Tag Archives: Budget

The Greens Hijack Biden’s $3.5 Trillion Budget Proposal (That Could be a Blessing), by Mike “Mish” Shedlock

Each loony new green proposal dropped into the Biden’s administration budget decreases the chances it will be passed. From Mike “Mish” Shedlock at mishtalk.com:

The Democrats’ Congressional proposals keep getting sillier and sillier. Let’s take a look.
Green New Deal ImagesDeal or No Deal?

“Deal” means agreement among radicals. The Greens hijacked Biden’s already strained budget.

Clean Electricity Standard

Please consider Reconciliation Package to Include Clean Electricity Standard.

In an interview with The Hill prior to her tweet, Smith, who is crafting the clean electricity standard legislation with Sen. Ben Ray Luján (D-N.M.), said she had expected the standard to be part of the legislation.

The senator also told The Hill that while the details of the standard will have to be worked out in negotiations, she’s hoping to see a requirement for 80 percent clean electricity by 2030.

My goal is to get to 100 percent clean electricity as soon as possible. President Biden’s goal is to be doing it by 2035,” she said, referencing Senate rules that allow reconciliation bills to raise the deficit for no more than 10 years.

White House climate adviser Gina McCarthy has said that the clean electricity standard is among her priorities for the legislation.

Smith said she’d include power coming from wind, solar, geothermal, hydroelectric or nuclear — and fossil fuels only when they use carbon capture technology to prevent their emissions from going into the atmosphere.

Smith also stressed the importance of the clean energy standard, calling it the “centerpiece of our strategy for addressing climate change.”

She said she opposes partial credit for unabated natural gas, which is less carbon-intensive than coal and oil, but still emits planet-warming gases.

Continue reading→

Republican Fiscal Hawks Revolt Against Budget Deal, Suspension Of Debt Ceiling, by Tyler Durden

Democrats and Republicans have reached their time-honored budgetary “solution” to a legislative impasse: Democrats get more vote-buying social spending and Republicans get more vote-buying military spending. To their credit, there are a few Republicans who can’t stomach it. From Tyler Durden at zerohedge.com:

As more details emerged about today’s bipartisan Senate budget deal, which will lift spending caps by $300 billion above the current limit and which prompted today’s sharp Treasury selloff, it was revealed that the agreement would suspend the federal debt ceiling through March 1, 2019.

This, together with the generous spending terms which are sure to blow out the US budget deficit even more than recent troubling forecasts such as those from Goldman, which recently predicted  US debt issuance would more than double, rising from $488bn in 2017 to $1,030 billion in 2018…

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prompted a revolt among GOP conservatives against the massive bipartisan deal, who complained that the GOP could no longer lay claim to being the party of fiscal responsibility.

“I’m not only a ‘no.’ I’m a ‘hell no,'” snapped Rep. Mo Brooks (R-Ala.), one of many members of the conservative Freedom Caucus who left a closed-door meeting of Republicans saying they would vote against the deal.

According to The Hill, one of the Freedom Caucus leader, Rep. Dave Brat (R-Va.), called the budget “a Christmas tree on steroids.”

This spending proposal is disgusting and reckless — the biggest spending increase since 2009,” conservative Rep. Justin Amash Mich.) tweeted after the meeting. “I urge every American to speak out against this fiscal insanity.”

But the focal issue appears to be the debt hike, which is giving conservatives “heartburn,” said Rep. Dennis Ross (R-Fla.), a member of the GOP vote-counting team.

The swift backlash from fiscal hawks means that Speaker Paul Ryan (R-Wis.) and his leadership team will need dozens of Democratic votes to help get the caps-and-funding deal through the lower chamber to avert a government shutdown set for midnight Friday. At the same time, some Republicans predicted a majority of the majority would back the package.

To continue reading: Republican Fiscal Hawks Revolt Against Budget Deal, Suspension Of Debt Ceiling

 

Tax Cuts will Balloon US Debt to 120% of GDP, but Boost to Economy will be “Short-Lived”, by Wolf Richter

The US debt to GDP ratio is now 105%, and regardless of what happens to Trump’s budget, that percentage will continue to rise. If Trump’s budget was to pass unscathed, it would rise even faster. From Wolf Richter at wolfstreet.com:

US is the “most indebted AAA-country” and runs “the loosest fiscal stance,” but the dollar as Reserve Currency still props it up: Fitch

It’s uncertain what if anything in the mix of tax cuts and tax increases being kicked around in Congress will become law. But Fitch Ratings believes that some combination will make it, and that it will sap US government revenues. “Under a realistic scenario of tax cuts and macro conditions,” the US deficit would rise to 4% of GDP next year, and balloon the US debt to 120% of GDP by 2027.

And that might be the best-case scenario.

That debt-to-GDP ratio just shot up to 105% – based on annualized Q3 GDP of $19.5 trillion and the US gross national debt of $20.5 trillion that had spiked by $640 billion in eight Weeks, following the suspension of the debt ceiling in September. The debt-to-GDP ratio was 103% earlier this year.

Fitch said in the report that it expects some version of the package to pass the US Congress, and that it “will be revenue negative, even under generous assumptions about its growth impact.”

The tax package, which includes cutting the corporate tax rate from 35% to 20%, “would deliver a modest and temporary spur to growth,” Fitch said. Even with these tax cuts, Fitch expects US economic growth to peak at 2.5% next year and then fall back to 2.2% in 2019 – the same kind of economic growth the US has seen since the Financial Crisis. So any boost to output from the tax cuts would be “short-lived.”

These tax cuts would “not pay for themselves or lead to a permanently higher growth rate,” Fitch said, adding:

The cost of capital is already low and corporate profits are elevated. In addition, the effective tax rate paid by large corporations is well below the existing statutory rate.

Throwing in these tax cuts to add to demand “at this point in the economic cycle” could boost inflationary pressures and “lead to additional monetary policy tightening.”

To continue reading: Tax Cuts will Balloon US Debt to 120% of GDP, but Boost to Economy will be “Short-Lived”

Save Liberty, Shut Down the Government, by Ron Paul

The title conveys a sentiment with which all thinking people can agree. From Ron Paul at ronpaulinstitute.org:

Congress ended the week by passing a continuing resolution keeping the government funded for one more week. This stopgap funding bill is designed to give Congress and the White House more time to negotiate a long-term spending bill. Passage of a long-term spending bill has been delayed over objections to Republican efforts to preserve Obamcare’s key features but give states a limited ability to opt out of some Obamacare mandates.

This type of brinkmanship has become standard operating procedure on Capitol Hill. The drama inevitably ends with a spending bill being crafted behind closed doors by small groups of members and staffers and then rushed to the floor and voted on before most members have a chance to read it. These “omnibus” spending bills are a dereliction of one of Congress’s two most important duties — allocating spending. Of course, Congress long ago abandoned another primary duty — preventing presidents from launching military attacks without first obtaining a congressional declaration of war.

The uncomfortable question raised by Congress’s abrogation of these two key functions is whether a republican form of government is compatible with a welfare-warfare state. The answer seems to be “no.”

Congress’s dysfunctional spending process is an inevitable result of the government’s growth. It is simply unrealistic to expect Congress to fund the modern leviathan via a lengthy and open process that allows individual members to have some say in how government spends their constituents’ money. The dysfunctional spending process benefits the many politicians eager to avoid accountability for government spending. The rushed process allows these politicians to say they had to vote for the spending bills. Often, these big spending bills include a promise to cut spending in the future. Like tomorrow, the promised spending cuts are always a day away.

To continue reading: Save Liberty, Shut Down the Government

Stocks Soared on Trump’s $1-Trillion Infrastructure Boom. But that Just Evaporated. Now What? by Wolf Richter

Trump’s budget proposal certainly does not contain funding for an infrastructure boom. That might be tacit recognition that a nation $20 trillion in the hole can’t really afford an infrastructure boom, not unless it gives up something else, like making war in faraway places. From Wolf Richter at wolfstreet.com:

Wall Street will have to go look for another mirage to hype.

During the campaign, President Trump explained that he’d fire up the economy and create jobs by spending $1 trillion on infrastructure. It’s in terrible shape and needs some big spending. It might have been material for rare bipartisan agreement.

The stock market has soared since the election, counting on this $1 trillion in new federal spending and “pricing it in.” Infrastructure stocks were hot. But by the looks of it, some folks are going to end up holding the bag…

Because there is not a trace of this huge spending plan in the 2018 budget blueprint released by the White House on Thursday. Instead, the blueprint slashed the budget of the Department of Transportation by 13% and cut out some existing plans for infrastructure spending.

Yet on February 12 — just days before the first efforts to defund existing infrastructure projects began to seep to the surface — I wondered incredulously if Trump and California “suddenly see eye-to-eye on high-speed rail,” because Trump, still brimming with enthusiasm about infrastructure spending, had told aviation CEOs this encouraging tidbit:

“And we have an obsolete plane system, we have obsolete airports, we have obsolete trains. We have bad roads. We’re going to change all of that, folks. You’re going to be so happy with Trump. I think you already are.”

And when the stock market opened in Japan, a major supplier of train system to the US, this happened… Trump Promises “Fast Trains,” Japan’s Railway Stocks Soar.

Days later, everything changed. In mid-February, the Department of Transportation announced that it would withhold its portion – $647 million – of funding for the Caltrain Electrification project. Caltrain runs 45 miles between San Francisco and San Jose in parallel with the awfully congested Highway 101, straight through Silicon Valley, a stretch that generates 14% of California’s GDP, and where 43% of the venture capital of the US is invested.

To continue reading: Stocks Soared on Trump’s $1-Trillion Infrastructure Boom. But that Just Evaporated. Now What?

 

President Trump should have made even deeper cuts in Washington’s bloated budget, by Diana Furchtgott-Roth

Cutting the federal budget is like lyposuctioning 10 pounds out of a 1500-pound pig. This year’s exercise will prove no different. From Diana Furchtgott-Roth on a guest post at theburningplatform.com:

President Trump wants to cut the budgets of individual agencies by as much as 31%.

On Thursday President Trump released his proposed budget for fiscal 2018. It would increase defense spending by $54 billion and cut the budgets of other government agencies by the same amount.

He wants to trim executive-branch agencies with a chain saw rather than with pruners. The State Department would get a 28% cut, the Environmental Protection Agency would get a 31% reduction and the Labor Department would get a 20% decrease. Gone are a wide swath of programs that could be funded by the private sector or individual states, such as the National Endowments for the Humanities and the Arts, the Corporation for Public Broadcasting and the Overseas Private Investment Corporation.

Washingtonians are complaining [about the proposed budget], but those who do not live on the coasts are undoubtedly cheering.

Although many in Washington are saying the sky is falling, Trump has not moved to cut Social Security and Medicare, the main sources of the budget deficit. That would have the most effect in reducing government spending in the future. When he issues a fuller 10-year budget, it is to be hoped that he will include even more cuts.

Cutting entitlements would be a welcome change. Although the U.S. economy is doing better than most of its competitors, our government for the past 15 years has been spending with abandon, increasing debt to dizzying levels. Concern about deficits was abandoned in 2002 after the attacks of Sept. 11, 2001. Debt today is a staggering $20 trillion.

Wasteful and duplicative government programs cost taxpayers billions annually, according to the Government Accountability Office. America has over 90 anti-poverty programs, 17 food-aid programs and 22 housing-assistance programs. The federal government even pays over $150 million for “official time” for union officials who happen to be federal civil-service employees in practically all its agencies. These officials work for their unions rather than for the taxpayer.

To make Trump’s budget a reality, Congress must pass it as a budget resolution. One would expect that a Republican Congress would pass a Republican president’s budget, but senators and representatives often have their own priorities — such as getting reelected. That means retaining expenditures within their states’ borders.

To continue reading: President Trump should have made even deeper cuts in Washington’s bloated budget

They Said That? 10/28/15

From Speaker of the House John Boehner, referring to an agreement on the budget and the debt ceiling:

Sometimes, the clock works against you, sometimes the clock works in your favor. In a town that isn’t known for a lot of bipartisanship, you’re going to see bricks flying from those that don’t like the fact that there’s a bipartisan agreement. But there is. It’s a solid agreement.

SLL lets fly a brick: this is the oldest “bipartisan” trick in the book. Democrats wanted more domestic spending, Republicans wanted more defense, they met in the middle and gave themselves both. The sequester caps that had been the only brake on Washington’s spending and which had been “temporarily” raised in 2013 were “temporarily” raised another two years, which means the sequester is for all intents and purposes history.

From Representative Jim Jordan, (R. Ohio):

Another last-minute, back-room spending deal by the White House and congressional leaders that busts the budget caps and allows unlimited debt for the next 18 months. No wonder so many Americans distrust Congress.

No wonder indeed! But as SLL recently noted, “The Fix Is In,” and establishment,  “bipartisan” Washington has closed ranks and is fully behind Hillary Clinton’s presidential campaign. In a follow-on piece, “The Empire Strikes Back,” SLL noted that Paul Ryan had agreed to be the next Speaker of the House, and asked: “Can a debt ceiling agreement be far behind?” The Empire will do what it has to do to stay in power. If that means coming together against interlopers Trump, Carson, and Sanders, then so be it.

Quotes are from The Wall Street Journal, “Budget Deal Stirs Anger On The Right,” 10/28/15.