Spending Daily | October 11, 2012
Keeping Score Matters In Baseball and Budgets
The Wall Street Journal reports, “In baseball, in corporations and in the federal budget, score-keeping is important. It tells you where you’ve been and guides you to where you want to go. The sparring between President Barack Obama and challenger Mitt Romney over the Romney tax plan is reviving the debate about how best to score big proposals to change tax or spending policies: If tax reform is designed to increase the pace of economic growth, should official scorekeepers in Congress take into account that growth spurt and the extra tax revenue it would produce? Tax-cut fans shout, ‘Yes!’ Tax-cut foes and deficit phobes shout, ‘No!’ This matters. … When the campaigning ends and promises morph into legislation, the Joint Tax Committee and Congressional Budget Office will decide, for instance, how much deficit reduction Congress can claim if it adopts an Obama-style package of tax increases and spending cuts. They will decide if a Romney-style tax reform would, as he says, produce the same amount of revenue as the current tax code.”
Obama Faces Criticism For Lacking Specifics On Tax/Spending Plan
The Washington Free Beacon reports, “When it comes to contentious issues such as tax reform and deficit reduction, President Obama has failed to provide a detailed view of what he hopes to accomplish in a second term. … Despite a growing bipartisan consensus surrounding the urgent need for comprehensive tax reform that lowers rates by eliminating loopholes and deductions, the president has made no serious effort on this front during his first four years in office. He disavowed his own debt commision, which had put forward a framework for comprehensive tax reform, along with numerous proposals to reduce federal spending. … His plan for ‘taxes and the budget,’ as outlined on his campaign website, consists of two nebulous components—’Asking millionaires and billionaires to pay their fair share’ (raising taxes) and ‘Investing in the middle class’ (more stimulus spending)—as well as a third (‘Reducing the deficit by more than $4 trillion over the next decade’) that has been roundly dismissed as inaccurate. Independent experts estimate the real savings Obama has proposed amount to little more than 2 trillion over 10 years —the vast majority of which is achieved through tax increases.”
Contractors Avoid Sending Layoff Notices Despite Warnings
Role Call reports, “Despite growing warnings from GOP Senators, government contractors appear unconvinced that they must issue sequester-related layoff notices before the elections next month to comply with federal law. Though a trio of Senators has traveled the country warning of impending job losses caused by automatic budget cuts that take effect Jan. 2, industry insiders and budget experts say defense contractors are unlikely to need to lay off workers on the day the cuts are scheduled to begin. “ The White House and Office of Management and Budget has assured the contactors they will cover the coast of failing to comply with a law- the WARN act- which requires 60 days notice of termination of employment. “Even if the sequester takes effect, contractors are unlikely to see an immediate drop-off in funding because those funds were obligated in previous fiscal years…. One defense industry lobbyist said Defense Department contractors used the WARN Act notices to draw attention to the looming cuts in a way that the president and lawmakers, who are focused on Election Day, would understand.”
Jobless Claims At A Four Year Low
Bloomberg is reporting that jobless claims have fallen to a four year low, writing, “Fewer Americans than forecast filed first-time claims for unemployment benefits last week, which may reflect difficulty adjusting the data for seasonal swings at the start of a new quarter. Applications for jobless benefits dropped 30,000 to 339,000 in the week ended Oct. 6, the fewest since February 2008,Labor Department figures showed today. Economists forecast 370,000 claims, according to the median estimate in a Bloomberg survey. One state accounted for most of the plunge in claims, a Labor Department spokesman said as the datawere issued to the press. Waning dismissals may help clear the way for bigger hiring gains with any improvement in demand. At the same time, the global economy cooling and a lack of clarity on U.S. fiscal policy are hurdles for faster gains in employment.”
Romney Claims He’ll Get Tough on China
The Associated Press reports, “Republican presidential contender Mitt Romney is promising to get tough on China to help American workers, but his plans could backfire. Romney is pledging, on his first day in office, to designate China a currency manipulator, a step no administration has taken against any country for 18 years. That could, eventually, lead to tariffs punishing China for policies that Americans believe unfairly keep Chinese products cheap, hurting U.S. manufacturers. Tariffs could trigger a trade war with a country that is the fastest-growing market for U.S. exports. Even if they don’t, the designation would instantly set back relations with Asia’s emerging superpower.” However analysts doubt Romney would follow through on the claims because of possible repercussions. “In a speech this week, Romney said China’s recent assertiveness was ‘sending chills through the region.’ He said the pivot is under-resourced and has alienated U.S. allies elsewhere. He outlined plans to expand U.S. naval power – although it’s unclear how he’d pay for it since he also wants to slash government spending. … U.S.-Chinese relations are entering a critical juncture. Two days after the Nov. 6 vote,China will begin its own once-in-a-decade leadership transition. How the next U.S. administration gets on with the new guard in Beijing could determine whether the world’s pre-eminent military powers can cooperate in the Asia-Pacific region or head on a path to confrontation.”
Can America’s Debt Addition Be Cured?
Chuck Bentley write an an op ed for Politico, “Many hoped to come away from the first presidential debate with renewed optimism for a solution to the fragile condition of our nation’s fiscal health. Unfortunately, I came away less optimistic. … A national crisis in spending beyond our means reaches from the White House to the home front. Recently, the Labor Department noted that the bottom fifth of Americans spent more than double their incomes (through things like credit cards, drawing from savings and payday loans). In a healthy budget, debt payments should not be more than 5 percent of monthly spending. But the Economic Policy Institute reports that in 2010, about one-fourth of the poorest fifth of households were spending more than 40 percent of their income servicing debt. … This is a dire picture for all of us. No cost of living increase and certainly no partisan quick fix can address this crisis.” Also concerning is the reported additional $2,000 tax burden middle-income families will see as the result of the debt crisis. “On the whole, it’s a grim picture facing America. Regardless of which candidate is elected president, after this election, it will be time for real bipartisan efforts to set a new course for America, because this current economy is a house of cards stacked far too high. “
Spain Hit Hard By Credit Downgrade
The Wall Street Journal reports, “Standard & Poor’s Ratings Services cut its rating on Spain and maintained a negative outlook, citing the mounting pressures from the country’s economic recession. The ratings company warned Wednesday that Spain’s credit-worthiness might continue to deteriorate as Madrid struggles to close a yawning budget gap, and said the Spanish government’s ‘hesitation’ to request a bailout from the European Union is ‘potentially raising the downside risks to Spain’s rating.’ S&P’s downgrade totriple-B-minus from triple-B-plus puts its rating on an equal footing with where Moody’s Investors Service rates Spain, just one notch above speculative-grade, or ‘junk,’ status. Moody’s, however, has Spain on review for a potential downgrade and expects to complete its review by the end of October. The market has been closely waiting to see if Moody’s will cut Spain to junk status.” The firm predicts the country’s economy will contract nearly 2 percent this year and without cuts they doubt Spain’s fiscal targets can be met.
Government Waste: Surely You Can’t Be Serious?
Bankrupting America writes, “When the Essential Air Service program was created in 1978, it was intended to keep small airports open, as de-regulation no longer required them to carry such routes. Today, it requires airlines to service airports sometimes as close as 75 miles apart, costing taxpayers an average of $200 per empty seat. In a recent expose, ABC 10 News in San Diego traveled to Maryland to see just how many empty seats were on board the short flight from Baltimore to Hagerstown. During the flight, the pilot invited the only other passenger on the flight who was not part of the film crew to join him in the co-pilot’s seat for the duration of the flight. On another flight from Cleveland, Ohio, to Dubois, Pa., only one other passenger was present for the 180-mile flight on a 19-passenger aircraft. Overall the program is allocated $200 million per year by the federal government, but clearly a large portion of those funds is paying for empty seats.”