BA Spending Daily October 2, 2012

Spending Daily | October 2, 2012

“Poll: Two-Thirds of Americans Believe Gov’t Spending Does More Harm Than Good”
Newsmax reports, “Two out of three Americans believe that government spending does more harm than good, a new poll released Tuesday shows.  More than half say that President Barack Obama’s stimulus harmed the economy with 86 percent of those surveyed saying it did nothing to help their own personal finances. ‘ Voters understand that our $16 trillion national debt is dragging down our nation’s economy and taking their personal finances with it,’ said Gretchen Hamel, executive director of Public Notice which commissioned the Tarrance Group. ‘ With debt and spending now a top issue in this election, thedebate from here on out should be focused on which candidate has the most credible plan to reduce spending and the debt and get our fiscal house in order.’” Click here to read the full article.

White House Offers to Pick Up Tab For Defense Industry Layoffs
Fox News reports, “If a $16 trillion debt wasn’t enough for taxpayers to lose sleep over, the Obama administration has offered to pick up the check — at taxpayer expense — for legal costs associated with defense industry layoffs should automatic Pentagon cuts be triggered. Republicans are now crying foul over the move, accusing the White House of playing politics over the possibility of mass layoffs. At issue are the crush of Pentagon budget cuts set to go into effect starting in January should Congress fail to avert them. Under federal law, many employers are supposed to give 60-day notice of ‘mass layoffs’ if they are considered likely, but the Obama administration for months now has urged companies not to do so.  Last week, the administration doubled down on that plea by offering to cover legal fees in compensation challenges.”

“Almost 2,400 Millionaires Pocketed Unemployment Benefits”
Bloomberg reports, “Almost 2,400 people who received unemployment insurance in 2009 lived in households with annual incomes of $1 million or more, according to the Congressional Research Service. The report was released after about 1.1 million people exhausted their jobless benefits during the second quarter of 2012, when more than 4.6 million filed initial unemployment claims. Eliminating those payments to high earners is one idea being considered as U.S. lawmakers struggle to curb a projected $1.1 trillion deficit for the fiscal year that ended Sept. 30, with the nationwide jobless rate at 8.1 percent. ‘Sending millionaires unemployment checks is a case study inout-of-control spending,’ U.S. Senator Tom Coburn, an Oklahoma Republican, said in an e-mail.” The report may include people whose spouses had high paying jobs or people who received unemployment benefits, then in the same year became wealthy. “Congress has expanded unemployment benefits that had been paid for by states and lasted 26 weeks. The federal money lengthened the maximum period to 99 weeks, though the researchers said in practice no state currently offers more than 79 weeks.”

“Official resigns after report finds VA spent $6.1M on lavish conferences”
According to The Hill, “The head of Human Resources for the Veterans Affairs Department resigned after an inspector general’s (IG) report found that the agency spent $6.1 million on two weeklong conferences. The 142-page IG report investigated about $762,000 in ‘unauthorized, unnecessary, and/or wasteful expenses’ during two conferences held in Orlando, Fla., that included $49,516 to produce a parody video of the late-Gen. George S. Patton. Assistant Secretary for Human Resources and Administration John Sepúlveda stepped down on Sunday following the release of the report, which determined that he ‘abdicated his responsibilities’ by not properly overseeing the conferences. The conferences were held in 2011 for about 1,800 VA employees ‘to fulfill valid training needs,’ according to the report. But the VA’s top leadership ‘failed to provide proper oversight,’ which allowed lower-level senior officials to spend $280,698 on an excessive contract with a Marriott Hotel for audio-visual services, catering, food and drinks.”

“Administration Advises States to Expand Medicaid or Risk Losing Federal Money”
The New York Times reports, “The Obama administration is putting pressure on states to expand Medicaid, telling them they may lose federal money if they delay. But at the same time, federal health officials have also told states that if they choose to expand Medicaid, they are free to reverse the decision at any time. … The expansion of Medicaid is a major part of President Obama’s health care law, originally expected to account for half of the 32 million people who were to gain coverage. Congress required states to expand Medicaid to cover people under the age of 65 with income less than or equal to 133 percent of the federal poverty level (up to $25,390 for a family of three).” Cindy Mann, the federal official heading Medicaid, said “that while ‘there is no deadline’ for expanding Medicaid, states would pay a price for delay. Under the new law, she said, the federal government will pay the entire cost of Medicaid coverage for newly eligible beneficiaries for three years, from 2014 to 2016. The federal share will decline to 95 percent in 2017, 94 percent in 2018, 93 percent in 2019 and 90 percent in 2020 and later years.”

Postal Service Sinks Even Deeper Into Debt
The New York Times reports, “The Postal Service sank deeper into debt on Monday after the agency defaulted on a $5.6 billion payment due at the end of September, the second time it has missed a deadline this year to set aside money for its future retiree health benefits. The agency said it expected net operating losses to be $15 billion for the fiscal year that ended Sept. 30. That loss includes the two missed payments totaling $11.1 billion for the agency’s future retiree funds. This month, the Postal Service also faces a $1.5 billion workers’ compensation insurance payment to the Labor Department. It said on Monday that it would most likely make that payment, but that it would be left with a cash shortage of about $100 million. … The agency had warned Congress for months that it would not be able to make the payments into the fund for its future retiree health benefits.  … Lawmakers left Washington last month without passing legislation that would have helped the Postal Service deal with its crippling debt and its operating losses.”

 Economic Downturn Witnessed Firsthand on Campaign Trail 
The Associated Press reports, “Sometimes all President Barack Obama has to do is look out the window to get a firsthand look at the country’s economic woes. This week in this town, the presidential motorcade speeds past opulent homes lining manmade Lake Las Vegas as he heads to the sprawling luxury development where he’s preparing for the upcoming debates with Mitt Romney. But many houses here are empty, victims of Nevada’s foreclosure crisis, and others are worth far less than their purchase price. … And if Obama didn’t get the message of pocketbook pain, the marquee at a business – one that is open if perhaps not thriving – spells it out: ‘President Obama, we need lower taxes.’ … ‘It’s good to get out of Washington,’ Obama frequently tells crowds on the campaign trail, whether he’s in an economically-booming community or a struggling one in a nation where the unemployment rate hasn’t dropped below 8 percent since January 2009 – the first month of his presidency.”

“Report: Nearly 90 percent of Americans would see taxes rise if ‘fiscal cliff’ hits”
The Washington Post reports, “Nearly 90 percent of Americans would face higher taxes next year if Congress lets the nation hurtle over the ‘fiscal cliff,’ the year-end precipice of tax hikes and spending cuts that threatens to throw the nation back into recession. A study published Monday by the nonpartisan Tax Policy Center finds that taxes would go up by a collective $536 billion next year, or about $3,500 per household, reducing after-tax income by more than 6 percent — an ‘unprecedented tax increase.’ The impact would vary significantly by income level, the study found, ranging from a $412 jump for the lowest earners (a reduction of 3.7 percent in after-tax income) to $120,000 for the top 1 percent (a 10.5 percent bite). Middle-income households — those earning between $40,000 and $65,000 a year — would see their taxes go up by an average of $2,000, the study found, leaving those families with 4.4 percent less money to spend.”

Survey: Fiscal Cliff “most serious risk facing the economy”
CNN Money reports, “Getting economists to agree on almost anything is tough. But on the subject of the fiscal cliff, a survey by CNNMoney found an almost unanimous consensus. Of 17 top economists surveyed, 14 believe the end of tax breaks and the steep federal spending cuts set to take effect at the start of next year would cause the economy to tumble into a new recession. Twelve of them believe the fiscal cliff is the most serious risk facing the economy, more serious than the European sovereign debt crisis, business uncertainty about various government regulations or the continued weakness in the job and housing markets. ‘Should gridlock prevail, business sector investment and hiring will be stymied, and the household sector will sharply curtail spending,’ said Patrick O’Keefe, director of economic research for accounting firm JH Cohn. But all 17 agree on one thing — the economy won’t plunge over the fiscal cliff.”