Budget News Jan. 3 - 7

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News
FRIDAY
Congress unlikely to extend hand to ailing states
States will continue to face substantial deficits over the next few years, but they will have to get by with the end of stimulus spending and less financial help from the federal government.
Pentagon seeks $120B in war funds
The Pentagon is expected to seek in the range of $120 billion for overseas war costs next year, a significant drop from 2011 but still a stubborn strain on deficit-reduction efforts.
House GOP Challenges Obama on Debt Limit
In power scarcely a day, House Republicans bluntly told the White House on Thursday its request to raise the nation's $14.3 trillion debt limit will require federal spending cuts to win their approval, laying down an early marker in a new era of divided government.
States see biggest revenue drop in 60 years
In a sign of the sluggish economy’s devastating impact, state government revenue across the country dropped by nearly one third in 2009 - the sharpest decline in 60 years, the Census Bureau said in a new report.
House Budget Chief Ryan Says Republicans Won't Bail Out States in Default
Congressman Paul Ryan, the Budget Committee chairman in the U.S. House of Representatives, said Republicans don’t intend to save states from debt defaults.

THURSDAY
Irish Government Reports Budget Deficit Fall In 2010
The department of finance said the budget deficit at the end of 2010 of EUR18.7 billion, compared with EUR24.6 billion at the end of December 2009, was in line with previous government forecasts.
US Gov't Seen Hitting Debt Limit in March or April
Hitting the limit could force shutdowns of federal offices, as happened in 1995, threaten payments for Social Security and other federal benefits, or even cause a default on federal debt payments.
N.Y. governor unveils emergency debt plan
The Conference of State Legislatures says the 50 states face a combined $82 billion in deficits in their 2012 fiscal years, as high unemployment continues to undermine a weakening tax base across the country.

WEDNESDAY
GOP's first spending targets: Bottled water on the line
The Republicans about to take over the House have big plans to try to cut federal spending. First on the chopping block: Congressional travel, postage, staff salaries and other office expenses.
House Democrats Attack GOP Budget Rules
The new “cut-as-you-go” rules would also allow for exceptions until a budget resolution is enacted, and some Democrats, including Rep. Chris Van Hollen, D-Md., worry it would be used to aid Republican plans to repeal the health care law.
House Budget Chief Wants Concessions Over Debt
The incoming budget chief in the House of Representatives on Wednesday said he will demand spending concessions from the Obama administration in exchange for any increase in the national debt ceiling.

TUESDAY
GOP sets up huge target for budget ax
The promise to cut $100 billion this fiscal year — in effect, taking government operations to 2008 levels — would mean cuts of more than 20 percent across the board from the $477 billion that Congress allocated for such programs in the 2010 fiscal year, which ended Sept. 30.
States in fiscal mess: N.Y. governor cuts his pay
New York's new governor, one of several greeted by billions of dollars in budget gaps, acted to cut his salary Monday amid reports he will freeze the pay of most other state workers.
Pentagon to Detail Savings, Cuts
US Defense Secretary Robert Gates is expected to announce as early as Thursday about $100 billion in savings for the Pentagon and cuts to some weapons programmes, sources said on Monday.
Strained States Turning to Laws to Curb Labor Unions
Faced with growing budget deficits and restive taxpayers, elected officials from Maine to Alabama, Ohio to Arizona, are pushing new legislation to limit the power of labor unions, particularly those representing government workers, in collective bargaining and politics.
Illinois Has Days to Plug $13 Billion Deficit That Took Years to Produce
The legislative session that began today as the House convened will take aim at a budget deficit of at least $13 billion, including a backlog of more than $6 billion in unpaid bills and almost $4 billion in missed payments to underfunded state pensions.
Cost of Food Safety Bill is Challenged by Republicans
The administration's new food safety inspection system is meeting Republican resistance over the costs of the $1.4 billion bill over 5 years.

MONDAY
White House Warns Failure to Raise Debt Ceiling Would Mean Economic 'Crisis'
The $13.9 trillion national debt is creeping closer to its $14.3 trillion ceiling, and a vote to increase that limit is expected in the spring.
Congress Targets Spending
Republicans, Poised to Take Control of the House, Put Budget in Cross Hairs.
Debt ceiling a major test for GOP
Days before Republicans take control of the House, the debate over whether to raise the debt ceiling continues to loom over the nation’s capital.
The war over spending
The fight over spending is likely to come to a head by March. That's when temporary funding for the government expires and when the country's debt load will be very close to surpassing the legal debt limit.

Economist Comments
FRIDAY
DORFMAN: $100 billin in cuts easy for Republicans
Surely, Republicans in Congress can find $100 billion to cut out of the $1.25 trillion of new spending that has existed for less than 10 years.
EDITORIAL: Only $279,950,956,705.59 left to spend
The Congressional Budget Office estimates that America already is on track to quadruple interest payments to $778 billion within 10 years. Unfunded liabilities in Social Security and Medicare amount to a staggering $47 trillion, according to the latest reports by trustees. Combined with the public debt, this amounts to $660,000 in liability for each individual who paid taxes to the federal government last year.

THURSDAY
A Challenge for the New Congress
By ceasing to authorize expenditures from the Highway Trust Fund, and ending the 18-cent federal gasoline tax, Congress could let the trust fund expire and turn highway spending authority back to the states-along with the ability to levy the fuel tax for their own coffers.
Momentum Builds for Corporate-Tax Overhaul
To be sure, many companies don't pay that top rate. The panel recommends a federal rate of 20%.
Two Cheers for Rivlin-Ryan
How a modest plan shows progress in Washington is possible.
The Deficit's Stubborn Facts
Every additional $100 billion borrowed this year adds $43 billion in interest over the next decade, and much of it will go to foreigners.
Where is the Deficit Czar?
It is remarkably foolish for anyone to play down the bond market’s reaction to the ballooning deficit and out of control government spending. Historically that reaction has been sudden, violent and severe.

WEDNESDAY
Hubbard: Fiscal Reform Must Come from Spending Cuts
Economist Glenn Hubbard expects gridlock in Washington when the new Congress convenes, argues for tax reform including a scaling back the home-mortgage interest deduction and other popular tax breaks…
We're About to Go Crashing Through the Debt Ceiling
It took just seven months to go from $13 trillion to $14!
Cut spending to restore certainty
...spending is due to double — from 20 percent to 40 percent. So taxes would need to more than double just to stay even.
Examiner Editorial: Using the debt ceiling for a powerful message
So long as the federal government continues to spend far beyond its means, the nation's economy will remain mired in a recessionary stasis.
Municipal Debt Threatens US Economy
Local and state debts are large enough to derail the economic recovery.

TUESDAY
Rules for Smaller Government
In their new rules, Republicans are giving paygo the heave-ho and substituting a rule called "cut as you go." From now on, increases in mandatory spending—for new or existing entitlements—will require that spending be cut by an equal or greater amount elsewhere in the budget.

Blogs
FRIDAY
The Illogic of America's Debt Ceiling
"One of the peculiar embarrassments of the American political process is the fact that Congress votes separately on the deficit and debt, as if they were two different decisions."
Thoughts on the Debt Limit Debate
Congress has voted to increase the limit numerous times over the decades, including 10 times since 2001.
Paul and Paul: The Government Is Bankrupt
Rand noted that they are working on a bill to cut $500 billion from the budget. Rand Paul notes that four years ago Senator Obama refused to extend the debt ceiling because of Bush’s financial recklessness.
Republican $100 Billion Spending Cut
The important thing is that Congress needs to start cutting all types of spending right away.

THURSDAY
Sen.-Elect Rand Paul: $50 Billion in Spending Cuts Not Good Enough
...responding to the New York Times report that Republicans are backing off their 2010 campaign pledge to reducing spending by $100 billion in the first year.
Is It Insane to Want to Stop the Government from Borrowing More Money?
The statutory debt limit was instituted in 1939 as a way to limit congressional spending (as a way to affirm its constitutional mandate to control spending). The idea was to signal to lawmakers that they couldn’t spend and borrow above a certain point. Unfortunately, lawmakers didn’t understand this signal and, since legally the debt limit does not alter the spending and revenue policies that determine debt and deficits, they continued to spend more as the debt limit grew.
Eileen on Maryland’s Budget
Maryland has struggled to balance its budget for much of the last decade. ...by 2015 the structural deficit is projected to grow to $1.65 billion.

WEDNESDAY
No more sacred cows, Congress: Put everything on the budget-cuts table
Republicans, it's time to put defense spending on the table. Democrats, take down the walls around Social Security and Medicare.

TUESDAY
House GOP cuts $35 million from congressional budget
House Republicans say the $35 million that will be saved by slashing office budgets is $10 million more than they expected.

MONDAY
When Do Public Sector Pensions Run Dry?
...Business Insider generated an interactive map of when state pension plans run dry.

Reports
None.