Spending Daily | March 11, 2013

Some Convinced Entitlement Reform Now Obama’s #1 Priority
The Washington Examiner reports, “President Obama, hoping to make debt reduction part of his legacy, appears focused on striking a grand bargain with Republicans to reform Medicare this year. Medicare’s growing share of the budget and its increasing toll on the expanding debt were the main topic of conversation at an unprecedented dinner meeting last week between Obama andSenate Republicans, who came away convinced that entitlement reform is now the president’s No. 1 priority. And he wants the job done by this summer. … Medicare is the biggest driver of the nation’s debt, Obama told the group, and it’s costing far more than American workers are pumping into the system through paycheck deductions. ‘They all think that Medicare is their money, and to a certain extent it is,’ Obama said, according to Sen. Ron Johnson, R-Wis., who attended the event. ‘But for every dollar they put in, they get three back. The American people don’t understand that.’

Dems to Obama: Don’t Touch Entitlements
POLITICO reports, “President Barack Obama may be thinking about a ‘grand bargain’ to address spending and the federal deficit, but there’s a key constituency he has to persuade to come along. Democrats. The talk of any deal with congressional Republicans — and for now, it’s just that: talk — has liberals worried the White House will give in to changes to safety net programs including Medicare, Medicaid and Social Security. … One hundred and seven of the 200 House Democrats signed a letter to Obama threatening to vote ‘against any and every cut to Medicare, Medicaid or Social Security benefits — including raising the retirement age or cutting the cost of living adjustments that our constituents earned and need.’”

Senate Dems Struggle to Pass Budget by Easter
The Hill reports, “Senate Democrats say they will soon pass their first budget in four years, but it is proving a test. Disputes over tax cuts, spending reductions and entitlement reform all present challenges to Budget Committee Chairwoman Patty Murray (D-Wash.) and Majority Leader Harry Reid (D-Nev.). The Democrats’ narrow 12-10 majority on the panel means one defection would mean failure, if Republicans stick together as expected. There is more leeway on the Senate floor because budget resolutions cannot be filibustered and Democrats control 55 seats. Still, the party can afford to lose only five votes before Vice President Biden’s deciding ballot would likely become necessary. … They have signaled that their budget will do more to raise revenue than to cut spending and that it will not end deficits. In a memo, Murray adumbrated the justification for this by noting that Congress has already approved $1.8 trillion in spending cuts since 2010 but only $600 billion in new taxes.”

“Pump Up the Fraud”
The Washington Free Beacon reports, “A politically connected engineering company that received massive stimulus contracts has admitted that workers committed widespread fraud under the encouragement of its executives while working on a major taxpayer-funded nuclear cleanup effort. Employees of CH2M Hill routinely inflated hours worked on the cleanup effort at the Hanford nuclear waste site in Washington state between 1999 and 2008. Company executives sanctioned those violations in order to obtain bonuses that required certain performance benchmarks, according to an agreement between the company and the Justice Department filed in federal court on Friday.”

“Too Much Talk of Taxing”
Judd Gregg editorializes in The Hill, “Many who march in the army of the president say that all they want is to return to the good old days when Bill Clinton rode the range and richpeople paid their fair share of taxes. …  In 2000, the top tax rate was 39.6 percent and there was a 2.9 percent Medicare tax on top of that. Therefore, the stated tax burden on high income Americans and small businesses was 42.5 percent. After the ’fiscal cliff’ tax increase, the top rate is now 39.6 percent and on top of that there is a new 3.8 percent Medicare tax rate forpeople with incomes over $200,000. This means that the top stated rate for taxes is now 43.4 percent — a rate that is higher than that paid in Clintonian times. … The capital gains rate on small businesses and high-income people is also now higher than in the Clinton years.  It is 23.6 percent today as compared with 20 percent in Clinton’s last years. Even if you look at the effective rate, high-income people are paying more today than in the last decade of the last century. The effective rate is 27.6 percent today as compared with 26.4 percent back then. There should be happiness in Obama-land.  But, alas, there is not.  The president and his minions in Congress continue to call for the rich, also known as small business-owners, to pay more. What is the goal here? Obviously, it is not to return to the tax policies of the Clinton years regarding wealthy Americans and small businesses, since we have already done so.”

Are Senate Leaders Road Blocking Deficit Talks?
The Hill reports, “Sen. Tom Coburn (R-Okla.) accused Democratic and Republican Senate leaders of standing in the way of a bipartisan deficit-reduction deal. ‘The Senate’s not nearly as dysfunctional as it’s made out to be, because there’s great relationships in the Senate,’ said Coburn, who is at the center of deficit talks. ‘Our problem in the Senate is the leadership in the Senate, not the members in the Senate.’ He said President Obama, who has tried tocircumvent Republican leaders by reaching out to rank-and-file members in recent days, has a good chance at striking a grand bargain despite widespread skepticism. … Coburn said many lawmakers on both sides of the aisle are eager to forge a compromise and blamed the Democratic and Republican leadership in Congress for impeding their efforts. He said he came away from last week’s meeting hopeful that Obama would begin talking to the public about the need to reform entitlement programs, the biggest drivers of the federal deficit. Coburn said a deal would need to be struck before the start of the 2014 campaign season and indicated his willingness to reduce the deficit by raising new revenues through tax reform in exchange for entitlement reform, a concession Obama has demanded.”

Ryan Claims Budget Will Balance Books in 10 Years 
Bloomberg reports, “House Budget Committee Chairman Paul Ryan is planning to unveil a 2014 budget plan this week that would balance the government’s books in 10 years by limiting the annual growth of spending to 3.4 percent. The budget proposal assumes that Congress would repeal President Barack Obama’s health-care law set to be implemented next year, Ryan said yesterday on ‘Fox News Sunday.’ That assumption depends on the unlikely possibility that the Democrat in the White House and those who control the Senate agree to repeal the president’s signature domestic policy achievement. Ryan, a Wisconsin Republican, said his budget would save $5 trillion over 10 years, the same amount his two previous budget plans had proposed saving by 2040. His party’s vice presidential nominee in 2012, Ryan said new tax revenue of more than $600 billion that Congress and the president agreed to in January will help achieve a balanced budget in 10 years. … ‘Instead of growing spending at 4.9 percent’ annually, ‘we grow spending 3.4 percent’ so ‘the result is a $5 trillion’ cut in the increase of spending over 10 years, he said.”

“Cuts Give Obama Path to Create Leaner Military”
The New York Times reports, “At a time when $46 billion in mandatory budget cuts are causing anxiety at the Pentagon, administration officials see one potential benefit: there may be an opening to argue for deep reductions in programs long in President Obama’s sights, and long resisted by Congress. On the list are not only base closings but also an additional reduction in deployed nuclear weapons and stockpiles and a restructuring of the military medical insurance program that costs more than America spends on all of its diplomacy and foreign aid around the world. Also being considered is yet another scaling back in next-generation warplanes, starting with the F-35, the most expensive weapons program in United States history. None of those programs would go away. But inside the Pentagon, even some senior officers are saying that the reductions, if done smartly, could easily exceed those mandated by sequestration, as the cuts are called, and leave room for the areas where the administration believes more money will be required. These include building drones, developing offensive and defensive cyberweapons and focusing on Special Operations forces.”