Spending Daily | February 25, 2013

Congress Prepares for Cuts to Take Effect in Four Days
The Washington Post reports, “Lawmakers will return to work Monday after a week-long break, with $85 billion in automatic spending cuts set to take effect in four days. Congressional offices and agencies have remained largely quiet on the issue compared with the executive branch, where top officials — from President Obama to Cabinet members such as Transportation Secretary Ray LaHood and Defense Secretary Leon E. Panetta — have warned against the budget cuts known as sequestration, in speeches and with testimonies before congressional committees. But that doesn’t mean the legislative branch would escape cuts. The sequester would not affect lawmaker salaries, since their pay does not come from discretionary spending. But the reductions would hit their individual offices, as well as all legislative-branch agencies such as the Library of Congress, the Congressional Budget Office and U.S. Capitol Police. … Although the sequester could have an impact on lawmakers’ local and Capitol Hill offices, it remains unclear how many members of Congress would impose layoffs, furloughs or pay cuts to meet the reduction targets. Only those who expect to avoid such measures commented for this report.”

Woodward: Sequester Idea Originated in White House
Bob Woodward editorializes in The Washington Post, “Misunderstanding, misstatements and all the classic contortions of partisan message management surround the sequester, the term for the $85 billion in ugly and largely irrational federal spending cuts set by law to begin Friday. What is the non-budget wonk to make of this? Who is responsible? What really happened? The finger-pointing began during the third presidential debate last fall, on Oct. 22, when President Obama blamed Congress. ‘The sequester is not something that I’ve proposed,’ Obama said. ‘It is something that Congress has proposed.’ … ‘There was an insistence on the part of Republicans in Congress for there to be some automatic trigger,’ [former White House Chief of Staff Jack] Lew said while campaigning in Florida. It ‘was very much rooted in the Republican congressional insistence that there be an automatic measure.’ The president and Lew had this wrong. My extensive reporting for my book ‘The Price of Politics’ shows that the automatic spending cuts were initiated by the White House and were the brainchild of Lew and White House congressional relations chief Rob Nabors — probably the foremost experts on budget issues in the senior ranks of the federal government. Obama personally approved of the plan for Lew and Nabors to propose the sequester to Senate Majority Leader Harry Reid (D-Nev.). They did so at 2:30 p.m. July 27, 2011, according to interviews with two senior White House aides who were directly involved.”

“Devastating Sequester Spending Cuts? Give Me a Break!”
Jonathan Karl writes in ABC News, “The Sky is Falling! Maybe, but it really shouldn’t be. The Obama administration’s list of what will happen if upcoming spending cuts go into effect is downright terrifying. In recent days, officials have warned of more forest fires, workplace deaths and, heaven-forbid — chicken shortages. … There’s no doubt that the automatic spending cuts set to go into effect on March 1 will cause some real pain and many economists believe they would hurt the economy. But all the dire warnings give the impression the cuts are much larger than they actually are. Take today’s White House example: The Department of Transportation. The Department of Transportation’s budget for 2013 is $74.2 billion. The automatic spending cuts would slice $1 billion out of its budget: that is a cut of less than 1.4 percent. And consider this: even if the cuts go into effect, the Department of Transportation will spend more money this year ($73.2 billion) than it spent last year ($72.6 billion).”

“The Manufactured Crisis of Sequester”
George Will editorializes in The Washington Post, “Even during this desultory economic recovery, one industry thrives — the manufacture of synthetic hysteria. … As in: Batten down the hatches — the sequester will cut $85 billion from this year’s $3.6 trillion budget! Or: Head for the storm cellar — spending will be cut 2.3 percent! Or: Washington chain-saw massacre — we must scrape by on 97.7 percent of current spending! … Or: Grass will grow in the streets of America’s cities if the domestic agencies whose budgets have increased 17 percent under President Obama mustendure a 5 percent cut! … Obama, who believes government spends money more constructively than do those who earn it, warns that the sequester’s budgetary nicks, amounting to one-half of 1 percent of gross domestic product, will derail the economy. A similar jeremiad was heard in 1943 when economist Paul Samuelson, whose Keynesian assumptions have trickled down to Obama, said postwar cuts in government would mean ‘the greatest period of unemployment and industrial dislocation which any economy has ever faced.’ Federal spending did indeed shrink an enormous 40 percent in one year. And the economy boomed. Because crises are government’s excuse for growing, liberalism’s motto is: Never let a crisis go unfabricated. But its promiscuous production of crises has made them boring.”

Samuelson: “True National Debt” Could Be $11-$31 Trillion
Robert J. Samuelson editorializes in The Washington Post, “How big is the national debt? You’d think this would be an easy question. Surely we know how much the government owes. Unfortunately, it’s not that simple. The true national debt could be triple the conventional estimate, anywhere from $11 trillion to $31 trillion by my reckoning. The differences mostly reflect explicit and implicit ‘off-budget’ federal loan guarantees. In another economic downturn, these could result in large losses that would be brought ‘on budget’ and worsen already huge deficits. That’s the danger. My purpose is not to scare or sensationalize. It’s simply to illuminate the problem. Broadly conceived, the national debt covers all debts for which the federal government assumes final responsibility. For politicians, the appeal of ‘off-budget’ programs is that they allow the pleasure of spending without the pain of taxing. But they also create massive exposure for government.”

Poll: Majority of Voters Believe in Defense Cuts
The Hill reports, “A majority of voters believe cutting America’s debt is more important than maintaining domestic and military programs at their current levels, according to a new poll for The Hill. But the public also feel strongly that the budget should be balanced on the back of reductions to defense spending rather than through cuts to programs such as Social Security and Medicare. … In order to reduce America’s debts and deficits, more than twice as many voters said they would support defense cuts as said they would supportcuts to social programs.  Forty-nine percent of respondents said they would support cutting military spending, while just 23 percent said they would support slashing Social Security and Medicare. An overwhelming majority, 69percent, said they would oppose cuts to social programs.”

Americans Tired of Government Drama
The Wall Street Journal reports, “In Washington, leaders of both political parties are warning of dire effects if across-the-board federal budget cuts aren’t averted. Here in this swing congressional district in Arizona, voters all along the political spectrum say they aren’t moved by the alarms. After two years of creating and then resolving a series of budget showdowns, lawmakers are losing the power to summon concern—or even much interest—among the public, voters here say. ‘It just happens so often, it’s white noise to me,’ said Eric Jones, general manager and partner of the Glenn Jones Ford dealer in Casa Grande, who is aRepublican. The budget cuts, known in Washington parlance as sequestration,would come less than two months after a fight between President Barack Obama and congressional Republicans over tax increases and spending cuts, called the fiscal cliff, which were resolved right as they were kicking in. … But many voters here say they don’t see harm to themselves in the looming cuts—”not a bit,” said Flagstaff resident Patrick Shiels, a registered libertarian and a professional artist and engineer. He said he thinks all $1.2 trillion in planned cuts over the next decade ought to be implemented this year.”

Governors Agree Federal Gov’t “must shrink the deficit”
Reuters reports, “Less than a week before billions of dollars of U.S. spending cuts are set to begin, governors meeting in Washington ratcheted up the pressure on Congress and President Barack Obama to find an alternative to the reductions and give states more say in bringing down the federal debt. ‘I certainly join the chorus of voices that are calling for that administration and members of Congress to come together and find more responsible cuts,’ said Indiana Governor Mike Pence, a Republican who served in the House of Representatives during the 2011 negotiations that led to the cuts. … Republican and Democratic governors agree the federal government must shrink the deficit. They have already met with the White House and lawmakers in the first two months of 2013 to discuss sequestration alternatives.”

New Healthcare Law Hindering New Hiring
The Wall Street Journal editorializes, “Here’s a trend you’ll be reading more about: part-time ‘job sharing,’ not only within firms but across different businesses. It’s already happening across the country at fast-food restaurants, as employers try to avoid being punished by the Affordable Care Act. In some cases we’ve heard about, a local McDonalds has hired employees to operate the cash register or flip burgers for 20 hours a week and then the workers head to the nearby Burger King or Wendy’s to log another 20 hours. Other employees take the opposite shifts. Welcome to the strange new world of small-business hiring under ObamaCare. The law requires firms with 50 or more ‘full-time equivalent workers’ to offer health plans to employees who work more than 30 hours a week. (The law says ‘equivalent’ because two 15 hour a week workers equal one full-time worker.) Employers that pass the 50-employee threshold and don’t offer insurance face a $2,000 penalty for each uncovered worker beyond 30 employees. So by hiring the 50th worker, the firm pays a penalty on the previous 20 as well.”

“Sen. Tom Coburn: Obama ‘absolutely’ exaggerating impact of sequester”
The Washington Post reports, “President Obama is exaggerating the impact of the across-the-board federal spending cuts known as the sequester, Sen. Tom Coburn (R-Okla.) said Sunday. ’Absolutely,’ Coburn responded on ‘Fox News Sunday,’ when asked whether Obama was overstating the impact of the cuts, which are set to begin Friday. The Republican later added: ‘There [are] easy ways to cut this money that the American people will never feel.’”