Spending Daily | December 19, 2012

Dems Dodging Questions On Spending Cuts
The National Journal reports, “President Obama’s latest fiscal cliff offer to support deeper spending cuts to popular government programs puts his Democratic allies on Capitol Hill in a tough spot on Tuesday, driving them to dodge questions about whether they could support it. Obama’s plan calls for $1.2 trillion in spending cuts that include changes like slowing the cost-of-living increases for Social Security beneficiaries – a reform Senate Democrats declared off the table weeks ago. So now, Obama’s proposal puts Democrats in a bit of a political pickle. Democrats can’t embrace Obama’s plan for fear of getting hammered by liberal interest groups and giving Republican House Speaker John Boehner room to push for further entitlement cuts. … So, they’re not saying much of anything.”

Twelve Years Ago We Had No Deficit And No IPods
Public Notice Executive Director Gretchen Hamel writes in POLITICO’s Arena, “Upon hearing the Treasury Department’s announcement of another deficit for the month of November and its projection that we’re on track for our fifth straight year of a trillion dollar budget deficit, I took a trip down memory lane. … It’s hard enough to believe it’s been four years since Washington passed a budget, and harder still to comprehend that that the last budget surplus was eleven years ago. …  So the last time there was a surplus, a morning jog while listening to Justin Bieber on an iPod was impossible. … Many often use the 2001 budget surplus as a political tool to call for higher taxes. … But what everyone overlooks is how much less we were spending in 2001 compared to now.”

Economy Facing Drag, Washington Hopes To “Do Less Damage”
The Wall Street Journal reports, “Deal or no deal, the U.S. economy will face a drag of some kind from Washington budget policy next year. The White House and GOP are just negotiating how much. The latest offers exchanged by President Barack Obama and House Speaker John Boehner (R., Ohio) point to higher income taxes for many upper-income earners, smaller paychecks for almost everyone and reduced federal spending that could restrain an already slow-growing economy. A central goal of the talks is to forge a deficit-reduction deal that would allow the government to avoid the fiscal cliff, the combination of tax increases and spending cuts scheduled to begin in January. The hope is that an agreement would do less damage to the economy while also erasing some of the uncertainty that has held back consumers and businesses, providing an offsetting boost.”

Both Sides Want Their Political Posturing To Be Taken Seriously
POLITICO reports that the fiscal cliff negotiations have become more about political posturing, writing, “All of this is part of a highly choreographed Washington play, and in the current act, Obama and Boehner are trying to prove themselves as the more reasonable party with tax rates, spending cuts and unemployment benefits hanging in the balance. As negotiations behind closed doors slog on without any resolution in sight, both sides are orchestrating strategic leaks to the press and dashing to the House and Senate floor to try to show their colleagues — and the nation — that they’re the ones that should be taken seriously. … It’s the Capitol Hill waltz, with a year-end deadline looming as the last dance.”

“Plan B” Addresses Taxes, Punts On Spending
The New York Times reports, “Speaker John A. Boehner unveiled what he dubbed ‘Plan B’ less than 24 hours after President Obama offered a more comprehensive deal that would raise tax rates on incomes over $400,000 and, over 10 years, produce $1.2 trillion in tax increases and cut $930 billion in spending.”  But according to the article, “the bill would not cancel across-the-board spending cuts — known as sequestration — that are scheduled to total $110 billion in 2013 and more than $1 trillion over 10 years. Republicans would resume the fight for broad spending cuts, especially to entitlement programs like Medicare, in late January or February, when the government will face raising its borrowing limit and when, many Republicans believe, they will have much more leverage than they do now. The White House came out strongly against the speaker’s plan. The White House press secretary, Jay Carney, said that it could not pass the Senate and ‘therefore will not protect middle-class families’ from large tax increases schedule to begin on Jan. 1.”

WSJ: Bad Deal For Everyone Except Politicians
The Wall Street Journal editorializes, “It’s clear by now that the budget talks are drifting in a drearily familiar Washington direction: Tax and spending increases now, in return for the promise of spending cuts and tax and entitlement reform later. This is a bad deal for everyone except the politicians who want more money to spend. … This isn’t reform. It’s another tax increase next year disguised as reform. The Fortune 500 CEOs who are lobbying Republicans don’t mind because they hope to get a cut in the corporate tax rate. But small businesses will be stuck with a huge immediate tax increase … As for spending cuts or entitlement reform, these look notional at best. The only tangible agreement that has been leaked so far is to calculate future tax brackets and entitlement benefits based on ‘chain-weighted CPI.’ This is a more accurate measure of inflation than is currently used and we support it, but it is a small change worth perhaps $270 billion over 10 years.”

“Obama Social Security Offer At Odds With Top Dems”
The Associated Press reports, “President Barack Obama’s offer to slow the growth of Social Security benefits would force fellow Democrats in Congress to abandon promises to shield the massive retirement and disability program from cuts as part of negotiations to avoid the year-end fiscal cliff. Both Senate Majority Leader Harry Reid, D-Nev., and House Minority Leader Nancy Pelosi, D-Calif., pledged not to touch Social Security as part of deficit reduction talks. … The inflation measure under consideration is called the Chained Consumer Price Index. On average, the measure shows a lower level of inflation than the more widely used Consumer Price Index because it assumes that as prices rise, consumers turn to lower-cost alternatives, reducing the amount of inflation they experience.  If adopted across the government, the change would have far-reaching effects because so many programs are adjusted each year based on year-to-year changes in consumer prices. On average, annual increases in Social Security payments, government pensions and veterans’ benefits would be about 0.3 percentage points smaller each year. Next year’s COLA is 1.7 percent. Under the new measure of inflation, it would be about 1.4 percent.”

Liberals Call Social Security Adjustments “Cruel,” “Stupid,” A “Betrayel”
The Washington Free Beacon reports, “Democratic Party leaders on Tuesday signaled a willingness to accept an adjustment to Social Security benefits that New York Times’ columnist and amateur psychohistorian Paul Krugman has called ‘cruel and stupid.’ The adjustment, known as chained CPI, would save about $130 billion by changing the way Social Security benefit increases are calculated and ultimately slow their rate of growth over time. Obama reportedly offered the adjustment as part of his most recent proposal to avert the so-called fiscal cliff. Liberals were not pleased. … Justin Ruben, executive director of MoveOn.org, said the group’s members ‘overwhelmingly oppose’ cuts to Social Security benefits and that any agreement that does so would be seen as ‘a betrayal that sells out working and middle class families.’”

Growing Number Of Young Adults Living On The Street
The New York Times reports that the recession is forcing more young adults are living on the street, writing, “Across the country, tens of thousands of underemployed and jobless young people, many with college credits or work histories, are struggling to house themselves in the wake of the recession, which has left workers between the ages of 18 and 24 with the highest unemployment rate of all adults. Those who can move back home with their parents — the so-called boomerang set — are the lucky ones. … Without a stable home address, they are an elusive group that mostly couch surfs or sleeps hidden away in cars or other private places, hoping to avoid the lasting stigma of public homelessness during what they hope will be a temporary predicament. These young adults are the new face of a national homeless population, one that poverty experts and  case workers say is growing.”

Hurricane Sandy Bill A “Christmas Tree Laden With Pricey Ornaments”
POLITICO reports, ” The $60 billion Hurricane Sandy disaster bill has become a Christmas tree laden with pricey ornaments: money for fisheries as far away as Alaska, a huge cash infusion for Amtrak and $2 million for roofs at the Smithsonian. … Some of the line items being targeted are old saws for Republicans, such as $336 million for Amtrak. Also drawing ire are the Smithsonian’s roof repairs, $17 billion in HUD grants, more than $4 billion for Army Corps of Engineers water and navigation projects, and replacements for storm-damaged vehicles for agencies like the Secret Service and Customs and Border Protection. It all adds up to ‘questionable spending,’ Sens. John McCain (R-Ariz.) and Tom Coburn (R-Okla.) say, even as the Senate has begun debating the bill. Final passage is possible later this week.”

Fitch: Stabilize Debt Or Lost Triple-A Status
Reuters reports, “Ratings firm Fitch said on Wednesday it is more likely to strip the United States of its triple-A status if a political deal is not reached to halt $600 billion of spending cuts and tax hikes set for early next year. ‘Failure to avoid the fiscal  cliff … would exacerbate rather than diminish the uncertainty over fiscal policy, and tip the U.S. into an avoidable and unnecessary recession,’ Fitch said in its 2013 global outlook, published on Wednesday. … Fitch added that an agreement on a multi-year deficit reduction plan to stabilize U.S. debt and public finances was likely to see the country keep its triple-A rating.”