Budget News Feb. 14 - 18

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News
FRIDAY
Raise the debt limit -- or cut $738 billion
The country would need to cut spending or raise taxes by as much as $738 billion over just 6 months, according to a report from the Congressional Research Service. That's how much it would otherwise need to borrow to pay all its bills for the rest of the year.

THURSDAY
Big Budget Cuts Seen for Illinois Despite Increases in Tax Rates
Even after Illinois raised income and corporate tax rates last month, Gov. Pat Quinn is proposing a budget that would cut aid to the poor, skimp on many services and count on borrowing billions to pay overdue bills.
Battles continue on House GOP spending bill
Despite working past midnight once again, lawmakers still intended to offer a raft of amendments to the $1.2 trillion legislation, which funds the Pentagon and the operating budgets of every Cabinet agency and provides $158 billion for the wars in Iraq and Afghanistan.
Sacred Cows: Why Lawmakers Are Stuck on Medicare, Medicaid, Social Security Fixes
The three programs have ballooned to 57 percent of the government budget this year and are widely cited as the most significant contributors to the federal deficit, something nearly all Americans want to see aggressively brought under control.
Debt deal: 'History will condemn us' if U.S. punts
The problem, Conrad said, is that the president's budget would do nothing to bring gross debt down below 100% of GDP, above which it will be for the next decade.
Deficit Plan Details Emerge
Bipartisan Senate Group Mulls Spending Caps That Could Trigger Tax Increases.

WEDNESDAY
Pentagon Budget Sees Weapons Growth Above Inflation Through 2016
The projections represent real growth of 2.6 percent annually, said Todd Harrison, a defense budget analyst with the nonpartisan Center for Strategic and Budgetary Assessments in Washington.
GOP Presses Biggest-Ever Budget Cuts
Proposed Pentagon Reductions Survive Early House Votes on Amendments to Bill Trimming $61 Billion in Spending.
Interior Added to GAO High-Risk List
After last year's Gulf Coast oil spill, the department might be unable to manage oil and gas leases while overhauling the agencies and offices responsible for them, according to the Government Accountability Office's biennial "High-Risk Report."

TUESDAY
Deficit is biggest as share of economy since 1945
That would be just under 11 percent of the $14 trillion economy - the largest proportion since 1945, when wartime spending swelled the deficit to 21.5 percent of U.S. gross domestic product.
Obama's wackiest budget cuts
...it offers a bewildering tour of government projects that don't work, are hopelessly outdated or downright wacky.
Chances up for federal shutdown
The chances of a government shutdown are on the rise.
Florida's Scott takes businessman's ax to budget
Many newly elected Republican governors have pledged to run their states like a business as they grapple with low revenues and multibillion-dollar budget gaps with little relief from a fragile U.S. economic recovery.

MONDAY
White House Expects Deficit to Spike to $1.65 Trillion
The White House projected Monday that the federal deficit would spike to $1.65 trillion in the current fiscal year, the largest dollar amount ever, adding pressure on Democrats and Republicans to tackle growing levels of debt.
Geithner Quietly Tells Obama Debt-to-GDP Cost Poised to Increase to Record
Net interest expense will triple to an all-time high of $554 billion in 2015 from $185 billion in 2010, according to the Obama administration’s adjusted 2011 budget.
House GOP Releases CR With $100 Billion in Cuts
The measure also includes no earmark funding and eliminates all previous earmark funding from fiscal 2010, saving about $8.5 billion.
Boehner warns: 'We're broke' as Obama plans to increase speed of spending cuts to $1.1trillion
John Boehner has condemned President Obama’s new plans to slash the budget deficit by $1.1trillion over the next ten years, calling the country ‘broke’ and saying the cuts don’t go far enough.
Steny Hoyer: Some Democrats to back Republican cuts
House Minority Whip Steny Hoyer expects some Democrats to support spending cuts proposed by the new Republican majority in the House but says the GOP effort to reduce the deficit is so far “more cosmetic than real.”
Obama’s 2012 Budget Proposal: How $3.7 Trillion Is Spent
Explore every nook and cranny of President Obama's budget proposal.
Obama spending plan criticized for avoiding deficit commission's major proposals
Some who worked on Obama's fiscal panel were also disappointed by his decision not to endorse any of the major elements of their deficit-reduction plan, which calls for raising the Social Security retirement age, charging wealthy seniors more for Medicare and limiting popular tax breaks such as the mortgage interest deduction.
Robert Gates to move on two budget fronts
The secretary already laid out the broad outlines of his budget plan for the next 2012 fiscal year last month, $553 billion, up a tad from its $549 billion request for this fiscal year, excluding funding for the wars in Iraq and Afghanistan.

Economist Comments
FRIDAY
Obama team uses slippery words to tout budget
...a budget in “primary balance,” according to the Obama administration, occurs when revenues and spending are equal -- excluding all the interest the government pays on its enormous debt.
Empty Words from Both Sides on the Debt
In fact, if the unfunded liabilities of entitlement programs were to be included in our national debt figures, our total future indebtedness could top $127.5 trillion.
Florida Railroad Check
Mr. Scott rejected $2.4 billion of federal money for an 84-mile line from Tampa to Orlando, saying that it would likely end up costing state taxpayers an additional $3 billion when the state's budget deficit this year is $3.6 billion.
Your $5,555 Defense Bill Chokes on Waste: Veronique de Rugy
On top of mandatory spending and other defense related programs, that comes to roughly $702 billion, or some $5,555 per American household.
Congress Finally Earns Its Pay
Unlike years past, the budget debates in the House were vigorous and democratic, not stage-managed by the leadership of the majority party.
Barack Obama’s Louis XV Budget
Unlike the French monarch, Obama is in denial of the coming deluge.
A leadership deficit amid a budget crisis
Waiting on a crisis could lead to a downgrade of the nation's credit rating, a sudden spike in interest rates, a loss of confidence in the dollar or any combination of events that could send our economy into a tailspin.
President Obama’s Pathetic Scalpel
The Bush administration had a quaint idea — evaluate the effectiveness of federal programs.

THURSDAY
Opinion: This Is No Way to Win the Future
Obama's original estimates were way off for the same reason his current scenario can't be trusted: He grounds most deficit reduction in the fantasy world of increased revenues.
For Congress, a History of Effort to Enforce Budgetary Restraint
Gramm-Rudman, as it came to be called, failed to meet its goals—but paved the way for a bipartisan agreement to cut the deficit years later.
BACON: AWOL: The ‘responsible’ Obama
It is time for Washington to act as responsibly as American families do, but it’s a bit of a stretch for Mr. Obama to suggest that the fiscal 2012 budget approaches the frugality displayed by the Breece household.
William Watson: Can the U.S. find fiscal sanity? Maybe
Budget data show the U.S. has a horrible fiscal record.
Fiscal Sanity Requires Courage
Measured by the Christie standard, President Obama's $3.7 billion budget request for fiscal year 2012, which will begin October 1, fails.
EDITORIAL: Oil ban means more debt
Washington loses revenue while plugging wells.

WEDNESDAY
Serious Debt Reduction Will Require Courage
Barely 12 cents on every federal dollar spent is in the nonsecurity discretionary budget... the overfocus on the 12 cents could leave the U.S. hollowed out, damaging education, infrastructure, science, health and basic research.
Small Budget Cuts Add Up
Why has Congress spent $720 million on a think tank over the past 25 years?
Obama Budget Offers Inertia, Not Hope and Change
...conventional wisdom also said that the stimulus package and Obamacare would be popular. The Republicans, following where the voters led, are betting conventional wisdom is wrong again.
Top Ten Obama Budget Failures
The president’s budget numbers are based on the assumption that the economy will grow, in real terms, 3.6 percent in 2012 and 4.4 percent in 2013. That’s much faster than CBO or private economists forecast, and nearly a quarter point faster than the economy has grown coming out of the last five recessions.
EDITORIAL: Obama’s budget blarney
The Fiscal Year 2010 budget projected a deficit of $581 billion in FY 2012. The FY 2011 budget projected $829 billion of red ink in 2012. And now the FY 2012 budget itself projects $1.1 trillion, a deficit 89 percent higher than the one Mr. Obama’s numbers crunchers projected for the coming fiscal year two budget cycles ago.
After Obama's Budget, Republicans Need a New Strategy
The big spenders are setting the GOP up for another phony debt ceiling debate. The party should unify around a proposal to put a ceiling on debt as a share of the economy.

TUESDAY
Why Pentagon budget cuts might not be as impressive as they sound
At $553 billion, the Pentagon budget is $13 billion less than expected. But it is still up from last year, and many of the biggest planned cuts are in the uncertain future.
Examiner Editorial: Obama adds $8.8 trillion in new debt in next decade
That number would be even larger, except that Obama's budget also raises taxes by $1.5 trillion on corporations and high-income earners, imposing higher marginal rates and new limits on charitable and mortgage deductions.
Obama's sea of red
Another free-spending budget.
Budget Battle Lines Drawn
Obama Plan Offers Tax Increases and Spending Cuts, but Avoids Big Fiscal Issues.
Sessions, Ryan: President failed on budget
Under his plan, the federal government would spend $46 trillion over the next 10 years, doubling the national debt by the end of his term and tripling it by the end of the decade.
$120 Billion for Obama’s ‘Sputnik Moment’
Despite a five year freeze in his budget, President Obama emphasized the need for “investment” spending on programs to improve America’s competitiveness and spur job growth — what he calls a down payment on his “Sputnik moment” agenda to “win the future.”
The Cee Lo Green Budget
The cynical and unrealistic White House budget.

MONDAY
A Limited Government--and a Strong Defense
Now begins the great business for which the voters recalled the Republican party to power in Washington: reestablishing the habits of limited government.
High Speed Rail a Fast Track to Waste
Translation: The administration would pay states $53 billion to build rail networks that would then lose money - lots - thereby aggravating the budget squeezes of the states or federal government, depending on which covered the deficits.
Runaway Trains
Obama's high-speed rail plan is a fiscal pipedream.
The Federal Government’s Unspent Billions
Meanwhile, more than $700 billion gathers dust in accounts all around Washington.
What cuts? Obama's budget only boosts spending
President Obama has two choices to avoid a major fiscal debt crisis for the U.S.: Fix it or ignore it. Unfortunately, he has so far chosen the latter.

Blogs
FRIDAY
Federal Government Could Reduce Debt by $1.5 Trillion with a Sale of Unneeded Assets
A large-scale sale of this magnitude would be a significant first step toward paying down the federal government’s unsustainable debt. It would be relatively painless, not requiring any tax increases or spending decreases.
Till Debt Do Us Part
The European marriage between its peripheral and core countries shows all the signs of the parties having irreconcilable differences.
I’ll Take “Whatever Evidence I Like” for Hundreds of Billions, Alex
Clearly, "evidence" doesn't drive budgeting decisions -- it's just a term that's invoked when it's politically expedient to do so.
Budget Process: a study of swollen spending
Our nation is at a critical crossroads: the federal government’s spending, deficits, and debt are at dangerous levels – and absent real reform – the already dire fiscal situation is projected to get far worse.
Worried About U.S. Debt? Shiller Pushes GDP-Linked Bonds
...if veteran economist Robert Shiller has his druthers, bonds linked to gross domestic product should shed that stigma, and the U.S., although not in immediate danger of defaulting, should give serious consideration to using them in order to help manage its burgeoning debt.
Some Dietary Suggestions For Our Regulators
It’s estimated that regulatory compliance costs $1.75 trillion annually thanks to a Federal Registry that has ballooned to 82,000 pages. Economically significant regulations, those costing an estimated $100 million or more in compliance, have grown faster still. Clinton’s term averaged 47 economically significant regulations annually. Bush: 48. Obama, reveres regulation: 66.

THURSDAY
Obama’s Plainly Unserious Budget
Starting with the bottom line, according to the administration’s own numbers, the 2012 budget would push debt (held by the public, not government trust funds) up to nearly $12 trillion at the end of 2012. That’s up from $5.8 trillion at the end of 2008.
Budget Blues: What Would State Bankruptcies Accomplish?
Even municipalities can declare bankruptcy, and sometimes do. But federal law denies states this remedy.
The State of State Subsidies
Chris Edwards recently penned a piece that makes the case for cutting federal subsidies to state and local governments. In a related budget bulletin, he shows that there are now over 1,100 federal aid programs for state and local governments.
A Budget Paradox
...Federal outlays went up 108 percent from 2000 to 2010, while the Consumer Price Index only went up 26 percent.
A Budget No One Believes In
The reality is that President Obama’s budget calls for a 49% rise in total spending over the next ten years. Driven by this spending explosion the President’s budget will cause the publicly held debt to rise from $9.5 trillion this year to $16.7 trillion in 2021.
Could your family spend money like the government?
The average American household earned $49,777 in 2009 (that latest year for which statistics are available). If that family followed the lead of the federal government, its credit card debt would equal about $47,785.

WEDNESDAY
Budget Numbers You Can Understand
What makes more sense? Eviscerating those budgets, or means testing social security, raising the retirement age, and cutting back on our military commitments?
Spending Projections and Spending Reality
Two years ago, they were promising that the spending increase would be “timely, targeted, and temporary.” As such, they projected that in 2011, spending as a share of the economy would already have fallen to 23.4 percent.
Obama’s Budget Means the Burden of Government Spending Will be $2 Trillion Higher in Ten Years
The most important number in Obama's budget is that he is proposing $5.7 trillion of spending in 2021, about $2 trillion more than is being spent this year, according to table S-1 of the budget.
Guest Blogger: The CRs Simple and Complex Spending Cuts
So as Congress begins the task of conquering our $14 trillion debt, H.R. 1 marks Congress’s first trip to the budget chopping block in years.
Deconstructing the Revenue Side of Obama’s Budget
The President wants higher tax rates, including higher taxes on investors, entrepreneurs, and small business owners. He also wants to increase the tax burden of American companies that are competing for market share in global markets.
Gov. Rick Scott Kills High-Speed Rail for Florida
Florida governor Rick Scott has just rejected $2.4 billion in federal high-speed-rail funds for his state, at the same time blasting the administration’s economic policies for making the U.S, and Florida, uncompetitive.
The price tag of fiscal evasion in Maryland
...what seem like small one-time maneuvers to close budget gaps ultimately weaken fiscal discpline and come with a price. Maryland has been dipping into the TTF since 1984 as the fund also became more reliant on bonds. The result is Marylanders now looking at higher taxes and fees, as well as interest payments on transportation bonds.
Why We Should Reform Entitlement Programs Now
Their conclusion is that “the rising burden imposed by the public financing of health care expenditures” in the form of more taxes and less economic growth could ultimately be what slows down the growth of health-care spending.

TUESDAY
Time to Get Serious About the Deficit
Conservatives will be very unhappy that the budget permanently ratchets spending up to 23% of GDP. But liberals shouldn't be too happy either--the president still hasn't found a way to get tax revenues above 20% of GDP.
Obama Budget Relies on Gloomier Economic Outlook
The jobless rate is seen at 8.6% in 2012 and should fall to a more normal level of 5.9% only in 2015.
Morning Bell: Obama Budget Doubles Down on Deficit Spending Failure
Since President Barack Obama was sworn into office, total entitlement spending has grown 4 percent, total discretionary has soared 16 percent, and the national debt has exploded 43 percent. Over that same time the United States economy has lost 3.3 million jobs.
Dealing With Higher Pension Costs
Buried deep within President Barack Obama’s budget proposal is a plan to stick traditional pension plans with a bill for an additional $16 billion dollars over the next ten years.
Education Reform, the Cost-Free Way
In fact, there’s no correlation between increased funding and a better education. In testimony delivered earlier this month at a hearing conducted by the House Education and Workforce Committee, the Cato Institute’s Andrew Coulson pointed out it costs the taxpayer $151,000 for each student’s K-12 public education — nearly three times as much as was spent per student in the ’70s, if you adjust inflation.
New Era of Big Government
Spending as a percentage of GDP has increased dramatically since the surplus years of the late 1990s.
The Budget Does Nothing to Assuage Fears over the Debt
A shocking side note is that not only will interest payments explode over the next 10 years, but they will account for an increasing portion of the total federal deficit (which is scheduled to remain at about 3% of GDP indefinitely). For instance, by 2021, interest payments will account for 83 percent of the entire federal deficit.
Deconstructing the Spending Side of Obama’s Proposed FY2012 Budget
The budget needs to be dramatically downsized, yet the President has proposed that we tread water.
30 years of spending priorities
INFOGRAPHIC: A look at how President Obama's federal spending compares to his recent predecessors, and how presidential priorities have shifted over time.
Budget puzzle
So what would be so hard about going back to the level of nominal spending in 2007 of $2.7 trillion? Why isn’t that proposal on the table?
The New Obama Spending Future
Now that the White House has released President Barack Obama's budget proposal for the government's 2012 fiscal year, we thought we'd update our look at how the future for federal spending has changed since George W. Bush was President.
First Thoughts on the Budget
First, there’s the $1.6 trillion deficit. That figure is the same as the entire budget of the United States in FY1998 (FY1986 in real terms, which is interesting considering the tendency to compare Obama with Reagan).

MONDAY
Obama the Born-again Budget Cutter?!?
There may not be any major initiatives to expand the burden of government, like the failed stimulus or the budget busting government-run healthcare scheme, but it certainly does not seem like there are any plans to reverse direction and shrink the burden of government.
Hidden costs of light rail
Are there additional energy costs of running a light rail that don't get measured?
Actually, Texans Save $600 Million a Year
A Texas tax official estimates in this story that Texas loses an estimated $600 million in Internet sales taxes every year. Its part of a long-running debate about whether state governments should be able to collect taxes from out-of-state retailers who send goods into their jurisdictions.
The 19 Percent Solution
How to balance the budget without increasing taxes.
The High Cost of Gravy Trains
Notwithstanding his proposal to spend $53 billion on an upgraded national passenger rail system, Vice President Joseph Biden is the problem, not the solution.
To Fix the Budget, Bring Back Reagan…or Even Clinton
The good news is that there's no major initiative such as the so-called stimulus scheme or the government-run healthcare proposal. The bad news, though, is that government is far too big and Obama's budget does nothing to address this problem.

Reports
FRIDAY
Wasteful Spending Does Not Stop at Earmarks and Overpayments
Federal entities estimate improper payments totaled $125.4 billion in fiscal year 2010, about 5.5 percent of the $2.3 trillion in reported outlays for the related programs. This $125 billion in overt waste, however, pales in comparison to the pervasive waste that exists in current spending patterns.

TUESDAY
President Obama’s 2012 Budget Builds on Failures of the Past
Under the President’s budget, the deficit in 2011 will hit a new record of $1.645 trillion, and the national debt held by the public over the next 10 years would nearly double, rising by $7.2 trillion.
Repealing the Davis–Bacon Act Would Save Taxpayers $10.9 Billion
The Davis–Bacon Act (DBA) requires the government to pay construction wages that average 22 percent above market rates. This shields unions from competition on federal construction projects. It will also add $10.9 billion to the deficit in 2011.

MONDAY
Additional $47 Billion in Spending Cuts for the Continuing Resolution
Rather than stop at $84 billion, lawmakers could seek a full $100 billion reduction in non-security discretionary spending.
Fiscal Year 2012 of the U.S. Budget
Fiscal Year 2012 contains the Budget Message of the President, information on the President’s priorities, budget overviews organized by agency, and summary tables.