In just a few minutes, President Barack Obama will host a press conference at the White House to propose a plan to avoid automatic spending cuts scheduled to take effect on March 1st. The cuts, which are part of the Budget Control Act of 2011, were originally scheduled to take effect at the beginning of the year, but were postponed as part of the so-called “fiscal cliff” deal on January 1st.
A White House official said Obama would emphasize that the scheduled cuts would hurt the Pentagon and the broader economy.
“With our economy poised to continue to strengthen this year, the president will make clear that we can’t see another self-inflicted wound from Washington,” a White House official said. “The president will urge Congress to come together and act to ensure these devastating cuts to defense and job-creating programs don’t take effect.”
During a presidential debate with Mitt Romney last fall, Obama said the sequester “will not happen.”
It remains unclear if Obama is asking for a short delay in the $85 billion in cuts or a replacement of the full amount. Obama is expected to outline a mix of tax revenue increases and spending reforms.
House Republicans are at a retreat in Williamsburg, Virginia for a few days this week hoping to find a strategy that will help the rebuild before the 2014 election and deal with President Obama during his second term.
Perhaps one of the biggest rumors that has come out of the retreat — noted yesterday afternoon on Twitter by Erick Erickson — is word that they will not put up a fight on raising the debt ceiling, which is set to be reached at some point in mid-February.
While he wasn’t that straightforward in comments to the media yesterday, House Budget Committee Chairman Paul Ryan (R-WI), who has urged unity from his party on fiscal issues, said that a short-term hike would be passed if a large agreement on spending couldn’t be reach with the White House:
“We’re discussing the possible virtue of a short-term debt limit extension so that we have a better chance of getting the Senate and the White House involved in discussions in March,” Ryan told reporters gathered at the pricey Kingsmill resort in Williamsburg, where the House GOP is holding its annual retreat.
If you’ve been in Washington, DC since the end of last year, you may have seen the ads sponsored by Bankrupting America posted all over the Union Station and Capitol South Metro stations. The ads, an example of which can be viewed here, feature quotes with promises from presidents and members of Congress to tackle the nation’s ever-growing national debt.
Even though the “fiscal cliff” debate may be over, the fight over the debt ceiling is right around the corner. Armed with a new web ad, Bankrupting America is continuing to call out Washington over how they are spending our money.
It’s official. Mark Sanford, former Governor of South Carolina who received glowing marks on fiscal policy from the Cato Institute, announced yesterday that he will run in the special election for South Carolina’s First Congressional District:
Former South Carolina Gov. Mark Sanford (R) announced he’s running for his old House seat on Tuesday, ending more than a month of speculation that he’d run.
“Officially we’re going to announce tomorrow, and then it’s off to the races,” Sanford told the conservative National Review. “What I’d like to do is take all that I’ve learned in my time in Congress and my governorship, on my way up and on my way down, and apply it to what is probably the most important debate that we will have in regard to the future of our country. I’m running because I care deeply about spending, and the mathematical impossibility of us continuing down the path we’re on.”
Sanford argued that he’d be the strongest candidate to take on deficit spending.
“I think if you look at the almost 20 years in the larger federal or state debate, what you see is an amazingly consistent record on looking out for the taxpayer and trying to impact that which I think worries a lot of people right now, that spending locomotive that we have going in Washington right now,” he said.
Buried in yesterday’s news of President Obama’s press conference, where he brow beat Republicans over the debt ceiling and called for even more tax revenue, was word that the White House would break the law by not submitting a budget for FY 2014 to House Budget Committee Chairman Paul Ryan (R-WI) by the required date:
The White House has informed House Budget Committee Chairman Paul Ryan (R-Wis.) that it will miss the legal deadline for sending a budget to Congress.
Acting Budget Director Jeff Zients told Ryan (R-Wis.) in a letter late Friday that the budget will not be delivered by Feb. 4, as required by law.
In the letter, Zients says the administration is “working diligently on our budget request.”
The letter blames the late passage of the “fiscal cliff” deal for the delay, saying that because tax and spending issues were not resolved until Jan. 2, “the administration was forced to delay some of its FY 2014 budget preparations, which in turn will delay the budget’s submission to Congress.”
“We will submit it to Congress as soon as possible,” Zients writes.
The Hill notes that, since taking office, the White House has met the deadline only one time. The last time Congress passed a budget was April 29, 2009, which was also the first year of Obama’s administration. And while the White House likes to blame Republicans for the impasse, Obama couldn’t even get a budget through in 2010 when Democrats had complete control of Congress.
While Jack Lew, former K Street lobbyist and President Obama’s nominee for Treasury Secretary, says that the budgets submitted the White House will get the the country to the point where Washington “can look the American people in the eye and say we’re not adding to the debt anymore; we’re spending money that we have each year”; the Congressional Budget Office recently noted that the budget deficit for the first quarter of the FY 2013 fiscal year is still running deeply in the red:
The federal government ran up a $293 billion deficit in the first quarter of fiscal 2013, which ended Dec. 31, the nonpartisan Congressional Budget Office estimated Tuesday. The government’s fiscal year starts on Oct. 1st.
At this pace, the deficit would be on pace to top $1 trillion for the fifth-straight year in 2013. All the trillion-dollar deficits have taken place under President Obama.
By the White House’s own estimate, the New Year’s Eve tax deal with Congress will only reduce the deficit by $4 billion this year, once increased spending such as on unemployment benefits is taken into account.
Written by Tad DeHaven, a budget analyst at the Cato Institute. Posted with permission from Cato @ Liberty.
Speaker Boehner says that the House will not pass another increase in the debt ceiling unless the White House and congressional Democrats agree to cut spending by an equal or greater amount. That’s the same line in the sand that Boehner drew during the previous debt ceiling showdown in 2011.
As I noted in a recent piece, the 2011 agreement to increase the debt ceiling accomplished no such thing:
The deal that Republicans ultimately agreed to — The Budget Control Act of 2011 — promised to reduce the growth in spending over the next ten years by $917 billion. In exchange, the president got to increase the debt ceiling by $900 billion. According to the House Republican leadership, the trade was a victory because the debt increase was smaller than the spending cuts. Of course, that’s nonsense. Not only were there no real spending cuts, the federal debt has proceeded to jump another $1.8 trillion since the president signed the bill less than a year and a half ago.
The other part of the deal hasn’t turned out any better. The BCA created a “Super Committee”, tasked with achieving $1.2 trillion in deficit reduction over ten years. When the committee inevitably failed, the agreement stipulated that the deficit reduction instead be achieved through a combination of automatic cuts to defense and non-defense spending (“sequestration”). Republicans and Democrats promptly made it clear that they would figure out a way to avoid the spending cuts.
In case you’ve missed it over the last few days, there is a lot talk from politicians and economists seeking a crafty way for President Barack Obama to bypass a debt ceiling debate with Republicans in Congress, who want spending cuts in any deal to raise the nation’s borrowing limit.
Some, including House Minority Leader Nancy Pelosi (D-CA), believe that the White House should use the 14th Amendment, which states that “the validity of the public debt…shall not be questioned,” to raise the debt ceiling through executive fiat.
The other option that is being floated, as weird as it sounds, would be the Secretary of the Treasury, which is current Timothy Geithner, to use his authority to order the minting of a $1 trillion coin.
Last night on Comedy Central, Stephen Colbert, host of The Colbert Report, gave the idea treatment that only he could deliver, explaining, “All of this means nothing because a $1 trillion coin doesn’t solve anything. Our nation’s debt is $16 trillion, and we can’t make a $16 trillion coin. That’s just silly.”
Watch the whole segment below:
If you thought the political fighting and deal making in Washington was over with the passage of the “fiscal cliff” deal, then guess again. It looks like Congress will be taking up the debt ceiling next month, which should, based on his track record, give Speaker John Boehner another chance to capitulate President Obama and company:
President Barack Obama scheduled another so-called “fiscal cliff” crisis for February by announcing late Jan. 1 he would refuse to negotiate any curbs on his use of the nation’s maxed-out credit card.
“I will not have another debate with this Congress over whether or not they should pay the bills that they’ve already racked up through the laws that they passed,” he claimed during a late-night appearance on the last-minute resolution to the December 2012 fiscal cliff.
However, the GOP-led Congress wants to use its authority over the nation’s debt ceiling to pressure Obama to shrink future spending, not to repudiate existing debts.
While he gave the White House nearly everything it wanted, Boehner announced yesterday that House Republicans would use “2013 to hold the president accountable for the ‘balanced’ approach he promised, meaning significant spending cuts and reforms to the entitlement programs that are driving our country deeper and deeper into debt.”