With another debt ceiling fight potentially brewing, the House of Representatives passed the Full Faith and Credit Act, sponsored by Rep. Tom McClintock (R-CA), which would require the Treasury Department to prioritize debt service and Social Security payments to keep the United States’ credit rating intact:
The House on Thursday passed legislation that would allow the government to borrow money above the debt ceiling, but only to service U.S. bondholders and make payments related to the Social Security Trust Fund.
The Full Faith and Credit Act, H.R. 807, was passed in a 221-207 vote that saw all but eight Republicans favor the bill, and every Democrat oppose it.
Republicans said the bill creates a necessary option for the government to extend its borrowing ability in the event that it bumps up against the debt ceiling. Republicans and Democrats are expected to begin talks this month on increasing the debt limit.
You can view the roll call vote here.
President Obama, who has pledged a veto should it pass the Senate, Democrats have attacked the measure because it would take one of their favorite talking points off the table. President Obama has frequently claimed during debt ceiling fights that Social Security checks could be held up if the statutory national debt limit is not raised.
Democrats are completely out of touch when it comes to the national debt. Rather than look at the past four years of $1+ trillion budget deficits, they pretend like it didn’t happen. Take the comments of Sen. Tim Kaine (D-VA) and Rep. Chris Van Hollen (D-MD), for example. These two recent told Politico that Congress can’t make anymore spending cuts because it would hurt the economy:
But aided by a pile of recent data suggesting the deficit is already shrinking significantly and current spending cuts are slowing the economy, more Democrats such as Virginia Sen. Tim Kaine and Maryland Rep. Chris Van Hollen are coming around to the point of view that fiscal austerity, in all its forms, is more the problem than the solution.
“Trying to just land on the debt too quickly would really harm the economy; I’m convinced of that,” Kaine, hardly a wild-eyed liberal, said in an interview. “Jobs and growth should be No. 1. Economic growth is the best anti-deficit strategy.”
Some conserative groups, like the American Enterprise Institute, are in agreement that austerity could be hurting the economy. But let’s think about that for a second. It’s true that the economy is still lagging, yet to pick up steam in terms of post-recession job creation and growth. However, businesses are dealing with the effects of tax increases that took effect at the beginning of the year and increased regulation, including ObamaCare. It’s no surprise that economy is being as productive as it should be. Moreover, Congress hasn’t actually cut spending. They’re just cut the rate of growth in spending increases.That’s not austerity. That’s a joke.
On Friday, the House passed legislation already approved by the Senate that would undo politically motivated furloughs for air traffic controllers that were implemented due to the sequester. But the fix will cost taxpayers. Over at the FreedomWorks blog, Jon Gabriel notes that undoing furloughs will add around $6 million to the deficit over the next 10 years:
From what little has been publicized, the bill appears to increase outlays this year in return for a promise of reductions in later years. Much like Lucy promised Charlie Brown that this time she wouldn’t yank the football.
But even the promised reductions wouldn’t cover the entirety of the bill’s cost. According to the House GOP website, “most, but not all, of that near-term increase would be offset by corresponding reductions in outlays in future years, resulting in net increases in outlays totaling $4 million over the 2013-2018 period and $2 million over the 2013-2023.”
One thing is clear: this “fix” will increase the deficit for 2013 and beyond.
This amount of money doesn’t even amount to a rounding error in the broader scheme of the federal budget, but it’s not about that. As had been noted several times at United Liberty, the sequester isn’t even really a spending cut in terms of actual outlays. It’s just a cut to the rates of spending increases. The sad thing is that these relatively unsubstantial “cuts” come after years of dramatically increased spending under both the Bush and Obama Administrations.
The good news is that for ex-Speaker Nancy Pelosi (D-CA) is that nearly everyone in the country has heard of her. The bad news is the current House Minority Leader is the least liked leader in Congress, according to a new poll from Gallup:
House Minority Leader Nancy Pelosi (D-Calif.) is the most well-known but least-favored of the four congressional leaders, according to a new poll.
The Gallup poll released Wednesday found that only 11 percent of those surveyed said they had never heard of Pelosi, making her the best known of the four top Democrats and Republicans in the House and Senate. But Pelosi also topped the list in unpopularity. Forty-eight percent of those surveyed said they have an unfavorable opinion of her while 31 percent have a favorable opinion.
The big four in congressional leadership — Pelosi, Senator Majority Harry Reid (D-NV), Speaker John Boehner (R-OH), and Senate Minority Leader Mitch McConnell (R-KY) — have a deficit to overcome with Americans. But as Gallup explains, Pelosi is the most polarizing. In fact, she’s the only congressional leader that a majority of independents view unfavorably. Hey, but at least 62% of Democrats have a favorable opinion of her.
On Tuesday, Senate Majority Leader Harry Reid (D-NV) took a shot at the Tea Party movement while discussing the sequester and the Simpson-Bowles fiscal reform plan with Sen. Tom Coburn (R-OK).
Coburn, who is serving his last term in the Senate, objected to S. 788, which would suspend the sequester for the current fiscal year. The sequester — a plan that merely cuts the rate of spending increases, is being blamed for flight delays due to FAA furloughs of air traffic controllers — a move with political motivations behind it.
“What is happening in the Senate is phenomenal, and I want the American people to see this, Coburn explained. “The Federal Government is 89 percent bigger than it was 10 years ago. We just heard the majority leader say flexibility can’t work because we are already dealing with the same amount of money — 89 percent more than we were 10 years ago.”
“I didn’t vote for the Budget Control Act. I think sequester is a stupid way to cut spending. But I want us to understand exactly what is going on,” Coburn continued. “This is a contrived situation because no effort — zero effort — by the FAA or the Department of Transportation has been made to have any flexibility in terms of how they spend their money. They have made no request for a reprogramming of funds within the FAA. They have over $500 million unobligated sitting in balances that aren’t obligated, so none of this had to happen. This has been a created situation.”
Reid responded with revisionist history, bogus numbers, and a slam against both Coburn and the Tea Party movement.
President Barack Obama got some bad news this week. A week after the White House released its new budget, which calls for another $1 trillion in tax hikes, Americans don’t seem all that impressed, according to a Washington Post/ABC News poll released on Tuesday:
President Obama’s courtship of Republicans hit a critical point last week when he unveiled a budget proposal pitched as an effort at compromise. But a new Washington Post-ABC News poll finds Americans’ initial reactions to the framework tilting negative, with broad opposition from Republicans and little public support for a key idea to reduce increases in Social Security payments.
Overall, roughly one-third of Americans offer no opinion on Obama’s budget, but those who do, lean against it (30 percent approve; 38 percent disapprove). The negativity stems from large opposition among Republicans (63 percent) and a negative split among independents (26 percent approve; 41 percent disapprove).
It would seem, at least this time around, that Americans aren’t buying into the the stale class warfare rhetoric that they’ve endlessly heard from President Obama. Unbelievably, the White House is trying to spin this budget as fiscally responsible.
Jeff Zients, who serves as Presidebt Obama’s budget director, apparently doesn’t know how much debt is in the budget the White House just sent to Congress.
During an appearance before the Senate Budget Committee, Sen. Jeff Sessions (R-AL) asked Zients about the $7.1 trillion in increased debt in President Obama’s budget proposal ($5.7 of that is new public debt, excluding governmental transfers). Zients tried to shift the narrative, but Sessions pressed him on the numbers. Zients replied, “I don’t…I need to check the numbers.”
“You don’t know your numbers?” retorted Sessions, to which Zients responded, “There are a lot of numbers there.”
Sessions’ office notes that the national debt will climb to $25.3 trillion over the next 10 years — $19 trillion (or 73% of gross domestic product) of that is debt held by the public. In other words, the You can see those numbers below (click to enlarge into a PDF):
President Barack Obama, who has overseen four consecutive years of $1 trillion budget deficits and $6 trillion added to the national debt in a little more than four years, issued a proclamation last week designating April as “National Financial Capability Month”:
President Barack Obama, who has increased the national debt by $53,377 per household, has proclaimed April “National Financial Capability Month,” during which his administration will do things such as teach young people “how to budget responsibly.”
“I call upon all Americans to observe this month with programs and activities to improve their understanding of financial principles and practices,” Obama said in an official proclamation released Friday.
“Together, we can prepare young people to tackle financial challenges—from learning how to budget responsibly to saving for college, starting a business, or opening a retirement account,” he said.
The 2012 election dealt a blow to the country, not just because it guaranteed the same failed economic policies of the last four years, but because it also means that any push to repeal ObamaCare in Congress is a non-starter. Despite that, there will still be ways to significantly diminish the impact of the law.
While the decision last year to uphold the individual mandate was certainly disappointing, the Supreme Court did provide lattitude for states to refuse to implement expensive insurance exchanges and even more costly Medicare expansion. This was a silver-lining in an otherwise terrible decision that set a very troubling precendent for future expansions of government.
In a new whitepaper, “50 Vetoes: How States Can Stop the Obama Health Care Law,” Michael Cannon, director of Health Policy Studies at the Cato Institute, explains that this gives states the chance to effectively veto these provisions and thus save taxpayers and business money.
“To date, 34 states, accounting for roughly two-thirds of the U.S. population, have refused to create Exchanges,” writes Cannon in the summary of the whitepaper. “Under the statute, this shields employers in those states from a $2,000 per worker tax that will apply in states that are creating Exchanges (e.g., California, Colorado, New York).”
“Those 34 states have exempted at least 8 million residents from taxes as high as $2,085 on families of four earning as little as $24,000,” he continues. “They have also reduced federal deficits by hundreds of billions of dollars.”
The budget battle is taking shape. On one hand you have a budget proposal from House Republicans that takes steps to deal with entitlement reform and balance nation’s finances in 10 years and on the other you have Senate Democrats pushing for nearly $1 trillion tax hike and a perpetually unbalanced budget:
The first budget from Senate Democrats in four years includes nearly $1 trillion in new taxes but would not balance the budget.
The blueprint unveiled by Senate Budget Committee Chairwoman Patty Murray (D-Wash.) on Tuesday to her Democratic colleagues would also turn off the next nine years of the sequester and replace those spending cuts with a 50-50 mix of tax increases and spending cuts.
The budget would dedicate $100 billion to economic stimulus in the form of infrastructure spending and job training.
While Rep. Ryan’s imperfect, but respectable budget would trim $4.6 trillion from budget deficits over the next decade, Sen. Murray’s proposal would only trim $1.85 trillion over that same timeframe. Sen. Murray’s budget would raise tax revenue by closing tax loopholes. That would be good, broad-based tax policy, provided that the increased revenues are used to lower overall tax rates.