Budget News Jan. 31 - Feb. 4

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News
FRIDAY
Bernanke urges Congress to act on debt
In a rare on-the-record appearance before reporters, Federal Reserve Chairman Ben Bernanke gave a dire warning to lawmakers: Raise the debt limit now.
Democrats warn of US shutdown over debt
Senate Democrats warned Thursday of dire economic consequences if Congress fails to raise the US debt ceiling, saying it could prompt a shutdown of the federal government.
$32 Billion in Budget Cuts Proposed
Republicans said that their cuts, prorated for the balance of the fiscal year, still fulfilled their campaign pledge to reduce to 2008 levels the government’s discretionary spending on everything other than national security.
Economists Disagree on Debt Risk Solutions
Testifying before the Senate Budget Committee on Thursday, a panel of economists and budget experts agreed that the risks of an eventual U.S. debt crisis are high in the absence of any major federal policy overhauls, but differed sharply about the right time frame for aggressive action to curb spending.
Weather Pressures Strained Budgets
Several big cities, including New York and Kansas City, Mo., have already exhausted their snow-removal budgets and are scrambling for additional funds, and many other cities and towns aren't far behind.
SPIN METER: Not much savings from stimulus money
It's not that all the stimulus money has been spent; it has been committed for specific projects and programs.

THURSDAY
Ore. governor budget: No tax increases, some cuts
Gov. John Kitzhaber on Tuesday proposed cutting nearly half the beds in juvenile prisons along with steep cuts to funding for education, health care and other programs.
Treasury close to profit on TARP bank loans
But that's just the loans made to banks. Taxpayers are still holding the bag on bailouts for the auto industry and AIG through TARP.
Ryan Budget to Fall Short of ‘Pledge’
Budget committee chairman's proposal will cut $55-60 billion from President Obama's budget.

WEDNESDAY
Pressure builds for debt reduction
Three lawmakers who sat on President Obama's bipartisan debt commission -- Sens. Kent Conrad, Tom Coburn and Mike Crapo -- convened a meeting of more than 30 senators from both parties "to make sure everyone comes to consensus on how big the problem is and how real it is," Coburn told CNN.
Governor Cuomo wants to slash funds for schools, Medicaid
New York Gov. Andrew Cuomo wants to cut funding for state operations by 10% to close a $10 billion budget gap.
Senate Democrats ban earmarks
Spending bills will not include pork requests.
Hey, Congress: We need more money!
Defense Secretary Robert Gates is warning that if Congress passes another stop-gap spending bill, instead of a full budget, the military will suffer.
N.Y., California sing blue-state budget blues
The two new Democratic chief executives, presiding over the nation’s two pre-eminent blue states, confronted the realities of weak economies, falling revenues and rising debts in outlining their — very different — governing visions this week.
Interest on national debt: 'Skyrocketing' costs ahead
Interest payments on the national debt could total $5.5 trillion over the next decade, or about 79% of the new debt estimated to accrue between 2012 and 2021.
What Could You Do with the U.S. Debt of $14 Trillion?
The U.S. Has Racked Up Its Highest Public Debt Ever, Enough to Buy Tickets to 53,122 Super Bowls.
CR Votes to Test GOP on Spending
House Republicans are hoping the upcoming debate over the continuing resolution will indicate how hard-line their Members will be during future fights on the budget and the debt ceiling.

TUESDAY
Can Republicans cut defense spending?
Republicans are divided over what to do about the defense budget. Secretary of Defense Robert Gates wants to reduce it by $78 billion over the next five years.
Udall to Call for Balanced Budget Amendment
Udall would be the first Democratic senator to support what has long been a favorite idea among Republicans.
Bernanke set to testify before House Budget Committee
Federal Reserve Chairman Ben Bernanke will make his first appearance in the Republican-controlled House next Wednesday, testifying before the House Budget Committee.
Lawmakers wary of touching entitlements
Proposals for drastic budget cuts come from all directions.

MONDAY
For Governors, Medicaid Looks Ripe for Slashing
...the election of tough-minded governors, the evaporation of federal aid, the relentless growth of Medicaid rolls and the exhaustion of alternatives have made the program, which primarily covers low-income children and disabled adults, an outsize target.
Greece loses Mediterranean Games over budget cuts
...Greece lost the 2013 Mediterranean Games hosting rights on Friday after seeking to slash the budget due to its acute financial troubles.
Lawmakers say Idaho's budget gap balloons to $185M
Less than a month ago, Otter based his proposed fiscal year 2012 spending plan on a deficit of just $35 million.
Playing chicken with the debt ceiling
...bond experts say Congress is engaged in risky business. They say lawmakers should not use the debt ceiling as an artificial deadline for deficit reduction. Instead, lawmakers should focus on crafting a comprehensive long-term plan for fiscal responsibility.
Nassau County Budget Figures Under Dispute
Nassau County says it has a balanced budget. The state of New York, which seized control of the county's finances earlier this week, says the budget is tens of millions in the red.
Snow blows city budgets
In some places, all it took was one storm to drain the budget. New York City, for instance, ran through its entire $38.8 million snow removal account just to handle the 20 inches of snow that fell in late December.
U.S. Default Would Be Finance `Disaster,' Not on Table, House Speaker Says
Treasury Secretary Timothy Geithner said in a Jan. 6 letter to congressional leaders that the U.S. government’s $14.29 trillion debt limit may be reached as soon as March 31 and “most likely” by May 16.

Economist Comments
FRIDAY
Education Cost Top Problem for Local Gov't
Education spending as a share of tax revenue jumped 90% from 1992 to 2011 at the state level and 73% at the local level.

THURSDAY
I Can Balance the Budget
...my cuts still total only $246 billion. If we're going to get rid of the rest of the CBO's projected deficit, we must attack the "untouchable" parts of the budget, starting with Social Security.
Nobody Is Proposing to 'Slash' Social Security Benefits
Under the current formula, retirees in 2050 will receive $11,000 more in today's dollars than current retirees get. Everyone knows that is unaffordable.

WEDNESDAY
REHBERG: Hello, I’m a congressional earmarkaholic
Here’s how we need to change, now that we’re off the sauce.
Cutting Billions From Defense Won’t Save Medicare: David Pauly
Eighteen years from now, the fund that pays for hospitalization expenses -- Part A benefits, if you’re up on the jargon -- will be exhausted, according to estimates in the 2010 report from Medicare’s trustees.

TUESDAY
More Budget Cuts for Education in Colorado
Nationally, forty states currently project budget gaps totaling over $140 billion for the next fiscal year. Even worse, states will have to try to fill the gaps with nearly $40 billion less in federal stimulus funds than they had last year…
EDITORIAL: Obama’s freeze
President Obama‘s pledge to freeze domestic discretionary spending for five years was a diversionary tactic. A look at the numbers shows how ineffectual his supposed fiscal discipline would be.
Mr. Duncan’s Smart Lesson Plan
Budget crises have their benefits.

Blogs
FRIDAY
Time for new rules to limit Washington spending
...such reductions aren’t unreasonable, says the CBO, if Medicare was to be turned into a subsidized voucher program for seniors, as some Republicans propose.
Interest Rates and Failure to Raise the Debt Ceiling
While the market may react to a failure to raise the debt limit, it would react also if we raise the debt ceiling. I find it interesting that those out there who are worried about default don’t realize that our ability to stave off default depends not on our willingness to raise the debt ceiling but on our continued ability to pay the interest on our debt.
Dissecting the House Budget Committee’s 2011 Budget Cuts
Lawmakers should continue to rein in spending by quickly and decisively paring spending back for 2011 and turning next to 2012.

THURSDAY
Enough Is Enough On Raising The Federal Debt Limit
Refuse to raise the debt limit and avoid default on the national debt by requiring interest on the debt to be paid first out of revenues before money is spent on any other programs.
More Stimulus Spending To Balance The Budget?
We all know what has to be done: everything must be cut across the board. That means all discretionary programs and non-discretionary programs.

WEDNESDAY
CAP Act: Baby Steps Towards Fiscal Responsibility – Tentative and Toothless
Procedurally, the Act only institutes a new budgetary point of order, which can be overridden with super-majority votes in both houses. That is, the Act doesn’t compel anyone to act fiscally responsibly unless they’re inclined to do so.
How Should the U.S. Break Its Promises?
...if we can't borrow money, no one's going to bail us out--or the states. And you can expect a default to be followed by a pretty ugly recession in an economy as credit-driven as ours.

TUESDAY
Sen. Rand Paul Proposes Serious Cuts
Paul’s bill would target $500 billion in cuts for fiscal 2011 alone. While audacious by Washington standards, cutting federal spending by that amount would still leave us with a projected $1 trillion deficit this year.
Should States Be Able to File for Bankruptcy?
The bankruptcy idea is definitely appealing, but after reviewing arguments from both sides, I think that state bankruptcy could create more problems that it would solve.

MONDAY
What Would a U.S. Debt Downgrade Mean?
I agree that a US debt downgrade wouldn't be a surprise. But it would certainly have an effect, particularly on the portfolio of institutional investors who have regulatory or contractual mandates to only hold top-rated, ultra safe bonds.
Is State Bankruptcy a Good Idea?
In other words, it’s not clear bankruptcy is the only way for states to fix their structural deficits and in fact it may come with many unintended consequences.
What it will take to balance the budget
As we consider fundamental tax reform, we should seek a system that not only can raise revenue efficiently, but also is flexible enough to adapt to changing spending priorities that our democratic process will ultimately determine.

Reports
THURSDAY
Taking a Scalpel to the Defense Budget
Members would be wise to carefully review the House and Senate versions of the pending FY 2011 defense appropriations bills. This would help Congress gain valuable insight into what defense funding may be supported by another federal agency and what defense projects may not warrant funding in a military bill or any federal agency at all.

TUESDAY
Running for Cover
The BRAC Commission as a Model for Federal Spending Reform.

MONDAY
Can We Trust the Social Security Trust Funds?
Lawmakers will consider different options for Social Security reform in the coming year; do they have all the necessary facts to do this?