Spending Daily | November 28, 2012

Flashback: “Obama Pledges Reform of Social Security, Medicare Programs” (in 2009)
Nearly four years ago, in January 2009, The Washington Post reported: “President-elect Barack Obama pledged yesterday to shape a new Social Security and Medicare ‘bargain’ with the American people, saying that the nation’s long-term economic recovery cannot be attained unless the government finally gets control over its most costly entitlement programs. That discussion will begin next month, Obama said, when he convenes a ‘fiscal responsibility summit’ before delivering his first budget to Congress. He said his administration will begin confronting the issues of entitlement reform and long-term budget deficits soon after it jump-starts job growth and the stock market. ‘What we have done is kicked this can down the road. We are now at the end of the road and are not in a position to kick it any further,’ he said. ‘We have to signal seriousness in this by making sure some of the hard decisions are made under my watch, not someone else’s.’

“Balanced” Deficit Reduction Must Include Entitlements
The Washington Post editorializes, “Democrats…are sounding more and more maximalist in resisting spending cuts. Many insist that Social Security, Medicare, Medicaid and education — pretty much everything except the Pentagon — are untouchable. … Elections do have consequences, and Mr. Obama ran on a clear platform of increasing taxes on the wealthy. But he was clear on something else, too: Deficit reduction must be ‘balanced,’ including spending cuts as well as tax increases. Since 60 percent of the federal budget goes to entitlement programs such as Medicare, Medicaid and Social Security, there’s no way to achieve balance without slowing the rate of increase of those programs.”

Dems Warn: Keep Hands Off Entitlements 
Politico reports, “Congressional Democrats are starting to draw a much tougher line on entitlements in the increasingly messy fiscal cliff talks, warning Republicans to keep their hands off Social Security and Medicare benefits. Democrats also say they’ll refuse to look at GOP calls to dramatically slash Medicaid. And for them to even entertain any changes to Medicare and Medicaid, they say the price is for Republicans to agree to far higher taxes than they have flirted with so far. … ‘I personally believe there are things that we can do with entitlements that don’t hurt beneficiaries,’ Senate Majority Leader Harry Reid said Tuesday, noting that he and Obama have insisted that Social Security be off the table. ‘We hope that they can agree to the tax revenue that we’re talking about, and that is rate increases, and as the president’s said on a number of occasions, we’ll be happy to deal with entitlements.’”

Pelosi Makes Case She Can Strike Deal In Talks: “Seeking a larger role at the negotiating table, House Minority Leader Nancy Pelosi (D-Calif.) has publicly expressed optimism on how she and other congressional leaders can strike a deal on taxes and spending.”

Reid Says Parties Making Little Progress in Budget Talks: “‘There’s been little progress with the Republicans, which is a disappointment to me,’ Reid, a Nevada Democrat, told reporters today in Washington. … ’They talked some happy talk about doing revenues, but we only have a couple weeks to get something done,’ Reid said. ‘So we have to get away from the happy talk and start talking about specific things.’”

Market Falls As Congressman Says He’s Willing to Go Over Fiscal Cliff
The Washington Free Beacon reports, “Rep. Raul Grijalva (D., Ariz.) argued Medicare and Medicaid cannot be on the table in fiscal cliff negotiations Tuesday — as the market fell during the interview with CNBC’s ‘Closing Bell.’ … The Arizona Democrat said he is willing to go over the fiscal cliff and that any prospective deal must focus on revenue increased via tax hikes on the wealthy and corporations.” Click here to watch the interview.

“Cliff dive doesn’t appeal to White House”
Politico reports, “It’s the rallying cry for liberal Democrats in Congress: going off the fiscal cliff is a better option than reluctantly accepting a deal that goes too lightly on revenues or too hard on entitlements. That message doesn’t seem to be getting through on the other end of Pennsylvania Avenue, where President Barack Obama and other administration officials speak of the economic pitfalls of allowing more than $500 billion in tax increases and spending cuts to take effect next year. Case in point: a 14-page White House report released Monday morning to kick off the week with grim details of what going off the fiscal cliff means for the economy. … The study is part of the administration’s strategy to build pressure on congressional Republicans to agree to significant tax increases as part of a deficit reduction plan. But it’s also a reminder to Democrats of the economic risks of holding out until next year to get a more favorable fiscal deal.”

Fiscal Cliff Already Having An Impact On Workers
The Washington Post reports, “As national leaders look for ways to avoid falling over a ’fiscal cliff’ that could eviscerate government services, federal employee organizations want to make sure Congress knows their members already gave at the office. The latest salvo is a letter a group of unions representing federal workers sent this week to congressional leaders, with a copy to President Obama. It urged them ‘to defuse the doomsday device of sequestration . . . without any further impact on federal employees.’ ‘Further’ is the key word here. ‘To date the federal workforce has given $103 billion back to the US treasury,’ said the letter from the Federal Workers Alliance (FWA). ‘That equates to an average of $50,000 in compensation per federal employee over ten years — a huge sacrifice for any worker to have to incur.’”

Dems Divided on Spending Cuts
The Associated Press reports,  “Deep divisions among Senate Democrats over whether cuts to popular benefit programs like Medicare and Medicaid should be part of a plan to slow the government’s mushrooming debt pose a big obstacle to a deal for avoiding a potentially economy-crushing ‘fiscal cliff,’ even if Republicans agree to raise taxes. Much of the focus during negotiations seeking an alternative to $671 billion in automatic tax increases and spending cuts beginning in January has centered on whether Republicans would agree to raising taxes on the wealthy.  … There’s a growing consensus among Senate Democrats and the White House that Social Security should be exempt from any deficit-reduction package. But some centrist Democrats in the Senate argue that fellow Democrats must be willing to consider cuts to Medicare and Medicaid in order to get concessions from Republicans on taxes. ‘It has to be both – a significant revenue increase as well as spending cuts,’ said Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee.”

“In U.S., Majority Now Against Gov’t Healthcare Guarantee”
Gallup reports, “For the first time in Gallup trends since 2000, a majority of Americans say it is not the federal government’s responsibility to make sure all Americans have healthcare coverage. Prior to 2009, a majority always felt the government should ensure healthcare coverage for all, though Americans’ views have become more divided in recent years.”

Federal Student Loan Debt Piling Up
The Wall Street Journal reports, “The federal lending program designed to make college education available to everyone is creating a pile of debt so large it is fanning worries that it has become too easy to borrow too much. U.S. student-loan debt rose by $42 billion, or 4.6%, to $956 billion in the third quarter, the Federal Reserve Bank of New York said Tuesday. … Payments on 11% of student-loan balances were 90 or more days behind at the end of September, up from 8.9% at the end of June, a rate that now exceeds that for credit cards. Delinquency rates for all other consumer-debt categories fell or were flat. Nearly all student loans—93% of them last year—are made directly by the government, which asks little or nothing about borrowers’ ability to repay, or about what sort of education they intend to pursue.”

Fed Officials Divided Over Easing
Reuters reports, “Deep divisions at the Federal Reserve were on display on Tuesday, just two weeks before the U.S. central bank’s next policy-setting meeting, with one top Fed official pushing for more easing, and another advocating limits. Charles Evans, president of the Chicago Federal Reserve Bank and one of the Fed’s most outspoken doves, said interest rates should stay near zero until the jobless rate falls to at least 6.5 percent. … But Dallas Fed President Richard Fisher, a self-identified inflation hawk, said the U.S. central bank could get intotrouble if it does not set a limit on the amount of assets it is willing tobuy. ‘You cannot expand without limits without horrific consequences,’ he told reporters on the sidelines of the conference organized by the Levy Economics Institute in Berlin. ‘There is no infinity in monetary policy, we know that from the German experience.’”

Greece Banking On “Rosy Outlook” 
The Wall Street Journal reports, “A long-awaited deal cobbled together by euro-zone finance ministers early Tuesday gives Greece a rough outline for cutting its mountain of debt, but the plan threatens to be derailed if the country’s economy doesn’t emerge from recession in two years. … The plan unveiled early Tuesday calls for the euro zone to cut the interest rate it charges Greece on bailout loans and for the European Central Bank to send Athens any profits the ECB makes on the Greek bonds it holds. The plan would also allow Greece to buy back its bonds at the sharp discount to face value at which they currently trade. The euro zone pledged to bring Greece’s debt down to 124% of the country’s gross domestic product in 2020 and then ‘substantially under’ 110% two years later—down from a current level of more than 170%. But by the euro zone’s own accounting, the numbers don’t quite add up.”