Spending Daily February 28, 2013: “Apocalyptic” Warnings from Washington Exaggerated

Spending Daily February 28, 2013: “Apocalyptic” Warnings from Washington Exaggerated

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Spending Daily | February 28, 2013

“Constructive Discussion” to Prevent “Harmful Consequences” of Sequester to Be Held on Sequester Deadline
The Associated Press reports, “Billions of dollars in harsh budget cuts are hitting the U.S. government on Friday, and officials are conceding that last-minute moves by both Democrats and Republicans in Congress to soften the blow are doomed. President Barack Obama is meeting congressional leaders of both parties just hours after the $85 billion in spending cuts kick in, after no apparent negotiations between the administration and lawmakers in recent weeks to avoid them. Friday’s meeting, the first face-to-face one since Obama was sworn in for his second term in January, essentially looks past the cuts to the next looming fiscal crisis: a possible government shutdown at the end of March. … White House spokesman Jay Carney said Friday’s talks are designed to be a ‘constructive discussion’ about how to keep the deep spending cuts from having harmful consequences.”

Fact Checker:  “Apocalyptic” Warnings from Washington Exaggerated 
PolitiFact editor Bill Adair calls out Washington for exaggerating the impact of the sequester.  ABC News reports, “With looming across-the-board budget cuts set to take effect tomorrow if Congress and the White House fail to reach a deal, there have been a lot of ‘apocalyptic’ warnings coming from Washington. While the significance of the cuts should not be ‘belittled,’ fact-checker Bill Adair tells Top Line the truth has been twisted and exaggerated in this ongoing political drama. Perhaps the most alarming warning about tomorrow’s cuts, known as ‘the sequester,’ has come from President Obama, who has said that ‘federal prosecutors will have to close cases and let criminals go.’ … ‘From what we could tell, [it was] a vast exaggeration to equate that with letting criminals go, wording that really implies opening the prison doors and letting people stream out, and so that one got a mostly false on the truth-o-meter,’ says Adair, editor of the fact-checking project PolitiFact.”

Poll: Most Americans Not Scared by the Sequester
The Washington Post reports, “In Washington, Republicans and Democrats have been at loggerheads over how best to avert sequestration. In the rest of the country, a remarkably high percentage of Americans take a different view: Bring it on. Thirty-seven percent of Americans said they would tell their member of Congress to let the deep federal spending cuts known as sequestration go into effect as scheduled, according to a Gallup poll released on Wednesday, while nearly one in five had no opinion. A plurality (45 percent) said they would like to see Congress pass a measure to avert the cuts, but that’s hardly a decisive figure that reflects the alarm bells the Obama administration has been sounding the last couple of weeks. … What gives? For starters, many Americans simply haven’t tuned into the debate over the deep cuts set to hit the federal government on Friday. In the Gallup poll, 38 percent said they were not following the story too closely or at all closely. An even higher percentage of Americans — 48 percent — said the same thing in a Washington Post-Pew poll released earlier this week. It’s hard to strongly oppose cuts you don’t really know that much about.”

Washington Post: Sequester Spin Not Rooted in Reality
The Washington Post reports, “The descriptions of the post-sequester landscape coming from the Obama administration have been alarming, specific — and, in at least some cases, hyped. Take the claim by Education Secretary Arne Duncan that there are ‘literally teachers now who are getting pink slips.’ When he was pressed in a White House briefing Wednesday to name an example, Duncan came up with one school district, in West Virginia, and he acknowledged, ‘Whether it’s all sequester-related, I don’t know.’ As it turns out, it isn’t. What Kanawha County is actually doing is sending transfer notices to 104 educators in response to an unrelated change in the way federal dollars are allocated. … While the country has lived through five temporary government shutdowns since 1981, … what is not new, however, is the impulse of officials to resort to melodrama when they are faced with budget cuts. Getting people’s attention has been a challenge in the case of the sequester. In the latest Washington Post-Pew Research Center survey, only one in four said they were closely following news about the automatic spending cuts.”

Market Reaction Response to Sequester: Yawn
POLITICO reports, “The financial markets and some of the nation’s biggest business groups have a collective response to the looming sequester: yawn.President Barack Obama is warning of economic catastrophe if deep and immediate spending cuts hit Friday. Yet some of the most influential business organizations are adopting a decidedly blasé attitude, staying largely silent on the matter. And so far, the markets don’t seem to care much either. The Dow Jones Industrial Average closed less than 100 points below its all-time closing high, hit in 2007. … ‘We are tired. We just go from one crisis deadline to the next,’ said Richard Hunt, president of the Consumer Bankers Association. ‘And it seems like the White House is more focused on the consumer approach this time around.’ … ‘Investors have been hearing a lot of hysteria out of the politicians for the last two years over all the different end-of-the-world deadlines,’ said Michael Obuchowski, portfolio manager at North Shore Asset Management. ‘We are human beings with vertebrate nervous systems, and there is a desensitizing effect when you hear it so many times. You eventually ignore it.’”

“Federally Financed Largesse”
The Washington Free Beacon reports, “The Subcommittee on Economic Growth, Job Creation and Regulatory Affairs of the House Committee on Oversight and Government Reform held a hearing examining executive pay at companies that received bailout money from the federal government. Christy Romero, special inspector general for the Troubled Asset Relief Program (TARP), and Patricia Geoghegan, acting special master for TARP Executive Compensation, both testified before the subcommittee. … Through TARP, the federal government sought to prop up businesses that were at risk of failing because of the 2008 financial crisis. After several of the bailed-out businesses gave their executives large bonuses in 2009, President Barack Obama announced regulations that curbed executive pay at all TARP-supported companies, including capping immediate cash compensation at $500,000 and limiting greater compensation to stocks. … Romero testified that 70 percent of the top executives at the companies in TARP were paid more than $500,000 in cash in 2012 and 94 percent were paid $450,000 or more in cash, despite the regulations.”

$1 Billion Wasted on Failed VA Medical Records Project
USA Today reports, “The departments of Defense and Veterans Affairs have wasted about $1 billion in a failed effort to streamline medical record-keeping, the chairman of the House Veterans’ Affairs Committee said in a hearing Wednesday. … Defense and VA officials said this month they had abandoned an ambitious plan to integrate medical records for both active-duty servicemembers and veterans into a single electronic system to make the records more accessible for patients and doctors. After cost estimates doubled and technology problems persisted, they decided on a less expensive plan to keep their current systems while making them ‘interoperable.’”

Jets for Counterterrorism Used for Top Officials’ Personal, Business Travel, Costing $11.4M
The Washington Guardian reports, “Two corporate-style jets that the FBI persuaded Congress to lease for fighting global terrorism have instead been used the majority of the time to ferry Attorney General Eric Holder, his predecessor in the Bush administration and FBI Director Robert Mueller on business and personal trips at an expense of millions of dollars to taxpayers, an investigation has found. The bureau’s state-the-art, sleek Gulfstream V jets logged 60 percent of their hours between 2007 and 2011 on “non-mission flights” that cost taxpayers $11.4 million, according to an investigation by the Government Accountability Office obtained by the Washington Guardian. … On at least one occasion a trip by Holder in 2011 left the FBI without access to a Gulfstream during a counterterrorism operation, forcing agents to scramble to charter a private plane, according to documents reviewed by the Washington Guardian.”

Failure of Leadership
The Hill reports, “For President Obama, it no longer matters whether weeks from now sequestration has caused the sky to fall or just the pollen level — he stands to be blamed either way. Sure, the GOP strategy so far — using several conflicting messages simultaneously — is failing miserably. But while Obama’s latest campaign might further damage Republicans, it isn’t likely to end in victory for him. … Either Obama will watch the economy suffer the blow he warned of, or he will watch Americans conclude sequester was nothing and wonder just what he was so upset about. Reaching a deal is the only way of avoiding recession or embarrassment, and to build a legacy.  Strangely, the president and his team think Republicans will cave and back a tax increase that will spare many of the cuts of the $85 billion in 2013’s sequester cuts, or even in the 10-year total of $1.2 trillion. … Sequestration is an abdication of responsibility and a betrayal of the taxpayer — the likes of which most of us have never witnessed in our lifetimes.”

Senate Lacks Votes to Stop Sequester
POLITICO reports, “Washington’s Great Sequester pregame show ends in the Senate on Thursday with Republicans still divided over how to disarm the doomsday budget machine they built in the previous Congress with Democrats and President Barack Obama. Obama will be waiting at the White House on Friday to meet with House and Senate leaders, even as his Office of Management and Budget works next door toward meeting the midnight March 1 deadline to put the cuts in motion. Newbattle lines were already taking shape Wednesday over funding the governmentpast March 27. Frustrated by the House, Senate Democrats signaled renewed interest in moving a full-fledged omnibus spending package for the remainder of the year. But Thursday in the Senate will belong to the sequester — and a debate less about finding solutions than political cover. No one is expected to have the 60 votes needed for passage — meaning the cuts are likely to be ordered Friday night. Indeed the Republican divisions are such that just getting to 50 will be a challenge on the GOP alternative.”

Few Budget Cuts in Senate Dem Bill
The Associated Press reports, “White House-backed legislation in the Senate to replace $85 billion in across-the-board spending cuts would raise the deficit through the end of the budget year by tens of billions of dollars, officials said late Wednesday as the two parties maneuvered for public support on economic issues. The nonpartisan Congressional Budget Office said that under the Democratic measure, deficits also would rise in each of the next two years before turning downward. Democratic officials had said earlier in the day their bill would spread one year’s worth of anticipated savings — $85 billion — over a decade in an attempt to avoid damaging the shaky economic recovery. … Senate Democrats have been reluctant to spell out the details of their measure, although it is not clear if that results from its relatively small impact on the deficits through the end of the current budget year.”

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