Budget News Nov. 15-19

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News
FRIDAY
McConnell Shoots Down Spending Bill
Senate Minority Leader Mitch McConnell (R., Ky.) said Thursday that Republicans won't support a large spending bill to fund the federal government through fiscal 2011.
Senate confirms new White House budget chief
The U.S. Senate confirmed Jacob J. Lew as director of the White House's Office of Management and Budget by a voice vote Thursday night.
Greek Hopes for Loan Extension Fade
Greece's government is losing hope of getting additional time to pay back a €110 billion ($149.91 billion) loan after its European partners pressured Athens for tough new measures to meet its deficit targets, two senior government officials said Friday.
Is bipartisan debt-reduction for real?
The Republicans' midterm surge has given the federal debt-reduction commission -- whose recommendations are due Dec. 1 -- a chance to stand up and be counted.
Irish Grasp at EU, IMF Lifeline
Dublin Admits It Needs a Rescue; Moment of Truth for 16-Nation Euro Zone.
Budget fight sets up 2011 showdown
Republicans moved Thursday to kill a year-end spending compromise, hoping to gain leverage in what could be a quick strike against President Barack Obama in the next Congress over budget priorities — and quite possibly funding for health care reform.
California Bond Woe Bodes Ill for States
America's strapped states and cities took another hit Wednesday, with California seeing tepid demand for its latest bond sale and other governments pulling about $700 million worth of borrowing deals this week as investors continued stepping away from the municipal bond market.
Spain and Portugal rule out rescue packages
Spain and Portugal have hurried to disassociate themselves from Ireland’s debt crisis...
Raise the national debt limit?
Congress is months from a vote on whether to raise the national debt limit. But House Republicans are already bracing for what could be the toughest vote tea party freshmen face.
GOP Governors Plan Budget Cuts
Newly elected Republican governors are preparing to wrestle with huge budget gaps in states already struggling with foreclosures and high joblessness.
Ireland faces corporation tax showdown
French and German officials are pressing Ireland to increase its low corporate tax rate in return for an aid package...
Debt Panel Convenes, Still Lacks Consensus
The bipartisan commission examining how to cut the federal debt ended three days of closed-door meetings Thursday without a firm agreement among its 18 members, with several saying the panel was still at odds over how to contain the ballooning costs of health care.
Additional $1.2B hole in state revenue projected — expect more budget cuts
Officials were stunned to learn Thursday that the state is expected to take in $1.2 billion less in tax revenue than previously thought between now and June 2013, the latest grim result of an economy creeping toward recovery.

THURSDAY
Key Question For Duck: Pass Omnibus or CR?
Democratic leaders are attempting to get on the same page on how to fund the government, but the mixed signals among Senate and House Democrats and the White House is casting some doubt on the only must do business in the lame duck: funding the government.
Deficit Proposal Draws Mixed Review
A new Wall Street Journal/NBC News poll shows Americans skeptical of deficit-cutting proposals laid out by the chairmen of a commission appointed by the White House.
A User's Guide to the Deficit-Reduction Plans
It seems everyone in Washington these days has a plan to balance the federal budget and wipe out the nation’s long-term structural deficit, and frankly, it’s getting tough to keep them all straight.
Greece Sticks to Deficit Target in 2011 Budget
The Greek socialist government Thursday unveiled its final 2011 budget reaffirming its fiscal commitment to international lenders by vowing to cut is budget deficit to 7.4%.
US fiscal panel at odds over deficit cut plans
The US fiscal commission’s ability to forge a consensus on measures to shrink the budget deficit has been complicated this week...
Questions on Muni Ratings Are Raised by Stale Data
States, cities and other municipalities are notorious laggards when it comes to financial disclosure; ratings firms and investors are accustomed to the wait.

WEDNESDAY
US fiscal panel members seek deficit vote
Several members of the US fiscal commission are asking for a commitment from Harry Reid, the Democratic Senate majority leader...
Prospect of Ireland bailout drives dollar up, Dow down
Worries about the European debt crisis boiled over in world markets Tuesday, this time triggered by the prospect of debt-strapped Ireland becoming the second country to need a bailout.
Jobless benefits cost so far: $319 billion
Unemployed Americans have collected $319 billion in jobless benefits over the past three years due to the federal government's unprecedented response to the Great Recession, according to a CNNMoney analysis of federal records.
Britain Signals Intention to Help Ireland in Debt Crisis
The British offer came after finance ministers from the 16 countries using the euro decided to “intensify” talks with Ireland on possible aid to shore up the country’s troubled economy and banking sector.

TUESDAY
Greece, Germany Grapple Over Debt
...the deficit is likely to be 9.4% this year, and that government debt would total 144% of GDP at the end of 2010.
Estimated state budget deficit reaches $25.4 billion
The economy, new restrictions approved by voters, phantom savings in the budget and the end of temporary taxes add to gloomy forecast by Legislative Analyst's Office for the next 18 months.
New York State's Budget Gap May Reach $1 Billion, Deputy Comptroller Says
This year’s projected gap will be followed by a $9 billion deficit in the year beginning April 1, according to budget documents. Next year’s imbalance may reach $9.3 billion if lawmakers don’t close the current deficit with spending cuts, according to Robert Megna, the state budget director.
Texas leaders to ask for more spending cuts
Straus and Dewhurst said they'll send agencies a letter by the end of the month asking for additional cuts of 2-3 percent in their current year spending.

MONDAY
Irish Officials: We Don't Need a Bailout
Debt-burdened Ireland is talking with other European Union governments about how to handle its troubled finances, but denied they needed a bailout from an EU rescue fund as the continent's debt crisis continued to challenge policymakers for a response that would calm market turmoil.
Deficit Panel Co-Chair 'Hopeful' of Plan Approval
The recommendations would seek $4 trillion in deficit reduction over the next decade by cutting discretionary spending and eliminating tax breaks, while also raising the Social Security retirement age and imposing other changes on entitlement benefits.
Peter Orszag defends deficit commission
Orszag, former director of the Office of Management and Budget for President Barack Obama, writes in a New York Times column Monday that the commission's leaders have “bravely” proposed putting Social Security “on sounder financial footing.
Debt Commissioners: Baby Boomers Will Crush Social Security, Medicare
The U.S. government currently borrows 40 cents of every dollar it spends and is expected this fiscal year to draw a deficit more than $1.3 trillion. At the rate of current spending, interest on the debt alone will cost the U.S. $1 trillion by 2020.
Greek Budget Deficit Tops 15% of GDP
Under the terms of the loan, Greece must cut its budget deficit to 8.1% of GDP this year—from a previously estimated 13.8% gap in 2009—and to 7.6% of GDP in 2011.

Economist Comments
FRIDAY
Fixing The US Budget – Straightforward Or The Hardest Problem On Earth?
The conventional wisdom is that we face a serious budget problem, ballooning debt and political deadlock that prevents any semblance of progress either in the short term or over the next 20 years.
Fixing the Deficit: Our Biggest Test
Yet while the problem seems insurmountable, it really is not — at least not at this point. The greatest service the co-chairs of the deficit-reduction commission have done in their draft proposal is to make that plain.
Saving the euro
Ireland’s woes are largely of its own making but German bungling has made matters worse.

THURSDAY
Cutting the Deficit by Cultivating Growth
It is the reduction in the capital-gains tax that should get some of the credit for the economic boom and the surplus that followed.
Deficit Commission Runs Up against Unreality
...it changes the dialogue at least a bit away from the unreality that otherwise has dominated the campaign and Congress on fiscal issues for months, indeed years, and that threatens to get even worse.
The Rivlin-Domenici Alternative to the Deficit Commission Report
The Rivlin-Domenici plan wouldn’t cut spending; it freezes some small portion of the budget at 2011 levels but that’s pretty much it.

WEDNESDAY
This Is The Horrifying Budget Report That Caused Everyone To Freak Out About California
Well, there are a few reasons, but one culprit is the state's Legislative Analysis Office, which on November 10 came out with some very ugly revenue projections for the coming year, and the years after that... The nut is that the state has a $25 billion imminent budget problem.
Cities Face a Deepening Fiscal Crisis
A recent study of the 77 largest municipal pension systems by finance professors Joshua Rauh of Northwestern University's Kellogg School and Robert Novy-Marx of the University of Rochester estimates that total unfunded liabilities of America's municipal pension systems is well north of half a trillion dollars.
Payroll tax holiday and other measures to reduce the debt
This morning, a bipartisan task force that we co-chair unveils a bold, comprehensive plan to dramatically reduce America's deficits and debt and strengthen our economy, enabling the nation to reclaim its future.
States Offer Washington Lesson in Belt Tightening
The U.S. government is now borrowing $5 billion every business day and has done nothing more than talk about a plan to reduce its debt. State governments don't have that luxury.
BACON: Serious proposal for restoring fiscal sanity
Bowles-Simpson plan puts everything on the chopping block
Debt crisis gets human face
As Ireland’s debt crisis occupied centre stage in Brussels on Tuesday, back in Dublin hundreds of cash-strapped small businesses struggled...
BLANKLEY: Race against time to balance the budget
Failure to act quickly could trigger a double-dip recession.

TUESDAY
Irish woes should speed Europe’s default plan
...it has finally dawned on the EU that a rolling process that places private bank losses on to public balance sheets could leave its governments insolvent too.
Earmark ban: No effect on spending
For the earmark ban to reduce spending, "you have to lower the spending authorizations by the same amount," said Maya MacGuineas, fiscal policy director at the New America Foundation.
Reach for the Low-Hanging Fruit
According to the Congressional Budget Office's alternative scenario (the one that makes realistic assumptions about future policies), by 2050 the national debt will reach 344 percent of the economy with entitlements consuming two-thirds of non-interest spending.
Premature Rejection: Pelosi, Unions Nix Deficit Plan
The Bowles-Simpson deficit reduction plan could save Social Security. But Nancy Pelosi and some of the largest unions in the country have dismissed it out of hand. Have the Democrats become the “party of no?”
Cal Thomas: Debt Commission needs a history lesson
Every government agency and program should be periodically re-authorized. All spending should be justified before congressional committees responsible for oversight, and reduced -- or ended -- if the spending fails to fulfill its purpose.
California's Destructive Green Jobs Lobby
Silicon Valley, once synonymous with productivity-enhancing innovation, is now looking to make money on feel-good government handouts.
LEWIS: Key steps to balanced budgets
The Appropriations Committee - which will be ground zero for spending cuts - must begin strengthening the budget process with common-sense reforms to better control spending and make it more transparent and accountable to taxpayers who are footing the bill.

MONDAY
The Accidental Statist
Obama says the crisis made him do it.
FRASER: Good ideas, bad ideas
The report tackles all elements of the budget - cutting discretionary spending, cutting entitlement and other mandatory spending and tax policy. The results would bring spending down to 20.5 percent of gross domestic product (GDP) by 2040. This is good. However, taxes would increase to 21 percent of GDP. This massive tax increase is one of the key flaws of the co-chairmen's plan. The notion that you must raise taxes to solve a spending problem is simply wrong.
The GOP's Spending Tests
Republicans can demonstrate their fiscal sincerity by banning earmarks and appointing reformers to the House and Senate Appropriations Committees.

Blogs
FRIDAY
Soaking the Rich Would Not Solve the Long-Term Deficit Crisis
...selecting all of the options to increase taxes—including the crippling carbon and national sales taxes, which would hit all Americans—would still leave a deficit in 2030.

THURSDAY
How I Balanced the Budget
Overall: After 2015 my budget cuts will yield a $14 billion surplus; after 2030 there will be a $473 billion surplus. Spending cuts account for 85% of these gains, and tax increases account for 15% of additional gains.
For California, a New Month, a New Deficit
Five weeks after the Legislature passed a budget that promised to close a $19 billion budget shortfall, California has sunk back into yet another fiscal crisis, this time facing a $26 billion gap that is posing a major new challenge for the incoming governor, Jerry Brown, and seems almost certain to force deep cuts in a state already reeling from three years of financial turmoil.
The Deficit Dilemma and Obama's Budget
Much of the projected doubling of the national debt between now and 2020 reflects the spending and tax proposals in the president's fiscal plan this year.
Stimulus: Still Not Working!
Stimulus spending is like morphine. It might feel good in the short term for the beneficiaries of the money, but it doesn’t help repair the economy. And it causes more damage if it gets in the way of a proper recovery.
GAO: Public Debt Will Surpass WWII Highs Within 10 Years
The Government Accountability Office (GAO) has released yet another dire warning about the nation’s long-term fiscal condition.

WEDNESDAY
Mean Street: Not Enough Shock in America’s Deficit Shock Therapy
These ideas have been circulating for years. The only shocking thing is that we have done so little with them.
Obamacare, Save Money? Not Likely.
Orszag claims that Obamacare will reduce the federal deficit and Medicare spending. What isn’t mentioned is that, though it’s true that spending on Medicare will be reduced by $575 billion over the next decade, savings are used to offset spending on new programs. So really, there are no savings at all.

TUESDAY
Caulk the Leaks in Weatherization Spending
Money for nothing and overspending combined to 8.8 percent of total spending. Even more disturbing is that $69,000 (11.2 percent) of the audited spending couldn’t even be verified.
GAO: Unchecked Debt Could Prove ‘Disruptive and Destabilizing’
As if Washington hasn’t had enough reminders, the U.S. Governmental Accountability Office became the latest group in recent weeks to issue a stark warning that the levels of federal debt – if left unchecked – could prove disastrous.
How Would You Reduce the Deficit?
...reducing long-term deficits should focus on spending in Medicare, Medicaid, and Social Security. The co-chairs’ recommendations take a step in the right direction, but do not go far enough.
Fiscal Commission Compared to Clinton
...let’s remember that spending was just 18.2% in President Clinton’s last two fiscal years, 2000 and 2001.
Why Ireland fears a bailout
Note that casting your financial lot with the EU is especially problematic if you don't expect the EU to be so influential five or ten years down the road. Obviously the Irish are betting against the idea of a major step toward EU fiscal union and correctly so.
Four budget calculators, one story
In the Times' calculator, the single biggest thing you can do is add a "magic asterisk" to the health-care system. We don't know how exactly we're going to hold Medicare's spending growth to GDP+1%, but if we manage it, we'll save $560 billion by 2030.

MONDAY
Can a reduction in government spending stimulate the economy?
Critically, the IMF agrees that “tax increases are much worse for the economy than spending cuts.” Moreover, the IMF agrees that “after a few years, even large (but spending based) fiscal adjustments create growth for the economy.”
I Agree: Budget Cutting is Easy
Here's a prediction: if the New York Times keeps this game up on its site, a whole lot of people are going to be more sympathetic to cutting government and more optimistic that it can be done.
It’s Not About Ireland Anymore
Like it or not, it’s time for the Europeans to decide: Who gets unlimited liquidity support because they are essentially solvent, and who has to restructure their debt – with bridge financing and help from the outside?

Reports
WEDNESDAY
Restoring America's Future
...developed by a bipartisan task force that is chaired by former Senate Budget Committee Chairman Pete Domenici and former White House Budget Director and Federal Reserve Vice Chair Alice Rivlin, and includes 19 former White House and Cabinet officials, former Senate and House members, former governors and mayors, and business, labor, and other leaders.