There’s a lot of wailing and gnashing of teeth about the government shutdown that started today. Democrats in both chambers of Congress have been complaining about how it will slowdown basic services and hurt Americans. But there are a lot of misconceptions about what services and programs are affected.
Reason magazine put together the video below back in 2011 listing the departments, agencies and programs that will continue running during a government shutdown. Medicare will continue running and Social Security checks will still go out. The IRS will, unfortunately, continue to operate. The United States Postal Service and the TSA will also work through a shutdown.
Non-essential government workers will be furloughed, though it’s likely that they’ll get paid when an agreement is reached on spending. President Barack Obama and Congress will, unfortunately, continue to receive their paychecks during a shutdown.
Check out the video from Reason:
The Treasury Department announced on Monday that the $16.7 trillion debt limit will be reached in mid-October, meaning that Congress will once again have wade into the tumultuous politics that come with the issue.
House Republicans may hold a “clean vote” on the debt ceiling to show that there isn’t support for raising the borrowing limit without some sort of trade off, either further spending cuts or a showdown on ObamaCare. It could lead to a stalemate similar to what we saw in 2011 when Congress passed the Budget Control Act, a compromise between the Congress and the White House that led to the sequester.
Record budgets deficits that President Obama has overseen and a growing national debt are something about which Americans should be concerned. But the focus on the debt ceiling misses the larger point — specifically entitlement spending.
Veronique de Rugy, a senior research fellow at the Mercatus Center, recently took a look at various estimates of the true cost of the national debt, including unfunded liabilities, and what she found is nothing short of speechless:
Fiscal policy discussions generally focus on the current year’s budget numbers: $1.0 trillion budget deficit and $16.0 trillion national debt.
As alarming as these numbers are, they fail to account for the far greater fiscal challenges of unfunded liabilities. Here is some key evidence from various studies:
House Minority Leader Nancy Pelosi (D-CA) says that you should celebrate ObamaCare when you’re sitting down with your friends and family this Independence Day.
During a press conference yesterday, Pelosi marked the one-year anniversary of the Supreme Court decision upholding major parts of ObamaCare as a reason to “observ[e] health independence” and said that the law “captures the spirit of our founders.”
“Soon we will all be leaving for the Fourth of July recess next week. When we celebrate Independence Day, we also will be observing health independence. This week, this marks one year since the Supreme Court upheld the Affordable Care Act. It captures the spirit of our founders, a spirit they wrote in the Declaration of Independence: life, liberty, and the pursuit of happiness,” Pelosi told reporters. “The Affordable Care Act offers just that, a healthier life, the liberty to pursue a person’s happiness, to be free of constraints, be job-locked because they are policy-locked.”
“So, we have had Social Security, Medicare, and now health independence,” she added. “And that’s something our Members will take home to celebrate over this Independence Day.”
The new narrative being pushed by the media is that President Barack Obama’s new budget is an olive branch of sorts to congressional Republicans. Politico ran with the headline, “President Obama’s risky ‘goodwill’ gambit,” which highlighted some of the proposed changes to Social Security.
The Associated Press noted the frustration from some on the Left in its piece, “Liberals balk at Obama’s 2nd term overtures to GOP,” which also focused on the proposed cuts to entitlement programs.
While it’s true that the only real measure of good news from the the White House’s budget is the changes to Social Security, there is absolutely nothing here in terms of compromise or reform. The White House has made that much clear by telling Politico — in a separate article from the one mentioned above, of course — that Republicans can take the Social Security changes in exchange for more $1 trillion in tax hikes or leave it:
And Gene Sperling, the director Obama’s National Economic Council, on Wednesday afternoon emphasized that the proposal is ”not an à la carte menu” for Speaker John Boehner (R-Ohio) and congressional Republicans to choose what they like and discard the rest.
“You can’t decide to only pick out the concessions the president has made and not include the concessions from the Republican side that need to be part of a bipartisan deal that can pass both houses,” Sperling said.
Every now and then, you’ll read a story about how politicians are targeting 401(k) accounts as an extra source of revenue to deal with the long-term entitlement crisis or to guard against losses during an economic downturn. Back in 2009, leftist groups pushed Congress for more government involvement in the private retirement system, including some sort of public alternative — because, you know, Social Security has worked out just peachy.
The proposal out of Cyprus that would give depositors a “haircut,” a high-percentage levy on their deposits, has prompted fears in the United States that some future administration or Congress could eventually put financial assets, such as bank accounts and 401(k), in their crosshairs. Rep. Billy Long (R-MO) has proposed legislation that would prohibit the federal government from taking such an action.
But could something like that ever actually happen in other European Union countries? Over at Reason, Ed Krayewski points to an thought-provoking and troublesome op-ed out of Ireland that wonders what the future of that country’s depositors looks like:
Written by Daniel J. Mitchell, a senior fellow at the Cato Institute. Posted with permission from Cato @ Liberty.
Sigh. Even when they’re sort of doing the right thing, Republicans are incapable of using the right argument.
Rep. Paul Ryan (R-WI), chairman of the House Budget Committee, has unveiled his proposed budget and he and other Republicans are bragging that the plan will balance the budget in 10 years.
That’s all fine and well, but good fiscal policy is achieved by reducing the burden of government spending, and that means restraining the budget so that federal outlays grow slower than the private sector.
It’s good to balance the budget, of course, but that should be a secondary goal.
Now for the good news. The Ryan Budget does satisfy the Golden Rule of fiscal policy. As you can see in the chart, federal spending grows by an average of 3.4 percent annually, and that modest bit of fiscal discipline is enough to reduce the burden of government spending to 19.1 percent of economic output by 2023.
House Republicans have begun the roll out their new budget, which, like their previous budgets, aims to reduce the national debt and tackle entitlement reform. House Budget Committee Chairman Paul Ryan (R-WI) previewed his budget plan this weekend on Fox News Sunday and this morning 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.
House Republicans have a plan to change course. On Tuesday, we’re introducing a budget that balances in 10 years—without raising taxes. How do we do it? We stop spending money the government doesn’t have. Historically, Americans have paid a little less than one-fifth of their income in taxes to the federal government each year. But the government has spent more.
So our budget matches spending with income. Under our proposal, the government spends no more than it collects in revenue—or 19.1% of gross domestic product each year. As a result, we’ll spend $4.6 trillion less over the next decade.
While President Barack Obama continues to twiddle his thumbs, a new report from Congressional Budget Office (CBO) shows that the nation’s fiscal outlook for the next 10 years remains bleak.
While the report, which was issued yesterday, estimates that the deficit for the current fiscal year will come in under $1 trillion for the first time since 2008, unsustainable spending will have deficits soaring once again by the end of the 10-year window:
The federal budget deficit will fall to $845 billion in 2013 before rising again over the next decade as an aging population and soaring healthcare costs lead to an explosion in entitlement spending, the Congressional Budget Office reported Tuesday.
The budget deficit would fall below $1 trillion under President Obama for the first time in 2013 and would drop to $430 billion by 2015, according to CBO’s annual fiscal outlook.
But CBO’s long-term forecast projects that budget deficits will near the $1 trillion mark again by 2023, when it forecasts a $978 billion budget deficit.
What’s behind these perpetually large budget deficits? The CBO attributes the spending growth to the “pressures of an aging population, rising health care costs, an expansion of federal subsidies for health insurance, and growing interest payments on federal debt.”
More specifically, the problem is entitlements. Unless action is taken — meaning that President Obama actually puts forward a plan — the CBO notes, “The aging of the population, increasing health care costs, and a significant expansion of eligibility for federal subsidies for health insurance will substantially boost spending for Social Security and for major health care programs relative to the size of the economy.”
During his inaugural address on Monday, President Barack Obama made it clear that he was not willing to negotiate on entitlement programs. “The commitments we make to each other – through Medicare, and Medicaid, and Social Security – these things do not sap our initiative; they strengthen us,” Obama said in his defense of these government-run programs. “They do not make us a nation of takers; they free us to take the risks that make this country great.”
In his first term, President Obama talked about the need to deal with entitlements; however, he brought nothing resembling a credible plan to the table — in fact, he didn’t propose a plan at all.
Rep. Paul Ryan (R-WI), who, despite his recent shortcomings and generally bad record, has offered two credible budget plans that would both reform entitlements and pay down the national debt, responded to Obama’s comments yesterday during an interview on The Laura Ingraham Show:
Ryan said earned entitlements — where you pay your payroll taxes during your working like to get a benefit when you retire, such as Social Security — are “not taker programs.”
“When the president does kind of a switcheroo like that, what he’s trying to say is that we are maligning these programs that people have earned throughout their working lives,” he said. “So it’s kind of a convenient twist of terms to try and shadowbox a straw man in order to win an argument by default.”
Sen. Saxby Chambliss (R-GA), facing heat for his less than fiscally conservative record, is trying his best to appease the Republican base. During a conference call with reporters last week, Chambliss echoed a familiar line that we’ve heard from Republicans since they rolled over during the “fiscal cliff” debate:
Obama has promised not to get entangled in protracted negotiations during March’s vote on raising the federal debt limit and the extension of the spending authorization like those that dragged on for weeks before the “fiscal cliff” of sweeping spending cuts and tax increases that triggered automatically at midnight Monday.
The Georgia Republican dismissed that promise.
“My message to you, Mr. President, is you’d better strap on your chin strap very tight because this junkyard dog is going to address spending cuts and entitlement reform in the debt-ceiling debate, and that’s going to be a line in the sand for us Republicans and conservatives,” Chambliss said.