BA Spending Daily September 19, 2012

It’s the Spending, Stupid
A new NBC-Wall Street Journal poll released yesterday shows that for President Obama significant increases in federal spending and the national debt have now topped job-creation as a major concern for voters heading into November, according to the Washington Post.  This is just the latest in a series of polls that show Americans understand the burden of running up massive deficits and are willing to reward candidates who offer a “tough love” message of fiscal responsibility.  A Public Notice poll conducted by the Tarrance Group earlier this month found that behind jobs and the economy (37 percent), wasteful government spending and federal deficits (17 percent) are the top issues.  Additionally, a strong majority of voters see an impact from the rising federal debt, with 67 percent saying that the economy has been impacted and 53 percent say they/their own family has been impacted by the debt.  Whoever owns the issue of wasteful spending, could likely be the next President.

“Senate Finance Committee to Hold Fiscal Cliff School“
Politico reports, “ Senate Finance Committee Chairman Max Baucus [D] is giving his panel members a crash course on the fiscal cliff before they leave Washington again.” Democrats and Republicans alike are invited to take part in a ”private meeting Wednesday with Doug Elmendorf, the director of the Congressional Budget Office. “Elmendorf has been sounding the alarm about the economic consequences that lie ahead of Congress at the end of the fiscal year should they fail to act. ”Unless Congress acts by Dec. 31, $1.2 trillion in spending cuts will begin and the Bush-era tax cuts on wages, capital gains and dividends will expire.”

The Tax Divide: Romney v. Obama 
The New York Times reports, “Come November, the economy — and who would be better to fix it — will probably be at the forefront of voters’ minds. If you believe the rich pay too little, chances are you will vote for Barack Obama. If you think tax rates on wealthy Americans are still too high, you will vote for Mitt Romney instead.” Conservatives strong oppose the liberal notion of using taxes for income redistribution. “A growing share of Americans believes the rich pay too little in taxes. Many say our country would be fairer if those earning more than $250,000 paid more. … Still, many shrink from raising taxes on the wealthy. A McClatchy/Marist poll in July found that more than half of Americans want all the tax cuts passed in the Bush administration to be extended, including those for the richest Americans. What’s more, a quarter of Americans believe the poor don’t pay enough, the highest share since Gallup started asking the question a decade ago.”

“Puff, the Magic Drag on the Economy”
Lamar Alexander and Mike Pompeo editorialize in the Wall Street Journal, “As Congress works to reduce spending and avert a debt crisis, lawmakers will have to decide which government projects are truly national priorities, and which are wasteful. A prime example of the latter is the production tax credit for wind power. It is set to expire on Dec. 31—but may be extended yet again, for the seventh time. This special provision in the tax code was first enacted in 1992 as a temporary subsidy to enable a struggling industry to become competitive. Today the provision provides a credit against taxes of $22 per megawatt hour of wind energy generated. From 2009 to 2013, federal revenues lost to wind-power developers are estimated to be $14 billion—$6 billion from the production tax credit, plus $8 billion courtesy of an alternative-energy subsidy in the stimulus package—according to the Joint Committee on Taxation and the Treasury Department. If Congress were to extend the production tax credit, it would mean an additional $12 billion cost to taxpayers over the next 10 years.”

Feds Say Easing “vital for boosting ‘unacceptably slow’” Economic Growth
Bloomberg reports, “Federal Reserve Bank of New York President William C. Dudley said the central bank’s new stimulus is vital for boosting ’unacceptably slow’ improvement in economic growth.” Dudley said in a speech that without easing growth would remain slow, saying, “’As a result, unemployment would remain unacceptably high, with economic risks skewed to the downside.’  After 43 straight months of unemployment above 8 percent, the Federal Open Market Committee announced on Sept. 13 its third round of large-scale asset purchases since 2008. The FOMC for the first time didn’t set a limit on the amount the Fed will buy or the duration of purchases. Chairman Ben S. Bernanke said that day at a press conference he’ll add to the record stimulus until achieving ‘sustained improvement’ in the labor market.”

$900 Billion Dollar Farm Bill Too Costly For Some Lawmakers
The Hill reports, “House Republican leaders are pressuring members to refrain from backing a measure that would force a floor vote on a five-year farm bill. GOP leaders have refused to allow a vote on bipartisan legislation that cleared the House Agriculture Committee, 35-11, in July. Officials in leadership say the bill lacks the support to pass the House, noting conservative members who have balked at its $900- billion price tag. But lawmakers from farm-heavy districts are furious that the bill has stalled, and are calling for action before the November election. They have joined forces to apply pressure to Speaker John Boehner  (R-Ohio) and his lieutenants. And now, there has been some pushback. After supporting a discharge petition aimed at bypassing the GOP’s control of the House schedule, Reps. Scott Tipton (R-Colo.) and Renee Ellmers (R-N.C.) on Friday abruptly withdrew their signatures. Should the petition attract 218 signatures, the farm bill would come to the floor later this year. While that is highly unlikely, it is clear that GOP leaders view the possibility of mounting support for action on the farm measure as a political problem.”

“Estate tax debate re-emerges as fiscal cliff looms”
According to Politico, “A tiny fraction of the population is affected by it, a majority of the public fears it, and it’s about to become a marquee bout in the congressional fight over taxes this year — again. The estate tax — famously branded the ‘death tax’ by conservatives in the 1990s — is one of many tax provisions that lawmakers are eying as potential bargaining chips as the expiration of the Bush-era tax cuts, and hundreds of billions of dollars’ worth of fiscal uncertainty, approach at year’s end. … If Congress doesn’t act before the end of the year, the tax will expand from a 35 percent rate on estates valued at more than $5 million, to 41 percent to 55 percent on estates valued at more than $1 million. Those rates would affect 55,200 estates next year, according to the Joint Committee on Taxation. Letting that happen has virtually no support in either party. Still, none of the options has enough support to become a long-term solution — and none of the options would affect more than 2 percent of the population.”