. Measured against the size of budget cutting necessary for the future, the numbers are small, to be sure, but this number was a tactical, not a strategic engagement. The key to the matter is momentum, principle, and precedent, which set up the strategic environment for 2012.
There is more good in the budget deal than is revealed in the budget cut number agreed on last night. Measured against the size of budget cutting necessary for the future, the numbers are small, to be sure, but this number was a tactical, not a strategic engagement. The key to the matter is momentum, principle, and precedent, which set up the strategic environment for 2012.
Senate Majority Leader Harry Reid (D., Nev.) didn't want to cut anything at first. But bowing to political reality, eventually ponied up about $4.7 billion in cuts. He ended up with $33.8 billion less spending than he wanted. And he called it an "historic" accomplishment. (Not surprisingly, the left is appalled).
House Speaker John Boehner (R., Ohio), on the other hand, initially proposed $32 billion in spending cuts. House Republicans, led by an undaunted freshman class, bumped that number up to $61 billion ($100 billion off the president's budget), before settling on $38.5 billion.
That's $6.5 billion more than Boehner asked for to begin with, and $5.5 billion more than the $33 billion that Vice President Joe Biden and Senate Democrats claimed had been agreed to less than two weeks ago.
The GOP Made a Bad Deal
From: American Thinker
Last night's budget compromise amounted to series of broken promises by the GOP, and it was a tremendous opportunity lost. No matter what the accounting tricks and PR machinations say, the simple facts are that the GOP promised conservatives $100 billion in cuts, and didn't deliver. Worse yet, the GOP misread its mandate for massive spending reform, and will suffer for it to the benefit of Democrats. Here's why:
Last night's budget compromise amounted to series of broken promises by the GOP, and it was a tremendous opportunity lost. No matter what the accounting tricks and PR machinations say, the simple facts are that the GOP promised conservatives $100 billion in cuts, and didn't deliver. Worse yet, the GOP misread its mandate for massive spending reform, and will suffer for it to the benefit of Democrats. Here's why:
1. There's too much at stake.
This was last week's talking point -- one the GOP may have relinquished last night -- but it's impossible to underestimate the threat that that spending presents. Blogger Ace of Spades captured things nicely in writing that even Rep. Ryan's proposed budget cuts are necessary, but hardly sufficient.
"If you believe that the GDP will start growing at a healthy rate and continue at that rate forever, and if you manage to reform Medicare, Medicaid, and Social Security, and if you reform the budget process, and if you reform the tax code, and if you accomplish all these reforms in FY12, then you might be able to pay off this year's spending within 11 to 12 years. Or maybe the decade after. This is what the President and his crackerjack economic team have wrought. A one-year deficit that is so large that it can only be paid back if everything goes exactly right."
In the broader "spending-us-into-oblivion" context, last night's compromise struck exactly the wrong note. Forget "runaway spending." Ever seen Unstoppable?
Friday, April 08, 2011
Rep. Louise Slaughter: GOP Freshmen Came to Washington 'To Kill Women'
Really? Just a weeeeeeeee bit of a stretch, huh?
From: CNSnews.com
Rep. Louise Slaughter (D-N.Y.) said today that the new Republicans elected to the House of Representatives last November came to Congress "to kill women." She also likened Republican efforts to prohibit federal funding of abortion except in cases of rape, incest or where the life of the mother is endangered to actions taken by Nazis.
“This is probably one of the worst times we’ve seen because the numbers of people elected to Congress. I went through this as co-chair of the arts caucus," Slaughter said. "In ’94 people were elected simply to come here to kill the National Endowment for the Arts. Now they’re here to kill women.”
Slaughter was drawing a parallel between the Republican House majority elected in November 1994 and the Republican House majority elected in November 2010.
From: CNSnews.com
Rep. Louise Slaughter (D-N.Y.) said today that the new Republicans elected to the House of Representatives last November came to Congress "to kill women." She also likened Republican efforts to prohibit federal funding of abortion except in cases of rape, incest or where the life of the mother is endangered to actions taken by Nazis.
“This is probably one of the worst times we’ve seen because the numbers of people elected to Congress. I went through this as co-chair of the arts caucus," Slaughter said. "In ’94 people were elected simply to come here to kill the National Endowment for the Arts. Now they’re here to kill women.”
Slaughter was drawing a parallel between the Republican House majority elected in November 1994 and the Republican House majority elected in November 2010.
Tuesday, April 05, 2011
Paul Ryan’s Budget: The Path to Prosperity?
From: Pajamas Media
At first glance, House Budget Chairman Paul Ryan’s FY2012 Budget Resolution is a step in the right direction. With a determined moniker — “The Path to Prosperity” — the Republican roadmap is oriented on spending cuts, debt reduction, and credible revenue expectations.
The plan is not too surprising to those of us who have followed Ryan’s previous budget crusades. It concentrates on cutting government spending — reforming two of our three largest autopilot programs, Medicare and Medicaid — while recognizing that attempts at raising tax revenue will not support economic growth or fix our spending problem.
The new plan realistically projects that tax revenue as a percentage of the economy will grow as a result of economic growth and not rate hikes. Still, there are those who will argue that a serious debt and deficit reduction plan must include tax rate increases.
However, the Congressional Budget Office estimates that tax rates would have to more than double to address projected spending and — as Robert Barro and Charles Redlick of Harvard have demonstrated — such rates would paralyze the economy. Also, the Deficit Commission’s plan called for reducing the deficit by raising tax revenue to an unprecedented 21 percent of GDP which amounts to no more than wishful thinking on the part of its authors.
By contrast, under Ryan’s plan tax revenue will consume 17.1 percent of the wealth created by American families, a number that is still too high but more in line with the government’s abilities to collect money.
The real question is whether the plan will live up to its name by addressing our fiscal problems and putting us on the “path to prosperity.” Here are the guiding principles for responsible budgeting and how the Ryan plan matches up to each.
At first glance, House Budget Chairman Paul Ryan’s FY2012 Budget Resolution is a step in the right direction. With a determined moniker — “The Path to Prosperity” — the Republican roadmap is oriented on spending cuts, debt reduction, and credible revenue expectations.
The plan is not too surprising to those of us who have followed Ryan’s previous budget crusades. It concentrates on cutting government spending — reforming two of our three largest autopilot programs, Medicare and Medicaid — while recognizing that attempts at raising tax revenue will not support economic growth or fix our spending problem.
The new plan realistically projects that tax revenue as a percentage of the economy will grow as a result of economic growth and not rate hikes. Still, there are those who will argue that a serious debt and deficit reduction plan must include tax rate increases.
However, the Congressional Budget Office estimates that tax rates would have to more than double to address projected spending and — as Robert Barro and Charles Redlick of Harvard have demonstrated — such rates would paralyze the economy. Also, the Deficit Commission’s plan called for reducing the deficit by raising tax revenue to an unprecedented 21 percent of GDP which amounts to no more than wishful thinking on the part of its authors.
By contrast, under Ryan’s plan tax revenue will consume 17.1 percent of the wealth created by American families, a number that is still too high but more in line with the government’s abilities to collect money.
The real question is whether the plan will live up to its name by addressing our fiscal problems and putting us on the “path to prosperity.” Here are the guiding principles for responsible budgeting and how the Ryan plan matches up to each.
The Republican Budget
From: National Review Online
The budget released this morning by House Budget Committee chairman Paul Ryan is nothing short of stunning. It is easily the most comprehensive and ambitious conservative policy program ever put forward by an actual officeholder. Nothing that Newt Gingrich or even Ronald Reagan ever proposed quite compares. Gingrich and Reagan also actually got legislation enacted, of course, and it remains to be seen what will come of this bold agenda in the coming years. But as an agenda, it is just what this difficult moment calls for.
The document offers not just tables of spending levels in various categories (which is all that is technically required of a budget resolution) but a vision of a transformed federal government and American welfare state: entitlement reform, tax reform, welfare reform, budget process reform, and cuts and reforms of many individual discretionary programs all aimed at making possible a thoroughgoing but gradual and palatable course correction from a path that leads to a catastrophic debt crisis toward a path to sustainable growth.
The top line numbers and the entitlement reforms have been getting the most attention, and rightly so of course. The savings achieved in both the short and long term are pretty extraordinary. This budget spends $6.2 trillion less than President Obama’s budget over just the next 10 years, and imposes $1.5 trillion less in taxes. It reduces the ten-year deficit by more than $4 trillion. It brings government spending below 20 percent of GDP again—roughly the postwar average. And it starts significantly reducing the size of the debt as a percentage of the economy very swiftly—while the president’s budget never does. Here is a quick comparison of the effect on the debt in just the next decade, which I put together using the CBO’s baseline and its assessments of the Obama and Ryan budgets.
There has been a lot of talk in the past year about the need to start an adult conversation about the collapse of our government’s finances. But too often calling for such a conversation has in practice been a means of avoiding actually having that conversation. That has certainly been President Obama’s approach. He has talked about talking, but offered no solutions and no sense of a real awareness of the problem—indeed, his budget would only increase projected deficits and debt. I think it is safe to say that House Republicans have today begun to put an end to that unconstructive pantomime and to force a meaningful debate into being. They have put a real solution on the table, and our domestic policy debates will never be the same.
The document offers not just tables of spending levels in various categories (which is all that is technically required of a budget resolution) but a vision of a transformed federal government and American welfare state: entitlement reform, tax reform, welfare reform, budget process reform, and cuts and reforms of many individual discretionary programs all aimed at making possible a thoroughgoing but gradual and palatable course correction from a path that leads to a catastrophic debt crisis toward a path to sustainable growth.
The top line numbers and the entitlement reforms have been getting the most attention, and rightly so of course. The savings achieved in both the short and long term are pretty extraordinary. This budget spends $6.2 trillion less than President Obama’s budget over just the next 10 years, and imposes $1.5 trillion less in taxes. It reduces the ten-year deficit by more than $4 trillion. It brings government spending below 20 percent of GDP again—roughly the postwar average. And it starts significantly reducing the size of the debt as a percentage of the economy very swiftly—while the president’s budget never does. Here is a quick comparison of the effect on the debt in just the next decade, which I put together using the CBO’s baseline and its assessments of the Obama and Ryan budgets.
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