Spending Daily | July 12, 2012
Bankrupting America: “As San Bernadino Goes …”
After a third California city declared bankruptcy, The Wall Street Journal editorializes, ”[T]he biggest victims of the city’s fiscal crisis are taxpayers…San Bernardino’s problems aren’t much different from those of Stockton or even Detroit and Los Angeles. Most municipalities have postponed necessary labor reforms in hopes that a robust economic recovery would avert insolvency. That recovery has never arrived. Their hands have also been tied by collective-bargaining agreements, which are the real systemic risk to municipal finance—and to investors who think they’re a tax-free lunch.”
Pentagon Budget to Exceed Spending Caps
Th Hill reports, “The Congressional Budget Office issued a report Wednesday that found the Pentagon’s five-year budget plan is projected to exceed the spending caps established under last year’s Budget Control Act (BCA). The CBO report found that over the next decade, the Pentagon’s current budget plan would exceed the BCA spending caps by $508 billion without the sequestration cuts. Adding those in, the budget — which did not take into account the sequester this year — exceeds the caps by $978 billion.”
Fed Open to Another Stimulus?
Bloomberg reports, “The Federal Reserve signaled that a further economic slowdown would bring growing support among policy makers for additional steps to spur the three-year expansion. A few members of the Federal Open Market Committee said the Fed should ease policy to move the economy toward its targets for full employment and stable prices, according to minutes of the June 19-20 meeting released yesterday in Washington.”