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Do-Nothing Democrats

Senate Democrats set to reject Ryan, Obama budgets

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BY: Andrew Stiles – May 16, 2012 5:00 am

Senate Democrats are poised to continue their impressive streak of budgetary negligence on Wednesday by unanimously rejecting as many as five different budgets, including the one offered by President Obama. Republicans, meanwhile, are hoping that voters will pick up on the disturbing trend.

The Democratic-led Senate has not formally proposed a federal budget resolution in more than three years, and is not expected to offer one Wednesday. Senate Majority Leader Harry Reid (D., Nev.) and Budget Committee chairman Kent Conrad (D., N.D.) have made explicitly clear that they have no intention of doing so before the November election.

Senate Republicans plan to offer four GOP budgets—authored by Sens. Mike Lee (R., Utah); Rand Paul (R., Ky.); Pat Toomey (R., Pa.); and House Budget Committee chairman Paul Ryan (R., Wis.)—as well as the president’s budget. None of them are expected to draw any support from Democrats.

It would mark the second year in a row that Senate Democrats have unanimously opposed the White House budget proposal. The House of Representatives has already voted to reject Obama’s budget 414-0.

In total, members of Congress have cast more than 500 votes in favor of what is widely seen as the official Republican budget (Ryan’s) and zero in support of the president’s plan.

It is a sign, Republicans say, that Democrats are not serious about solving what experts have called “the most predictable economic crisis in history.”

“They simply don’t want to be held accountable,” Sen. Ron Johnson (R., Wis.) told the Washington Free Beacon. “Either they don’t have a plan, or they are totally unwilling to tell the American people what their plan is.”

Sen. Jeff Sessions (R., Ala.), the ranking Republican on the Senate Budget Committee, said he thought the latter was true. “I actually think they do have a plan,” he told the Free Beacon. “Their goal is to increase spending and increase taxes. But that plan will be rejected by the American people.”

“If they believed their plan was popular, they’d want to put it out in front of people, vote on it, and brag about it,” said Grover Norquist, president of Americans for Tax Reform. “That’s not what they’re doing. They’d rather run for reelection without the American people knowing what their vision of the budget would look like. It’s one thing for me to say their plan is unpopular. That’s what they’re saying.”

Democrats have been particularly reticent to propose a credible plan to reform federal entitlement programs such as Medicare and Medicaid, despite the fact that these programs are the primary drivers of the national debt. Medicare’s trustees project that the program will be insolvent by 2024.

Earlier this year, Treasury Secretary Timothy Geithner admitted that, even if Congress were to enact President Obama’s latest budget, “We would still be left with … what are still unsustainable commitments in Medicare and Medicaid.”

Obama pledged to make entitlement reform a priority as a candidate in 2008. “We’re going to have to take on entitlements, and I think we’ve got to do it quickly,” he said during a debate moderated by NBC. “I can’t guarantee that we’re going to do it in the next two years, but I’d like to do it in my first term as president.”

Nearly four years later, the closest thing to Medicare reform the president has offered is the Independent Payment Advisory Board, a council of appointed “experts” given sweeping power to reduce federal reimbursements to healthcare providers. Medicare’s chief actuary, Richard Foster, has raised doubts about the board’s ability to control costs.

Ryan’s budget, on the other hand, proposes to save trillions of dollars by gradually transitioning Medicare from a “fee-for-service” model to a market-oriented “premium support” plan modeled after a bipartisan proposal co-authored by Sen. Ron Wyden (D., Ore.).

Democrats have countered by accusing Republicans of trying to “end Medicare as we know it”—a charge the nonpartisan fact-checking site PolitiFact rated “Lie of The Year” in 2011—and in one case by portraying Ryan as literally throwing the elderly off a cliff.

Geithner summed up the Democratic position on entitlement reform during a House Budget Committee hearing in February when he told Ryan, “we’re not coming before you today to say we have a definitive solution to that long-term problem. What we do know is, we don’t like yours.”

President Obama and his Democratic allies have been far more resolute in their determination to raise taxes. Obama’s most recent budget calls for nearly $2 trillion in tax increases over the next decade. Conrad, the Senate budget chairman, has indicated that a similar amount would be appropriate.

Raising taxes is not something on which many politicians are eager to base their re-election campaigns. Studies have also shown that it is a particularly ineffective way to solve a nation’s debt and deficit problems. One report produced by the American Enterprise Institute examined data from a variety of countries between 1970-2007 and found “strong evidence that expenditure cuts outweigh revenue increases in successful consolidations.”

The findings echo those of a recent report from the Organization for Economic Co-Operation and Development, which concluded: “International experience shows expenditure-based fiscal consolidation tends to be more successful.”

The nonpartisan Congressional Budget Office recently concluded that the president’s budget, if enacted, would have a negative impact on long-term economic growth.

Ryan’s budget, on the other hand, simplifies the notoriously complex federal tax code by eliminating various loopholes and tax shelters while lowering tax rates.

Wednesday’s vote encapsulates what ought to be central issue in the 2012 campaign, Republicans say.

“This is an opportunity for the American people to assess the differences between the two parties,” a GOP budget committee aide told the Free Beacon. “We’re headed for financial disaster, and Senate Democrats are making no effort to take us off that path.”

“Republicans are actually putting forward proposals that are serious, that address the major challenges—on tax reform, entailment reform, spending reductions,” said another Republican aide. “Democrats have punted on all these issues.”

Few things better illustrate this lack of leadership more than unwillingness of Democratic lawmakers to support the president’s plan, Republicans say. Senate Democrats in all likelihood will vote in lockstep against every budget proposal, including Obama’s, and quickly move to change the subject.

“It’s a tear-off-the-Band-Aid kind of moment for them,” the GOP budget aide said. “They want to get it over with quickly so they can avoid a serious conversation about the budget.”

Even though Ryan’s budget, or any other GOP plan, has no chance of passing the Senate, Republicans want to use the moment to lay the groundwork for a winning political agenda.

“This is preparation for a Romney presidency,” Norquist said. “Republicans can line up and vote for an actual, written down budget. If Romney wins, they can turn and say, ‘I was elected to do this.’ That’s not something Obama could say about anything he did.”

Source

Obama Will Shred The Paul Ryan Budget In Today’s Big Speech

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WASHINGTON (AP) — In an election-year pitch to middle-class voters, President Barack Obama is denouncing a House Republican budget plan as a “Trojan horse,” warning that it represents “an attempt to impose a radical vision on our country” that would hurt the pocketbooks of working families.

Obama, in a speech to newspaper executives, is sharply criticizing a $3.5 trillion budget proposal pushed by Rep. Paul Ryan, R-Wis., which passed on a near-party-line vote last week and has been embraced by GOP presidential hopefuls. The plan has faced fierce resistance from Democrats, who say it would gut Medicare, slash taxes for the wealthy and lead to deep cuts to crucial programs such as aid to college students and highway and rail projects.

“It’s a Trojan horse. Disguised as deficit reduction plan, it’s really an attempt to impose a radical vision on our country,” Obama said in excerpts of his speech released Tuesday. “It’s nothing but thinly veiled social Darwinism.”

Obama’s message comes as Republican Mitt Romney looked to solidify his grip on his party’s presidential nomination in primary contests in Wisconsin, Maryland and Washington, D.C. The White House has appeared increasingly focused on Romney, with Obama’s campaign criticizing the former Massachusetts governor by name in an energy ad as the president’s team seeks to frame the election as a referendum on the economic security of middle-class voters.

White House advisers billed the speech — to be delivered during The Associated Press luncheon of editors and publishers — as an important marker for the president as he seeks re-election. Senior administration officials said the address would build upon themes the president delivered in Kansas last fall, in which he called the nation’s economic challenges a “make-or-break moment” for the middle class, and in his State of the Union address, in which he laid out his election-year agenda.

Ryan’s proposal aims to slash the deficit and the size of government while offering sharply lower tax rates in return for eliminating many popular tax breaks. GOP front-runner Mitt Romney and his Republican rivals have said they would support Ryan’s budget plan, which has little chance of passing the Democratic-controlled Senate but lays out the GOP’s fiscal priorities.

Obama was making the case that whoever wins the White House will face an economy still recovering from the “worst economic calamity since the Great Depression” and many Americans will still be looking for jobs and lacking financial security. By next year, “a debt that has grown over the last decade, primarily as a result of two wars, two massive tax cuts and an unprecedented financial crisis, will have to be paid down,” Obama says in the prepared remarks.

He argues that Ryan’s budget plan would stall the economic recovery. “By gutting the very things we need to grow an economy that’s built to last — education and training, research and development — it’s a prescription for decline,” he says.

On taxes, Obama is also expected to call for economic fairness encapsulated by the so-called “Buffett Rule,” arguing that the wealthy shouldn’t pay a smaller share of their income in federal taxes than middle-class taxpayers. Many wealthy taxpayers earn investment income, which is taxed at 15 percent, and Obama has proposed that people earning at least $1 million annually — whether in salary or investments — should pay at least 30 percent of their income in taxes.

Obama planned to note that “broad-based prosperity has never trickled-down from the success of a wealthy few. It has always come from the success of a strong and growing middle class.”

The focus on tax reform has brought attention to the effective tax rate of Romney, a millionaire who is paying 15.4 percent in federal taxes for 2011 on income mostly derived from investments. The top nominal rate for taxpayers with high incomes derived from wages, not including investments, is 35 percent.

Obama was speaking at a luncheon of 900 editors and publishers following The Associated Press’ annual meeting. William Dean Singleton, outgoing chairman of the AP Board of Directors and chairman of MediaNews Group Inc., will pose questions to Obama following the president’s remarks.

Read more: BI

BERNANKE TO SAVERS: We Don’t Owe You A Living

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Jeff Miller, A Dash of Insight

While we wait for the employment report, there was another big story yesterday — the Fed treatment of savers.

Fed Chair Bernanke testified before the House Budget Committee, responding to some illuminating questions from Committee Chair Paul Ryan (R. WI).  Joe Weisenthal, who is usually on the track of the biggest story, anticipated this one yesterday:

DEAR SAVERS AND RETIREES: Stop Whining About Those Lousy Rates You’re Getting From The Bank

Here is Joe’s conclusion:

And while we sympathize with people not getting returns on their money, the fact of the matter is that the big problem we have right now is that people have too much debt, not an abundance of cash that’s just sitting there not returning anything.

The bottom line is this: Yes, it sucks that pensioners and garden-variety savers aren’t getting returns, but it also sucks for everyone in the U.S. right now, because the economic outlook seems to be so mediocre. Welcome to the club!

Until growth and inflation return to anything that looks robust, savers will have to be stuck with the same garbage returns boat the rest of us are in.

The confirmation came in Congressional testimony by Fed Chair Ben Bernanke and the ensuing questions.

There is a lot of buzz about the role of the Fed and also the leadership of Bernanke.  The leading Republican candidates all want to fire Bernanke, and some of them even want to abolish the Fed.  Some of the GOP House Budget Committee members have joined the criticism.

Here at “A Dash” I focus on investments, not politics.  Years ago some readers called me a “Bush apologist” and a blatant “supply sider.”  I have tried to explain that I do not have a partisan perspective, but an investment perspective.  I want to find the best investments no matter who is in power.  My perspective changes with the evidence.

With that in mind, let me suggest a few propositions for your consideration.  If these are not obvious, I recommend more research.

  • Bernanke is a Republican, with a conservative background.  This is typical for Fed Chairs.
  • If President Bush had been re-elected, the current GOP fiscal argument would be different.  There would be support for stimulus, including both tax cuts or spending.  If you do not believe this, look back in history to the end of the Bush administration.
  • If President Bush had been re-elected, the GOP monetary story would be different.  They would be screaming for easy money, as both parties have always done, including past GOP administrations, and including Bush senior.
  • Paul Ryan is an ambitious and aspiring VP candidate who has a theme that resonates — balancing the budget.  It is an effective political argument — for the party out of power.

Meanwhile, the Fed is doing a good job of ignoring politics and focusing on the economy.

Investment Conclusion

I continue my plea:  Look beyond politics.  Most recently, look beyond the popular ploy of making a villain out of the Fed.

The Fed has a dual mandate including both price stability and employment.  Here is the official statement:

The Congress established two key objectives for monetary policy–maximum employment and stable prices–in the Federal Reserve Act. These objectives are sometimes referred to as the Federal Reserve’s dual mandate.

There are many who have criticized the US approach suggesting that there should be only a single mandate – price stability.

So let us all be clear about this — very clear.

The Fed has no Third Mandate.  There is no interest rate guarantee for savers!

It is difficult enough to balance economic growth and price stability.  The idea that the Fed should be judged by a third criterion — maintaining interest rates for savers — is misguided, politically biased, displaying favoritism for one group, and basically wrong.

More importantly, it is not going to happen.  Our investment decisions should be based upon reality, not the wishful thinking of those with a partisan agenda.

I understand the plight of savers and senior citizens.  I work with such investors every day, helping them find a combination of a bond ladder, dividend stocks, and enhanced yield.  Those who do not have a job at all face a more difficult problem.  Until we have a stronger economic recovery, we are all in this together.

Read more: BI

Tax and Debt Bomb

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By: Larry Kudlow

We thought tax reform meant lowering rates and broadening the base by eliminating or cutting back on various deductions, credits, and loopholes. That’s what the Bowles-Simpson commission proposed. That’s what Paul Ryan and David Camp are working on. And that’s the pro-growth model.

But President Obama unveiled a much different tax-reform vision in his much-anticipated debt speech on Wednesday. He would raise tax rates on upper-income earners and small businesses. He also would eliminate deductions and credits, or so called “tax expenditures.” The president referred to these tax-expenditure reductions as “spending cuts.” In his context, they most certainly are not. They are more tax hikes.

Basically, the president is giving successful earners and small-business filers a double tax hike. That’s what it really is.

Of course, the president’s formula of estimating higher revenues to lower the deficit is completely wrong. The reality is that higher tax rates will slow the economy, inhibit new start-up companies, penalize investors, and may very well lose revenues and increase the deficit.

In the latter part of his speech the president did mention some kind of middle-class and corporate tax reform. But he gave no specifics.

He also touted $750 billion in discretionary spending cuts, but again without any details. Most of that amount probably comes from the recent continuing resolution to avoid a budget shutdown. Since Obama is extrapolating out twelve years, who knows how this is scored.

On the entitlement front, Obama rejected Paul Ryan’s consumer-choice and competition approach to Medicare reform. Instead, he invoked the Obamacare central-planning agency called the Independent Payment Advisory Board, which is supposed to make reductions in Medicare. Medicare itself would exercise more price controls on prescription drugs, rolling back the consumer choice and competition established under George W. Bush.

In total, President Obama is claiming $4 trillion in deficit reduction over twelve years. But we’ll never see it. Interest expense savings is supposed to make up $1 trillion of that amount, while the rest will somehow come from a concoction of fewer tax deductions, higher tax rates, and $400 billion in defense-spending cuts.

In effect, the president has moved to the left. He has embraced the Democrats’ so called progressive caucus in the House by slashing defense and jacking up taxes, all while offering no serious entitlement reform. (Hat tip to Jimmy Pethokoukis for nailing this earlier in the week.)

My final point is this: President Obama’s harsh-rhetoric rejection of the Ryan budget and his new (presidential) campaign to raise taxes on the rich sets up a huge confrontation with House Republicans on the eve of the hugely important debt-limit expiration.

Sometime in mid to late May, the debt ceiling to allow the government to borrow more money is going to run out. The Treasury can move money inside government accounts to forestall a debt breakdown for another couple of months. But the potential for a major political conflict on the eve of this process sets up the worst possible outcome: Failure of the U.S. to pay the interest on its own debt.

This is unnerving to financial markets. Instead of compromise, the president decided to seek confrontation.

Caveat emptor. Investors beware.

( Original Article )

nationalreview.com

Paul Ryan’s Path to Prosperity, 2012

By Ellie Velinska

Progressive talking heads are fainting with excitement on TV over the Islamic world newly found love for democracy. Meanwhile, George Soros funded experts explain to the revolutionary crowds around the world that the reason they cannot afford food is America’s policy to cover the debt with make-believe dollars. They make it sound like the food will be plenty and affordable again if only somebody can get rid of the US dollar as the world currency. Does Mr. Soros care about the mother in Africa who puts her hungry child to sleep? Or is he cheering the humanitarian disaster with hope that it will put him in charge of the new world currency printing press?

Is President Obama ‘quantitivly easing’ his way to re-election or is he ready to get out of office in two years enjoying his life as the celebrity who ‘saved the world from the US dollar’?

The President of the United States is voting present on the fiscal crisis by proposing a budget with deficit over a trillion dollars. That means that Barack Obama is fine with another dose of the borrowing and ‘digitizing’ money: policy that is now deemed to be bloody across the world.

It doesn’t have to be this way. America can save the dollar as the world currency if the politicians stop the financial orgy of the US government. Leadership will not come from the progressives (democrats or republicans), because many of them are just fine with kicking the dollar until it comes home crippling making way for the new Open Society money masters.

Leadership can come from the old-fashioned Conservatives whose radical grandmothers thought them the trick of balancing the budget: don’t spend what you don’t have.

Paul Ryan presented the Republican Path to Prosperity budget balancing proposal. Parts of it make sense; parts of it are very disappointing.

Defense Department seems to be the only part of the government that is functioning in accordance to the reality. Secretary Robert Gates was able to organize house cleaning by collecting proposals for cuts internally so the Pentagon was ready with $178 billion in cuts and savings without waiting for Nancy Pelosi with the hammer, John Boehner with the hatchet and Barack Obama with the machete to appear at the door.

It is a strategy that makes sense. The bureaucrats can have much happier transition during the downsizing of the federal government if they follow the Defense Department lead and cut their own budget before Paul Ryan or other outsiders start digging in their yard. Unfortunately the Ryan’s plan does not go deep enough into the every department or agency’s affairs (with the exception of the EPA where the cuts go deep, very deep…)

The Government Accountability Office also came up with 100 billion in cutting redundancies and gets a ‘You did it’ sticker reward.

YouCut and the earmark ban make easy talking points and identify weird programs and policies that are ready go out the door.

The rest of the federal government consists of creatures that view themselves as Untouchables and if they remain such the US dollar will be over, so the Paul Ryan’s proposal has some plans to shake them up a bit.

The Path leads to reducing the number of the federal workforce by 10% by 2014. It is done in a humane way – on every three retired the government will hire one. The rate of downsizing of the federal workforce is higher than the one proposed by the Obama Debt and Deficit commission (two hired for every three retirees).

Deeply disappointing is the way Ryan’s proposal deals with the fraud and abuse across the federal government. The plan borrows the idea from the Debt Commission about creating a new bureaucracy and hiring more federal agents to look for government waste. This makes as much sense as policing Afghanistan for drugs while letting Charley Sheen to roam around Hollywood with a suitcase full of cocaine. More policing is not going to help until the real cause is addressed. In the case of the government waste the cause for the wide spread fraud and abuse is the insane size of the federal bureaucracy and the purposefully complicated way the business is conducted. The leaner the federal government the easier the waste will be identified. Making up a new committee is adding to the problem, not solving it.

Ryan’s plan is getting rid of many federal subsides including those for energy and agriculture. Those come in the category: too good to become true. The stars in that category are Fannie Mae and Freddie Mac which will be privatized. The proposal is winding down federal insurance guarantees for the GSE monsters and FDIC. Will the banks fly on their own soon? Right there with the pigs.

These are the itsy-bitsy cuts in Ryan’s Path to Prosperity and they seem achievable if good will meets the Republicans in the Senate. The trillions in cuts however come from a tax and entitlement reform that is a bit murky in details, so I will leave them for the next post waiting for a few questions to be asked and answered.

To be continued…

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The Moral Liberal Contributing Editor, Ellie Velinska, is the editor of the excellent blog: Big Bureacracy.com. A naturalized American citizen, she lives in North Carolina and is registered as a non-affiliated voter. Ellie attended and completed high school in the USSR and has Masters Degree in Psychology from Sofia University, Bulgaria. In 2000 Ellie and her husband moved to America after winning the Green Card Lottery. She says, the ‘New Media’ is a perfect challenge and quite convenient for her now that she is a mother of two boys.

( Original Article )

www.themoralliberal.com

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