Spending Daily | November 6, 2012

“Toxic Brew” Waiting For Next President
The Associated Press reports, “The race for the White House is pretty much back where it started … Despite some detours, the emphasis is heavily on the nation’s lukewarm economy and President Barack Obama’s stewardship of it. … [A]s millions of Americans vote for president, Congress and thousands of state and local posts, the excruciatingly slow economic recovery and continued high joblessness were clearly weighing on their minds. … Economic issues will shape the national post-election agenda no matter who wins as the nation hurtles toward a toxic brew of expiring Bush-era tax cuts and more than $1 trillion in automatic defense and domestic spending cuts that will begin to take effect in January unless Congress can strike a deficit-reduction deal to stop it. Congress, as closely divided as the nation itself, so far has been unable to do so.”

“Tough Calls on Deficit Await the Winner”
Damian Paletta editorializes in The Wall Street Journal, “If the winner of the presidential election wants to tackle America’s groaning debt load, he will probably have to break a campaign promise or two. President Barack Obama and Republican challenger Mitt Romney have hammered at each other’s plan for tackling the nation’s growing debt. They are similar, though, in one key regard: Both offer prescriptions that largely exempt the vast middle class from the bitterest medicine. … ‘It’s an extraordinarily dangerous situation,’ said former Federal Reserve Chairman Alan Greenspan, describing the growth of the nation’s debt and a lack of consensus about how to address it. ‘I believe we underestimate the size of current financial imbalances and how difficult it will be to resolve them. We’re trying to do this without pain. There’s just no credible scenario in which that happens.’”

U.S. Gives Election-Eve Commitment To Solve Fiscal Crisis! Phew.
Bloomberg reports, “The U.S. gave an election-eve commitment to ‘carefully calibrate’ its budget retrenchment amid global warnings that a rush of austerity would harm the weak world economy. As Americans prepared to choose a president, Group of 20 finance chiefs said after talks yesterday in Mexico City that the U.S. pledged to avoid a ‘sharp fiscal contraction’ in 2013. That’s when $607 billion of automatic tax increases and spending cuts are set to take effect unless lawmakers act. … The push for U.S. action took center stage at the G-20 meeting during which finance ministers also agreed to dilute their two-year-old budget-cutting goals. Their new vow, to ensure the ‘pace of fiscal consolidation is appropriate to support recovery,’ highlights increased concern that government belt-tightening would threaten an expansion the G-20 labeled modest.”

Fiscal Cliffhanger
Reuters reports, “If President Barack Obama wins re-election, he’s expected to move quickly, perhaps within a day, to renew his bid for a bipartisan deal to avert a ‘fiscal cliff’ that threatens to push the United States into recession, top Senate Democratic aides said on Monday. … If Republican challenger Mitt Romney wins, much of the work on a deficit-reduction deal that replaces the automatic cuts and reforms the tax code could be largely delayed until he takes office on Jan 20. … Democrats and Republicans have until the end of December to reach a massive deficit reduction deal or see the expiration of all tax cuts enacted under former president George W. Bush for millions of Americans, both the rich and middle class. In addition, $1.2 trillion in spending cuts would begin to kick in, delivering a blow to the economy that experts predict would lead to a recession.”

“Lame Duck looking lamer as fiscal cliff nears”
According to Politico, “The Washington defense establishment used to expect the life-or-death question of sequestration would be decided after Tuesday’s elections, in Congress’s year-end closing session. But the conventional wisdom has shifted: Now it appears that no matter who wins the White House, the lame-duck Congress is unlikely to have the last word. That’s the consensus of defense watchers across Washington, several of whom told POLITICO they even expect sequestration to take effect, at least for the first few weeks after its official start date, Jan. 2. Billions of dollars in defense spending ride on the outcome of the election, as President Barack Obama has pledged to draw down the military, while Republican challenger Mitt Romney has said he’d plus it up.

Obama’s Green Jobs Pledge “More Modest” Than Projected
Bloomberg repots, “Four years ago Obama pledged to make the U.S. less reliant on fossil fuels and create 5 million green jobs in 10 years. So far, job creation has been far more modest than Obama projected, and bankruptcies at government-supported companies, including solar-panel maker Solyndra LLC, which received a $535 million loan guarantee, have generated a political backlash. The 2009 economic-stimulus plan spent $90 billion on clean energy and ‘saved or created’ 225,000 positions through 2010, the President’s Council of Economic Advisers reported in November 2010. Out of 113,247 participants in green-job training programs funded with $435 million in stimulus, 30,857 people were hired in new positions, the Department of Labor’s inspector general said in an Oct. 25 report.”

Crippling Strike By Greek Labor Unions To Protest Wage & Pension Cuts
Reuters reports, “Hundreds of thousands of Greeks began a crippling 48-hour strike on Tuesday to protest against a new round of wage and pension cuts that parliament is expected to approve by a narrow margin. The parliamentary vote on Wednesday is the biggest test yet for the government of Prime Minister Antonis Samaras, which needs victory to secure aid from foreign lenders but has failed to convince its smallest coalition partner and the public to back the reforms. The strike, called by Greece’s two biggest labor unions representing half of the four million-strong workforce, brought public transport to a virtual standstill and shuttered schools, banks and local government offices.”