Spending Daily | March 13, 2013
Video: “Obama: ‘No,’ My Budget Won’t Be Balanced”
In and ABC News interview, President Obama said his budget would not be balanced. Watch the video from The Washington Free Beacon here.
Obama’s Budget Coming Week of April 8, More Than Two Months Late
Bloomberg reports, “President Barack Obama will send his fiscal 2014 budget to Congress the week of April 8, an administration official said today, more than two months late. The president’s spending blueprint was due on Feb. 4. The administration said last month that the debate over taxes and spending at the end of last year, combined with across-the-board spending cuts that kicked in March 1, would delay its release. … The president has said he’s planning to again seek many of the same proposals for spending and for deficit reduction that were contained in last year’s $3.8 trillion budget, which was never adopted by Congress.”
Poll: Obama Approval Down on Handling of Economy
According to The Washington Post, “The afterglow of President Obama’s reelection and inauguration appears to have vanished as increasingly negative views among Americans about his stewardship of the economy have forced his public approval rating back down to the 50 percent mark, according to a new Washington Post-ABC News poll. In December, just after he won a second term, Obama held an 18-percentage-point advantage over congressional Republicans on the question of whom the public trusted more to deal with the economy. Now, it’s a far more even split — 44 percent to 40 percent, with a slight edge for the president — but the share of those saying they have confidence in ‘neither’ has ticked up into double digits. The poll contains ample evidence of the disillusionment voters feel toward both sides amid a sense of continuing dysfunction in Washington, which since December has been grappling with fiscal crises and deadlines of its own making.”
Republicans, Democrats Present “Clashing Budgets”
The Hill reports, “House Republicans and Senate Democrats unveiled clashing budgets Tuesday that highlight the ideological chasm between the two parties on taxes, spending and the size of government. The plan from Rep. Paul Ryan (R-Wis.), chairman of the House Budget Committee, would slice spending by $5.7 trillion, cut the top tax rate to 25 percent and balance the budget in 10 years. Its Democratic counterpart, from Senate Budget Committee Chairwoman Patty Murray (Wash.), raises nearly $1 trillion in new taxes, adds new stimulus spending and does not project any date at which balance will be reached.”
Budget Comparison: “Apples to Bicycles”
David Nather writes in POLITICO, “Democrats and Republicans have put together their dream budgets — political documents that are more like wish lists than usable road maps for the future of government spending. Both have no chance of becoming law, but they do help explain the impasse over spending and debt in Washington. The two plans — one by Republican Paul Ryan and the other by Democrat Patty Murray — aren’t even apples and oranges. They’re more like apples and bicycles. Ryan’s budget shoots to balance the budget in 10 years by slashing health care spending. Murray’s plan, which Democrats outlined in bare-bones form Tuesday, seeks to lower deficits by raising $1 trillion in new revenues and leaving out big entitlement changes but doesn’t take on balancing the budget.”
Senate Dems Clash With Obama on Entitlements
The Hill reports, “Liberal Democrats challenged President Obama on Tuesday over his willingness to cut Social Security benefits. Sen. Tom Harkin (D-Iowa) said he and Sen. Bernie Sanders (I-Vt.), among others, challenged Obama on the so-called ‘chained CPI’ — a change in the way Social Security benefits are calculated. Obama has said he is open to chained CPI as part of a ’grand bargain’ that would include spending cuts as well as new revenue. And he didn’t back down from that support during a closed-door meeting with Senate Democrats, despite pushback from Harkin and Sanders. Harkin said the message from Obama was ‘basically, things are open for negotiation’ in pursuit of a grand bargain. ‘The president sort of talked about being willing to make some changes here so we can improve someother things over here’ when Sanders raised the issue, Harkin told reporters. In previous efforts to negotiate a grand bargain with House Republicans, Obama had supported raising the Medicare eligibility age. The White House has since said that Obama would not support that proposal. Harkin said Obama didn’t explicitly rule out raising the Medicare age, but implied that the policy has fallen out of favor. ‘I didn’t hear a commitment, but I spoke about that,’ Harkin said. ‘He didn’t make a commitment, but he seemed to indicate that yes, there are other ways of solving the entitlement problem without doing that.’”
“Obama Tells Democrats They Must Be Open to Entitlement Changes”
Bloomberg reports, “President Barack Obama told Senate Democrats that they should be open to changes in entitlement programs to achieve a long-term budget deal, according to several lawmakers who attended a meeting with him on Capitol Hill today. Iowa Senator Tom Harkin said Obama told Democrats during the 90-minute meeting that he wanted a broad, bipartisan deficit-reduction deal this year. Harkin said Obama rebuffed his demand, joined by Vermont Senator Bernie Sanders, for an assurance that Medicare and Social Security benefits would be remain untouched in any ‘grand bargain’ agreement.”
In Talk With Dems, Obama Stands Firm
The Hill reports, “Obama stood firm Tuesday when pressed to back away from benefit cuts during the meeting with the Senate Democratic Conference, according to lawmakers who attended. Democrats emerged from the Senate’s Mike Mansfield Room publicly declaring party unity. … ‘Most of the conversation I caught was on Social Security,’ Sen. Chris Murphy (D-Conn.) said, describing the back-and-forth on entitlement reform. ‘He’s been clear in the past that he’s willing to take a look at some aspects of Social Security.’ Some Democrats pressed Obama to back away from benefit cuts and instead support tax increases as the sole solution for prolonging the program’s solvency. Obama had discussed entitlement reform with a dozen Senate Republicans over a private dinner last week. ‘I urged him not to cut Social Security and benefits for disabled veterans,” said Sen. Bernie Sanders (Vt.), an independent who caucuses with Democrats. ‘He is concerned about the long-term solvency of Social Security and so am I. But I think he recognized there are different ways to approach it. You can bring more revenue into the program or you can cut benefits.’”
“Defense officials press Congress for budget flexibility”
Reuters reports, “Senior defense officials said on Tuesday they were doing their best to offset the worst impacts of $46 billion in budget cuts that began this month, but they will have to slash personnel and weapons programs if reductions keep coming in future years. Deputy Defense Secretary Ashton Carter told a conference of industry officials that the Pentagon was facing a ‘double absurdity’ of having to implement across-the-board budget cuts generally seen as bad policy while being funded for last year’s spending levels and priorities. … The department is also being squeezed by financial constraints imposed by the legislative mechanism Congress used to fund the government through March 27. Unable to reach a budget deal, they passed a resolution that extended funding based on last year’s spending and priorities. As a result, the Pentagon has more money for weapons programs than it requested but is facing a multibillion-dollar shortfall for operations and maintenance. Pentagon officials are urging Congress to give them an appropriation that would shift the funding into the right accounts for this year’s priorities.”
Debt Ceiling Crisis Still Ahead After Spending Fight
Roll Call reports, “Conservatives are privately debating how much space to give House leaders to follow through on promises made at their Williamsburg, Va., retreat in January, with a wait-and-see approach embraced by key veterans and a smaller movement of mostly newer lawmakers wanting to push leadership harder. The divide is behind the mixed signals in the past week as Republicans provided a surprisingly unified vote on the continuing resolution followed quickly by bold threats by conservatives to bring down rule votes. The debate has big implications for how Republicans will approach future spending showdowns such as the next debt ceiling increase and shows there are rumblings beneath the surface during a period of relative tranquility for the GOP conference.”
Ryan Budget Includes Defense Spending Caps
The Wall Street Journal reports, “Rep. Paul Ryan proposed a Republican budget blueprint Tuesday that included caps on defense spending, a shift for his party that could provide a point of compromise with Democrats. The House Budget Committee chairman’s proposal marks a significant reversal for the GOP since just last fall. Mitt Romney, the party’s 2012 presidential nominee, who made Mr. Ryan his running mate, campaigned on a plan to markedly increase the Pentagon budget, saying it should represent no less than 4% of gross domestic product. Mr. Ryan’s budget calls for $560.2 billion in defense spending in 2014, roughly $100 billion less than the 4% formula. Over 10 years, he would spend at least $2.3 trillion less on defense than he and Mr. Romney advocated. The defense proposal was a rare development on a day when House Republicans and Senate Democrats displayed deep policy differences as they released portions of their budget proposals for the next fiscal year, which starts in October.”
Feds Under Pressure From Business Groups to Explore Cost of Regulation
The Hill reports, “Federal agencies are under mounting pressure from business groups to run rigorous economic tests before handing down regulations. As the focus in Washington shifts focus from legislation to regulation in President Obama’s second term, the private sector is calling for strengthened requirements on agencies to measure the costs and benefits of new rules. A study issued Tuesday by the U.S. Chamber of Commerce, for example, urged regulators to adopt ‘rigorous cost-benefit analysis to arrive at more rational decision-making,’ especially as they consider the hundreds of rules required by the Dodd-Frank financial reform law. ‘This is 400 rules happening at once across 20 agencies,’ David Hirschmann, president of the Chamber’s Center for Capital Markets Competitiveness, said of Dodd-Frank. … But consumer groups argue that the federal government already relies too heavily on the guesswork of economic analysis. They say it is often easier to document costs of new rules than less tangible benefits such as improved quality of life. Flawed economic projections, they argue, are gumming up the works for urgently needed rules to protect public safety and health.Matters could get worse if economic considerations become more firmly embedded into rule-making decisions, they contend.”
At first look, the budget unveiled today by House Budget Committee Chairman Paul D. Ryan (R-WI) advances much-needed reforms and importantly accomplishes the crucial goal of balancing the budget within the decade, though this is partially on the coattails of Obama’s tax increases. Not a silver bullet, it is more of a stasis budget, rather than a bolder plan that builds on the reforms of previous years.
There are six things that each budget from the House, Senate, and President should accomplish. These are laid out in the Heritage plan, Saving the American Dream, which:
- Balances the budget in less than 10 years, without raising taxes, and keeps the budget in balance thereafter;
- Swiftly overhauls entitlement programs, including Social Security, to guarantee economic security to seniors while making the programs affordable;
- Repeals Obamacare in its entirety;
- Fully funds defense;
- Rolls back discretionary spending; and
- Rolls back recent tax increases with a sweeping, growth-oriented tax reform plan and caps taxes at the historical average of 18.5 percent.
Here’s how, at first blush, the Ryan plan measures up:
Gets to Balance. The Ryan budget achieves an important improvement over last year by balancing the budget within 10 years. The President’s budgets have never even attempted this, and given the Senate’s rusty skills in budget writing, it’s unlikely they would choose this course, either. The Ryan budget slows the growth of spending to about 3.4 percent per year, compared to roughly 5 percent today, with about $5 trillion less spending.
But, regrettably, Ryan’s budget also relies on Obama’s $618 billion fiscal cliff tax increase and Obamacare’s $1 trillion in tax hikes (more on this next) to get to balance. This means that tax levels rise almost immediately to 19.1 percent of GDP, well over the 18.5 percent benchmark. Balance is important, but so is the size of government. Without the tax increase, this budget would have had to have been more assertive in attacking spending and reforming entitlements to achieve and sustain balance.
And while the intent, we are told, is to stay in balance in the coming years and decades, regrettably, as the Congressional Budget Office (CBO) has not updated its long-term model yet, there is no CBO scoring to say how or whether this happens.
Repeals Obamacare Spending, But Keeps the Taxes. The vital organs of Obamacare—the insurance exchange subsidies and Medicaid expansions—are scheduled to start next year. Ryan’s budget takes the correct and necessary step of repealing them. But, as noted above, perhaps the biggest shortcoming of this budget is that it keeps the tax increases associated with Obamacare. These tax hikes are the oxygen that fuels the fire of ever bigger spending. But the entire fire needs to be put out—all of Obamacare should be repealed, including its tax hikes.
Defense Funding Levels Mixed. Like last year, the Ryan budget protects defense from the eviscerating sequestration cuts. This is sound. As North Korea’s posturing shows, the world is not a safer place today. But the national defense budget has been squeezed by Obama’s reductions just when U.S. forces need replenishment and modernization. Ryan’s budget essentially adopts the defense spending caps in the Budget Control Act without sequestration. This is better than the President’s plainly inadequate funding for current and future needs, and certainly better than the sequester, but still less than what is required.
Entitlement Reforms; More Needed. Ryan continues to be a strong leader here, tackling Medicare’s abject failures head on. His signature solution of a premium support model for Medicare is the hallmark of his budget. Moving to a patient-centered model would free retirees from relying on the unstable and unsustainable government-run Medicare program and restrain costs through the competition rather than price-fixing. The sooner this transition is made, the better.
But the transition is too slow, as it once again exempts those over 55 from these changes to Medicare. Our spending problem is so severe that all Americans should be part of the solution. While this “grandfather” clause is understandable, most Americans this age will have more than a decade remaining in their working lives. We cannot continue to keep leaving one more year of the baby boomer generation out of the solution because Washington fails to act.
Though the budget takes the first step on by turning Medicaid into a block grant, more important is to move the mainstream Medicaid population into private insurance.
And discouragingly, like last year, there is no Social Security reform at all. This is especially disappointing, given the current discussions of commonsense, simple reforms like increasing the retirement age or moving to a more accurate measure of inflation like chained CPI.
Reduces Non-Defense Discretionary Spending. By extending the Budget Control Act spending caps for two years and keeping sequestration levels, the Ryan budget makes strong reductions to this spending. It also assumes some worthy and long overdue reforms, such as consolidating the federal government’s 49 job training programs, many of which are ineffective, and first steps at reining in farm subsidies.
Growth-Oriented Tax Reform. The Ryan budget lays out important principles for tax reform and rightly rejects closing tax preferences (“loopholes”) just to raise revenue. True tax reform is revenue neutral: Any revenue raised by eliminating tax preferences should be offset by lowering tax rates. The budget sets the same, pro-growth goals for fewer, lower rates and territoriality as last year.
Bottom Line: The Ryan budget delivers on its new promise this year—to balance the budget within the decade. Unfortunately, it does use higher taxes to help achieve this. It maintains Ryan’s signature reform to Medicare, which will go far toward reining in unaffordable entitlement spending.
Though more could be done along the lines of Saving the American Dream to advance bolder entitlement reforms and to throw off the yoke of Obama’s tax hikes, this budget takes first steps toward reining in spending and reforming entitlements. And if preliminary news reports are to believed, this plan is sure to be far superior to the Senate’s version now awaiting its finishing touches replete with still more tax increases, spending and looming deficits.
Spending Daily | March 12, 2013
Fiscal Outlook Set to Worsen as Entitlements Become Unmanageable
The Associated Press reports, “Despite constant budget wrangling and finger-pointing by the nation’s policy-makers, the government’s short-term fiscal outlook isn’t all that bad. It’s actually getting better – at least for now. Washington is borrowing about 25 cents for every dollar it spends, down from over 40 cents just a few years ago. The federal budget deficit will drop to $845 billion this year after topping $1 trillion for four straight years, the nonpartisan Congressional Budget Office projects. Even if Congress does nothing further to cut spending or raise tax revenues, deficits will continue to shrink – to $430 billion by fiscal 2015, the CBO said.”
Ryan: Washington Can’t Cut 2% of the Budget?
Paul Ryan editorializes in The Wall Street Journal, “America’s national debt is over $16 trillion. Yet Washington can’t figure out how to cut $85 billion—or just 2% of the federal budget—without resorting to arbitrary, across-the-board cuts. Clearly, the budget process is broken. In four of the past five years, the president has missed his budget deadline. Senate Democrats haven’t passed a budget in over 1,400 days. By refusing to tackle the drivers of the nation’s debt—or simply to write a budget—Washington lurches from crisis to crisis. … Our opponents will shout austerity, but let’s put this in perspective. On the current path, we’ll spend $46 trillion over the next 10 years. Under our proposal, we’ll spend $41 trillion. On the current path, spending will increase by 5% each year. Under our proposal, it will increase by 3.4%. Because the U.S. economy will grow faster than spending, the budget will balance by 2023, and debt held by the public will drop to just over half the size of the economy.”
Senate Democrat Budget to Include $1 Trillion in New Taxes
POLITICO reports, “Sen. Patty Murray’s new budget plan will raise tax revenues by nearly $1 trillion while cutting spending by the same amount over the next decade, according to people familiar with the proposal. The Budget Committee chairwoman plans to brief fellow Democratic senators over the new proposal in a closed-door lunch Tuesday that President Barack Obama is also scheduled to attend. Committee deliberations will begin Wednesday, and the panel expects to vote on the plan Thursday before floor debate next week. … he Murray plan would not balance the budget in a 10-year timeframe like the Ryan proposal would. But Murray’s 50-50 split between taxes and spending is supposed to be consistent with Obama’s call for a “balanced” approach for deficit reduction …”
For the First Time in 92 Years, Congress Will Submit Budgets Before the President
The National Journal reports, “It’s budget week on Capitol Hill–the start of an annual ritual, but one that this year bucks a nearly century-old tradition. Over the next few days, Senate Democrats and House Republicans will unveil starkly different proposals for how to fund the government in the next fiscal year. It will be the first time since 2009 that the Senate majority party has released a budget proposal. The dueling congressional proposals will come as President Obama still has not yet set a date for the release of his budget blueprint. This year, in fact, will mark the first time that the Congress–and not the president–will kick off the budget process. The modern executive budget process, requiring an annual White House budget submission to Congress, was established under theBudget and Accounting Act of 1921. The law also created the agency that would eventually become the White House Office of Management and Budget. And, every year since then, according to the Library of Congress and The New York Times, the president’s submission has represented the start of the budget process–until now. The tradition was broken after the White House missed the early February deadline for sending the president’s proposed budget to Congress. Missing that deadline is not unusual: Obama has done it three years running.”
Reuters reports, “With little prospect of getting rid of the automatic spending cuts that kicked in on March 1, the Congress and the White House will move on to bigger budget battles this week as dueling Republican and Democratic proposals land in the House of Representatives and the Senate. Neither budget plan is likely to be enacted. But the proposals to be submitted by Republican Representative Paul Ryan of Wisconsin and Democratic Senator Patty Murray of Washington should frame the debate over the government’s taxing and spending priorities for the next few months and possibly into the 2014 Congressional elections. The budgets from Ryan and Murray, who chair the budget committees in the two chambers, are widely seen as wish-lists unacceptable to the opposing party, underscoring the depth of the fiscal divide.”
Dems Launch Attacks
The Wall Street Journal reports, “Democratic operatives aren’t waiting for House Budget Committee Chairman Paul Ryan (R., Wis.) to release his latest budget blueprint Tuesday before pouncing on it. The Democratic Senatorial Campaign Committee said Monday it is launching a budget-themed campaign targeting 14 House Republicans who could potentially run for Senate seats in 2014. The effort will highlight the consequences of the GOP budget in the lawmakers’ states and communities, DSCC Executive Director Guy Cecil told reporters on a conference call Monday. These lawmakers are ‘preparing to walk the plank on the new Republican budget,’ Mr. Cecil said. ‘We plan on holding them accountable.’ Democrats will argue that the Republicans’ budget will dismantle Medicare, make college education more expensive and eliminate jobs by reducing funding for infrastructure. Mr. Ryan said Sunday his budget will curb spending by about $5 trillion over 10 years, helping to eliminate the annual federal deficit in a decade. He is expected to again propose cutting Medicare costs by offering future retirees a subsidy to buy private health insurance as an alternative.”
Dozens Of White House Staffers Paid Six-Figures Despite Sequester
Fox News reports, “After closing the doors to public tours in an effort to save money, White House officials haven’t yet said if sequester cuts will result in furloughs or layoffs for its senior staffers — as is happening with rank-and-file in other executive branch agencies. But there are dozens of senior employees and other presidential ‘assistants’ to choose from if the administration were to look at cutting the six-figure salaries from its payroll. In the field of energy and climate change alone, President Obama in 2012 employed three advisers making at least $100,000 — though one has since left. The president kept on staff a ‘deputy assistant’ for energy and climate change, Heather Zichal, making $140,000; a ‘special assistant’ for energy and environment, Nathaniel Keohane; and a ‘deputy director’ for energy and climate change, Dan Utech. Together, their salaries totaled over $370,000 last year, according to White House records. Climate blogger Steven Goddard said it’s unlikely the administration will scale back its circle of advisers, at least on this issue.
With Obamacare’s Future Now Certain, Democrats Begin to Complain
Jennifer Haberkorn writes in POLITICO, “A funny thing happened once Democrats grew confident that Obamacare is truly the ‘law of the land.’ They started complaining about pieces of it in public. Democrats aren’t walking away from the overall law and its sweeping goals; they still see it as a historic achievement they had sought for generations. But now that they feel its future is protected and it’s safe from repeal, Democrats are slowly becoming more vocal about small parts of the law that they want changed or eliminated — device taxes, a Medicare board, even kids’ dental coverage, to name a few. And with important 2014 deadlines closing in, they’re more willing to point out where they think the Obama administration isn’t implementing the law correctly. For instance, four Senate Democrats and two dozen House Democrats have signed on to Republican bills to repeal the law’s tax on medical-device manufacturers. Another 10 House Democrats want to repeal one of the law’s boards charged with containing Medicare spending. During one recent Senate hearing, more fire came from the left than the right as several Democrats grilled a top administration health care official on how he’s getting the law up and running.”
Steny Hoyer: Ryan Plan Full of “Trickery”
Rep. Steny Hoyer editorializes in POLITICO, “In what is likely to be the latest installment in a tragic budgetary trilogy, House Budget Committee Chairman Paul Ryan on Tuesday will introduce a Republican budget proposal for fiscal year 2014 that purports to balance within ten years. While an improved economic outlook and new revenue from the fiscal cliff deal make the task of balancing the budget somewhat easier, this plan, much like Ryan’s previous budgets, is expected to rely on spurious budget trickery to reach its goal. In February, the Congressional Budget Office released an updated baseline projection for the next decade, taking into effect savings as a result of the fiscal cliff deal. That agreement allowed tax rates on the very highest incomes to revert to their Clinton-era levels and, in the process, reduced future deficits. Ryan voted for that deal and, as part of his strategy to close the deficit within a decade, is expected to include these revenues in his budget. But even with this help, in order to meet his ten-year deadline, Ryan will undoubtedly once again employ budget gimmicks of the type he and Governor Romney made a hallmark of their economic plan. His past budgets have included lofty rhetoric about deficit savings but very few actual details of how those savings are found.”
“Save the sequester, crush the children!”
Roger Simon editorializes in POLITICO, “If American politics has but one purpose in modern times, it is to crush the hopes and dreams of young people everywhere. And this is why President Barack Obama’s closing of the White House to public tours makes so much sense. … [White House Principal Deputy Press Secretary Josh] Earnest said that it was a ‘shame’ that the ‘people who come to the White House on a yearly basis to tour’ would get stiffed, but that ‘the people that the president is most concerned about, though, are the 750,000 Americans who stand to lose their job … as a result of the sequester.’ But this is like your mother telling you that you had to eat your lima beans because children were starving in China. If I ate my lima beans, would children in China (who today are very healthy and hacking into our computers) not starve? And will discontinuing White House tours somehow save 750,000 jobs?”
Fed Shifts Focus from Inflation to Jobs
The Washington Post reports, “For three decades, the Federal Reserve has believed that the path to economic prosperity is in fighting inflation. But it is realizing that is no longer enough. The central bank for the first time is making an attempt to shape the labor market, believing that reducing unemployment is the key to the recovery. It has tied billions of dollars of stimulus money to the health of the labor market. It has vowed to keep interest rates at historic lows until the unemployment rate is at least 6.5 percent. Top officials have begun addressing the issue in increasingly urgent and personal tones. The focus on jobs represents a historic shift for the central bank that began with the 2008 financial crisis and has intensified in the face of four years of middling economic growth. But how much influence the central bank wields over unemployment remains an open question: It cannot direct businesses to hire or inspire entrepreneurs to create jobs.”
WASHINGTON—Today, House Budget Committee Chairman Paul Ryan of Wisconsin and Committee Republicans released their plan to balance the budget in ten years. It is a responsible plan to cut spending, reform government, and foster a healthier economy. It provides economic security for families, repairs the safety net for the poor, strengthens retirement for seniors, and expands opportunity for all.
The Fiscal Year 2014 budget will be formally unveiled at 10:30 AM ET today. To watch Chairman Ryan and Budget Committee Republicans discuss their plan, tune in here.
Writing in today’s Wall Street Journal, Chairman Ryan makes the case that we need to stop spending money we don’t have. Ryan writes: “Yet the most important question isn’t how we balance the budget. It’s why. A budget is a means to an end, and the end isn’t a neat and tidy spreadsheet. It’s the well-being of all Americans. By giving families stability and protecting them from tax hikes, our budget will promote a healthier economy and help create jobs. Most important, our budget will reignite the American Dream, the idea that anyone can make it in this country.”
Read the full op-ed here.
For additional budget resources and the latest news, please visit budget.house.gov.
Budgetology: Entitlement Reform-Deluxe Edition
If there is one thing Washington can agree on, it’s that entitlements must be reformed. Some even believe not tackling this issue is a “legacy killer” and could mean a “failed presidency.” President Obama himself claimed that they are the biggest drivers of the debt. Will the return to a “Grand Bargain” also signal a bipartisan effort to reform entitlements before they are lost for future generations?
BOTH SIDES AGREE REFORMS MUST BE MADE AS EXPERTS SOUND WARNINGS
President Obama Has Been Calling For Entitlement Reform For Years:
July 2006: Sen. Barack Obama Said, “We’re Going To Have To Talk About Entitlements … Difficult To Have That Conversation…” Obama: “The — I think all of us are aware that at some point, in order to get our deficit under control, there are going to be revenue issues that we’ve got to bring up and there are going to be spending issues that we’re going to bring — and we’re going to have to talk about entitlements and we’re going to have to control costs and it is very difficult to have that conversation, particularly at a time when Americans are feeling squeezed and more vulnerable, if they think that the money is being wasted.” (Sen. Barack Obama, U.S. Senator Tom Coburn (R-Ok) Holds A Hearing On S. 2590, The Federal Funding Accountability And Transparency Act Of 2006, 7/19/06)
In 2009, Obama Pledged To Reform Social Security And Medicare. “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.” (Michael D. Shear, “Obama Pledges Reform Of Social Security, Medicare Programs,” The Washington Post, 1/16/09)
“Obama Pledges Reform of Social Security, Medicare Programs” (in 2009): “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,” [President Obama] 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.” (Michael D. Shear, “Obama Pledges Reform of Social Security, Medicare Programs,” The Washington Post, 1/16/09)
August 2012: Selection Of Paul Ryan As Romney’s Running Mate Will Lead To “Adult Conversation About Entitlement Spending.” “Mitt Romney’s selection of Congressman Paul Ryan as his running mate creates an opportunity to hold what Ryan likes to call an adult conversation about entitlement spending.” (Geoff Nunberg, “With Ryan’s Ascent, A Few Thoughts On ‘Entitlement’,” National Public Radio, 8/14/12)
Entitlement Reform Is Key To Fixing Long-Term Debt:
USA Today: “Cut Entitlements To Control Debt” (Editorial, “Cut Entitlements To Control Debt,” USA Today, 11/14/12)
According To The Congressional Budget Office, “Entitlement Programs Are The Biggest Driver Of The Long-Term Debt.” (Heidi Przybyla, “Democrats Hint at Entitlement Program Cuts in U.S. Budget,” Bloomberg, 12/7/12)
And Left Unchecked, The Problem Is Only Getting Worse:
CBO Warns Entitlement Spending Will Double. “Spending on Social Security and healthcare will double to $3.2 trillion a year over the next decade, threatening a sharp rise in national debt unless Congress acts to avoid the danger, congressional researchers warned on Tuesday.” (David Morgan, “Social Security, health spending to hit $3.2 trillion a year,” Reuters 2/5/3013)
Former Sen. Alan Simpson: “I mean, the bizarre thing, not touching the entitlements. The entitlements are the engine on the train driving us to the cliff. They were on automatic pilot.” (Alan Simpson, CBS’s Face The Nation, 12/9/12)
Entitlements “Lurking Like A Legacy Killer.” “Unless Obama seizes the opportunity in the next few months, entitlement reform will hang over his second term, lurking like a legacy-killer if he hands off the task to the next president, deficit hawks warn.” (Carrie Budoff Brown, “Obama Dodges ‘Hard Choices’ On Entitlements,” POLITICO, 1/22/13)
Former Sen. Alan Simpson: “[Obama] knows what to do and if he doesn’t get a handle on entitlements and the solvency of Social Security, he will have a failed presidency.” (Rebekah Metzler, “Simpson: Obama Headed for ‘Failed Presidency’ Without Entitlement Reforms,” US News, 2/19/13)
Erskine Bowles, Former Clinton WH Chief Of Staff, Says It’s Up To Democrats To Move Towards Entitlement Reform. “Democrats need to move on reforming entitlements to get a year-end budget deal, former Clinton White House chief of staff Erskine Bowles said Wednesday after talks between House Republicans leaders and chief executives of big U.S. companies. … He said Republicans were clear that there’s need for revenue and for entitlement reforms – and added it’s up to Democrats to move in that direction.” (Robert Schroeder, Democrats must move on entitlements in cliff deal, Bowles says,” MarketWatch, 11/29/12)
White House: Entitlement Reform Essential To Any Balanced Plan For Debt Reduction:
President Obama: “I Believe That We Have To Continue To Take A Serious Look At How We Reform Our Entitlements, Because Health Care Costs Continue To Be The Biggest Driver Of Our Deficits.” (President Barack Obama, Remarks By The President At A News Conference, The White House, 11/14/12)
Entitlement Reform “Central” To Containing Spending. “As president-elect, Obama said entitlement reform would be ‘a central part’ of his administration’s attempts to contain federal spending.” (Carrie Budoff Brown, “Obama Dodges ‘Hard Choices’ On Entitlements,” POLITICO, 1/22/13)
Widely Reported That Obama Was Willing To Address Entitlements. “During the debt ceiling fight and the fiscal cliff fight, Obama was (widely reportedly) willing to make cuts to entitlements in exchange for higher taxes from Republicans.” (Joseph Wiesenthal, “Obama’s Inauguration Speech Dealt A Devastating Blow To Deficit Hawks,” Business Insider, 1/22/13)
White House Claims That A “Balanced Approach” Includes Entitlement Reforms. “White House officials rejected Republican suggestions that Mr. Obama has not been serious enough about tackling the growth of entitlement spending. ‘He [Obama] is committed, every time he talks about this, to a balanced approach that includes both, you know, revenues, spending cuts and savings through entitlement reforms,’ said Jay Carney, the White House press secretary.” (Peter Baker, “Obama Tilts Tax Debate Away From Spending Cuts,” New York Times, 11/29/12)
President Obama is on track to submit the latest budget in history – now delaying his plan until April 8 – more than two months late. On top of that, each of the President’s previous budget submissions never balanced. The President’s talk of cutting wasteful spending and producing a responsible spending plan would be meaningful if he could also walk the walk. #CutWaste
As House Republicans prepare to release their budget this week, a budget with the goal of balancing in a decade, here’s a reminder of the Presidents TALK vs. his WALK:
The growing national debt demands immediate attention and real solutions from America’s elected leadership.
That was the message delivered yesterday by a group of young Americans at a press conference with House Budget Committee Chairman Paul Ryan (R-WI) and Representative Cathy McMorris Rodgers (R-WA).
“The greatest dysfunction of all is the fact that these young people standing here are facing a diminished future, no matter how you slice it,” said Ryan. “This isn’t a Republican issue. It’s not a Democrat issue. It’s a math issue.”
“Sixteen trillion dollars is a huge number, and individually, if you do the math, each of us are over a hundred thousand dollars in debt,” said Sohaani Perera, an attendee from College Park,Maryland.
“I’ve never even seen that much money in my life, and the idea of being that much in debt for something I’m not even responsible for – I feel penalized, and so does the rest of my generation,” she said.
Representatives Adam Kinzinger (R-IL) and Aaron Schock (R-IL) also spoke at the press conference, which was sponsored by the House Republican Conference, chaired by McMorris Rogers.
“I think it’s unfair of us now to ask that once [young people] become—once they have families, once they’re out in the workplace, that we ask them to bear the national debt because of our out-of-control spending,” said Kinzinger.
Other students worried about whether or not the entitlements they are paying for would be there when they retired.
“My other concerns are that when I do reach the age where I will be able to collect Medicare and Medicaid, that it’s not going to be there,” said Katelyn Williams of Hempstead, New York.
That’s right. Without real reforms, these programs will not be there for these students. They must be reformed.
The debt issue is one of basic responsibility, said John Pendleton ofRichmond,Virginia.
“I feel like I’ve been fiscally responsibly in saving money, so I expect the government to do the same,” he said.
Common Cents: A Vacation from My Problems
It’s difficult to break the gridlock in Washington. No one seems to be able to come to an agreement on anything. Take government spending, for example. Some deny the U.S. has a spending problem, and others are absolutely, positively sure the debt going to take us under, but there is one thing they can all agree on: It’s time for a week-long break. The sequester spending cuts will take effect on March 1, and uncertainty is high over what will happen. Is it really the best time for a vacation?
WHAT SPENDING PROBLEM?
President Obama: “We don’t have a spending problem.” (Stephen Moore, “The Education of John Boehner,” The Wall Street Journal, 1/6/13)
Rep. Nancy Pelosi: “[I]t is almost a false argument to say we have a spending problem, we have a budget deficit problem.” (Fox News Channel, “Fox News Sunday,” 2/10/13)
Sen. Tom Harkin: “I want to disagree with those who say we have a spending problem. Everyone keeps saying we have a spending problem. And when they talk about that, it’s like there’s an assumption that somehow we as a nation are broke.” (Tom Harkin, C-SPAN, 2/14/13)
Rep. Steny Hoyer: We Have A “Paying-For” Problem. “The country has a paying for-problem. We haven’t paid for what we bought. We haven’t paid for our tax cuts. We haven’t paid for the war. … If we don’t pay, we shouldn’t buy.” (“Dem Leader Refuses to Say We Have a Spending Problem—U.S. Has a ‘Paying-For Problem,” Fox News, 2/12/13)
Washington Post: “Obama: Job of debt reduction nearly done” (Lori Montgomery, “Obama: Job of debt reduction nearly done,” Washington Post, 2/11/13)
OH, WE DEFINITELY HAVE A SPENDING PROBLEM
White House Press Secretary Jay Carney: “Of course the president believes that we have a spending problem.” (Donovan Slack, “W.H.: We have a spending problem,” POLITICO, 2/11/13)
Rep. Paul Ryan: “It seems like they’re just trying to sweep our fiscal problems under the rug and call it a day, … We’ve spent years debating — inside groups, outside groups — talking about a debt crisis. And now they’re trying to suggest that the problem is nearly solved, and don’t worry about it.” (Karen Tumulty and Lori Montgomery, “Is the deficit losing its urgency?” Washington Post, 2/13/13)
SO LET’S GO ON A WEEK-LONG VACATION
Congress Taking Week Off Before March 1 Sequester Deadline: “A divided Congress will take next week off and then return to a familiar conflict: a looming, self-inflicted budget deadline that threatens economic stability with no resolution in sight on how to resolve it.” (Susan Davis, “Congress has no clear path to avoid broad budget cuts,” USA Today, 2/13/13)
- FLASHBACK: Pelosi: No Vacation Until We Deal With Sequester: “The House should not recess and Members of Congress should not go home until we finish our work, reach an agreement, and avert this crisis.” (Igor Bobic, “Pelosi To Boehner: No Recess Until We Replace Sequester,” Talking Points Memo, 2/11/13)
Obama Off To Palm Beach. “President Obama will be enjoying a little R and R — and no doubt some golf — this weekend during a vacation in West Palm Beach.” (Donovan Slack, “Obama to vacation in Palm Beach,” POLITICO, 2/13/13)
WASHINGTON—In response to President Obama’s State of the Union address, House Budget Committee Chairman Paul Ryan of Wisconsin issued the following statement:
“Last year, the American people chose divided government. So this year, both parties have to make it work. We need to make progress on real solutions. We need to strengthen our economy. And we need to create jobs—because if we don’t, we’ll have a diminished future.
“We need to balance the budget. Otherwise, we’ll provoke a debt crisis. Our finances will collapse. The economy will stall. And the most vulnerable will suffer. Instead, we have to budget responsibly—so we can expand opportunity for everyone in this country.
“I’m concerned the President doesn’t fully appreciate the challenge of our national debt—and its threat to our economy. Tonight, he outlined many new programs in detail. But when it came to spending restraint, he was remarkably brief. He overstated his administration’s success on this front. And he downplayed the task before us.
“This isn’t a partisan issue. It’s math. Over the last four years, the national debt grew by $6 trillion, the largest increase of any presidency. But the President hasn’t changed course. For the fourth time in five years, he’s failed to submit a budget on time. And Senate Democrats haven’t passed a budget in nearly four years.
“This spring, House Republicans will offer a budget—on time—as we have in the past two years. If the President wants to work together, he’ll find a willing partner in House Republicans. But he needs to get serious about the challenges ahead.”
The President and Senate Democrats need to get serious about spending.
WASHINGTON—The Congressional Budget Office released its Budget and Economic Outlook, which projected an $845 billion deficit for fiscal year 2013. In response, House Budget Committee Chairman Paul Ryan of Wisconsin issued the following statement:
“The CBO’s report is yet another warning that we need to get spending under control. The deficit is still unsustainable. By 2023, our national debt will hit $26 trillion. We can’t let that happen. We need to budget responsibly, so we can keep our commitments and expand opportunity.
“Unfortunately, the President has yet to produce a budget—in violation of federal law. And Senate Democrats haven’t passed a budget in nearly four years.
“This isn’t a partisan issue. It’s math. Unless the President and the Senate offer a credible plan to close the deficit, we will have a debt crisis—and the country will suffer.
“House Republicans have offered their solutions. Now the President and Senate Democrats must do the same.”
CBO’s Key Findings
- The CBO projects an $845 billion deficit for fiscal year 2013.
- In 2023, the federal government will collect twice as much revenue as it did in 2012. Even so, the deficit will hit $978 billion.
- The CBO projects the total debt will rise by $10 trillion by the end of the budget window (debt held by the public will rise by $8.7 trillion). By 2023, total debt will equal $26 trillion.