Tag Archives: federal budget

The Amazing Invisible Infrastructure Plan

On December 7, 2017  the White House said it was going to release its infrastructure plan in January 2018.   As usual from this administration it’s vague:

“The president aims to release a detailed document of principles, rather than a drafted bill, for upgrading roads, bridges, airports and other public works before the Jan. 30 State of the Union address, said the administration official, who spoke on condition of anonymity because the details aren’t public. Naysayers should wait until they see the details and how the legislative process unfolds, the official said.”

And, there’s a kicker:

The guiding principle of the plan is to shift responsibility for funding from the federal government to states and localities — which own or control most assets — by providing incentives for them to generate their own sustainable funding sources and work with the private sector.

Now, how do we translate “generate their own sustainable funding sources?”   The easiest way is to say “privatization.”   As in work with private corporations for the construction of toll roads, toll bridges, increased airport fees, and other forms of “sustainable funding sources?”

This notion is buttressed by the President’s budget.   In the aftermath of the Washington Train Wreck the President was probably ill-advised to tout his infrastructure “plan,”

“For that matter, if Trump wants to talk about his interest in this issue, perhaps we can start with his White House budget plan, which called for slashing federal aid to U.S. rail systems, including a dramatic cut in grants for Amtrak routes.

“As for the president calling on policymakers to “quickly” approve the White House infrastructure plan, now seems like a good time to point out that it does not currently exist.  In early April, Trump boasted, “[W]e’re going to have a very big infrastructure plan. And bill. And it’s going to come soon. And I think we’ll have support from Democrats and Republicans.” That was eight months ago. There’s still no plan.”

So, this week we have a middle class tax cut that doesn’t help the middle class nearly as much as it assists corporations and wealthy Americans.   And, now we have an infrastructure “plan” which doesn’t fund infrastructure.  Oh well, what we seem to have is an administration remarkably unwilling to govern and a Congress equally uninterested in representing their constituents.

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Filed under Infrastructure, Politics

Heller Rides (His Hobby Horse) Again

Hobby HorseThe U.S. Senate voted Tuesday evening on a cloture motion to stop the Republican filibuster of H.R. 4660, (Commerce, Justice, Science, and Related Agencies Appropriations Act, 2015 ) and the cloture motion was agreed to on a 95-3 vote.  The three Republicans voting to sustain the filibuster?  Paul (R-KY), Lee (R-UT), and Nevada’s own Dean Heller (R-NV). [roll call 200]

And, why might he have done this? Perhaps we have the answer in the following statement posted to Senator Heller’s web site:

“U.S. Senator Dean Heller (R-NV) has filed “No Budget, No Pay” as an amendment to the CJS Appropriations Bill (H.R. 4660).  The Heller No Budget, No Pay Amendment calls on Congress to adopt legislation requiring passage of a yearly budget and all twelve appropriations bills each fiscal year in order to receive pay.”

This particular hobby horse is a favorite toy for the Senator.   However,  proposal comes with a bit of a problem for the Constitution First Crowd — it’s unconstitutional.  See the 27th Amendment: “No law, varying the compensation for the services of the Senators and Representatives, shall take effect, until an election of Representatives shall have intervened.”   And, while the proposition has a lovely tinkly sound for fiscal conservatives it is no more grounded in reality than Tinker Bell.

In an article speaking for the ethereal proposal, former Comptroller General David Walker inadvertently included the core of the problem for the No Labels folk: “Congress has only passed spending bills on time four times since 1952. The last time Congress passed both a concurrent budget resolution and all required spending bills on time was 1996.” [Politico]  And, there’s another historical problem:

“In four of the last five election years in which the Republicans held at least partial control of Congress (1998, 2002, 2004 and 2006), they didn’t pass a budget resolution. That includes three years in which Republicans controlled both chambers.” [WaPo 2012]

There’s some irony in a Republican proposal to “solve” a problem created by … Republicans.  What might we call an unconstitutional, ahistorical, and flimsy proposal which is full of “sound and fury signifying nothing?”  The usual label is Grandstanding.

The idea has a lovely ring on the hustings, makes for great sound bite fodder, but as evidenced by the underwhelming support received by Senator Heller during vote #200, it has about Zilch chance of passage.

 

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Filed under Heller, Politics

Petty, Parsimonious, and Perverse: Daily Aggregation

Heller 2** Senator Dean Heller (R-American Bankers Association) is much perturbed about the publicity he’s getting from joining that small coterie of Nevada Republicans disinclined to move from their office spaces. [LVSun] The explanation du jour is that his aide was making a “joke,” and none of the flap should be taken seriously.

“According to unnamed sources cited in the article, Abrams told a staffer for Georgia Sen. Saxby Chambliss that Heller might have to start giving campaign funds to Chambliss’ Republican challenger in his 2014 election if Chambliss tried to take the office. The conversations took place before Chambliss announced he would retire at the end of the current congressional term.

Heller was incensed by the article, blaming “petty politics,” “petty politicians,” and “petty reporting” for turning Abrams’ conversation into a political football — or as the Nevada Democrats painted it, a “scandal.”

Heller was careful to say that when he was complaining about politicians, he did not mean to slight Chambliss or any sitting senators, merely criticize their staffers.”  [LVSun]

OK.  Petty, petty, and petty. But, of course, NOT to include politicians like his cohort Senator Chambliss, thus the major Petty must be for the reporters who first published the story.  And, perhaps the professional flack catchers otherwise know as Staff.

** Nevada Governor Sandoval is pleased to tell us that the unemployment rate drop in the Silver State must be due to ongoing efforts to diversify the Nevada economy [RGJ] Nevada’s overall unemployment rate fell to 9.7%, while the YOY job growth is now at 2.5%.  The U.S. unemployment rate is currently  7.9%. [DETR]  Before we become too enamored of our economic recovery, there are some caveats to note:

(1) Some of the good news is that the worst didn’t happen.  For example, initial estimates for job losses were that 22,600 jobs would be lost based on historical trends.  Happily only 16,000 were eliminated overall.  However, here comes the kicker — 2,400 jobs were added in the Las Vegas Metro area, another 600 added in Reno, but 300 were lost in the Carson City region.  Those would most likely be public sector (or private sector jobs related to public sector employee spending).  [NLDB ppt]

(2) The chart for job growth by sector shows we’re still primarily dependent on traditional Nevada business activities:

Nevada Job Growth by sector

Leisure and hospitality (gaming to us, gambling to our visitors) showed the most job growth.  Trade, transportation, and utilities is the second highest blue bar, with construction showing job growth as well.  However, look what’s happened to the bottom blue bar — professional and business services.  We seem to have lost ground in that sector.

(3) We do need to look a public sector hiring, since no one’s yet come up with another formula for calculating gross domestic product/aggregate demand for the state of Nevada (or the nation for that matter.)  DETR notes from July 2012 (pdf) offer some cause for concern, especially for local governments.  Local government jobs were down by 15,000 as of July 2012 from their peak in October 2008.  We’ve lost about 2,000 more state jobs since early 2011.   There are those who would view these numbers with glee, and as an indication we’re shaving off those idle, lazy, bureaucrats lounging at taxpayer expense in comfortable offices.    However, job descriptions don’t match the mythology — these are more often teachers, firefighters, police officers, health inspectors, highway maintenance workers, public health nurses, social workers, employment counselors, data entry specialists, IT personnel, DMV staff, archive and record keeping specialists, accountants, actuaries, statisticians….

There are numbers associated with these categories.   Nevada had lost 4.08% of its state workforce, and another 10.77% of its local government workforce between January and April 2008. [Governing.com]  However much privatization forces and their minions may wish to raise a clamor about public sector employees being “over-paid” or redundant, the hard truth remains that their spending power is part of the equation by which we calculate our gross domestic product for Nevada, and that spending doesn’t fall into a Black Hole, it forms part of the aggregate demand for goods and services usually purchased from local retailers and service providers.

** The Sin City Siren posts a comparative piece on the Ryan Budget and its Senate counterpart from Senator Patty Murray (D-WA).  Water, Water, and the SNWA can be followed at the Nevada Progressive.   The Nevada Rural Democratic Caucus points out that by the lights of the Not-So family friendly Family Research Council, “Unmarried people should be denied birth control and punished for having sex..”  which should come as something of a shock to the 80% of unmarried Christian evangelicals who report they have performed the beast with two backs?

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Filed under Heller, Nevada economy, nevada unemployment

Leverage?

ArchimedesSome members of the chatterati may have taken Archimedes a bit too literally: “Give me a place to stand and with a lever I will move the whole world.”  Often too much emphasis is placed on the fulcrum and not quite enough on the part about the ancient mathematician needing a place to stand.  The word of the week sounds like “leverage” in Washington, D.C. Who has it? Who doesn’t? And, so what? The So What part isn’t all that interesting.

Although the pundit class is thoroughly fascinated at the moment with how much leverage the President and the Republicans may each possess after the self inflicted Fiscal Cliff fiasco, most of their comments can be categorized as post game “analysis” of the variety which is more commonly associated with post game “analysis” of a sporting event.  It’s never quite enough to declare one team or another victorious based on the scoreboard numbers — “we” have to “know” why one team won and the other lost.  In reality, we really don’t.

So, in the parlance of political reporters emulating the post game questions of their sports writer colleagues — can the President win the next game? A game of Debt Ceiling already scheduled by the Republicans and given official status by the post game analysts.

It depends on where you stand.

There are two major elements of the federal debt that deserve serious scrutiny.  First, during the Bush Administration’s policy of credit card conservatism we racked up two wars (off the budget and supported by supplemental appropriations), a major addition to the Medicare program (Medicare Part D, also unpaid for) and one major Recession.  All were guaranteed to increase the national debt.  The first two increased spending and the latter cut into the tax base.

Secondly, we do need to reduce the national debt, but how we do it is important.  This is one of those occasions which calls for a scalpel, not a meat axe.

It is also important to stand on firm ground.

A few facts are in order.  The first part of standing on terra firma before attempting to leverage anything is to dismiss some media mythology about trends in the national budget deficits.  The following chart should provide an illustration of the inaccuracy of the Now That A Democrat Is In The White House The Deficit Is Out Of Control Myth:

Bush Obama Deficit trends

The chart illustrates what happens when two wars, one major Medicare addition, and a nasty Recession contribute to national spending. It also shows the effect of Obama Administration policies mentioned earlier, a point at which we should note that the Bush Administration toted up about $5.1 trillion in expenses, while as of last June the Obama Administration’s policies resulted in about $983 billion in spending.

Bush Obama Spending ComparisonIn short, if we are really serious about deficit reduction then we need to eschew the policies that got us into this mess in the first instance, i.e. unnecessary tax cuts, and two very expensive wars.

OK, so if we don’t get involved in more military operations, we resist the myth that tax cuts somehow cause economic growth (which they never have), and we regulate our financial markets more effectively in order to mitigate the excessive enthusiasm of traders who created the last great mess, then where do we cut?

It’s time for another reality check.

Here’s where the money goes:

Budget Categories

Since Social Security is a self-funding program, which as President Reagan famously cautioned in 1984 doesn’t add to the federal deficit (video), we can take that 20% out of the equation right now.  Anyone who is truly serious about the single issue of Social Security solvency should be clamoring to increase the cap on earnings liable to the payroll tax, currently set at a measly $110,000. We also need to remove the mandatory spending from the discussion because what we cut will have to be from discretionary spending.

The FY 2013 budget calls for spending $666.2 billion by the Department of Defense.  Another $80.6 billion is allocated to the Department of Health and Human Services (Medicare, Medicaid), and the Department of Education (Pell Grants, Title I, student loan guarantees, etc.) is scheduled to spend or entail $67.7 billion while the 4th largest chunk of the budget goes to the Veterans Administration which has $60.4 billion in scheduled spending.

In short, we’ve budgeted for $1,510 billion in discretionary spending in FY 2013.  The Department of Defense is on track to receive 44.12% of ALL the discretionary spending in the national budget.   Yet calls to cut military spending brings on the wailing of voices, the gnashing of teeth, and the rending of garments about “making us less safe” in an uncertain world.  In spite of all the wailing, gnashing, and rending — that one single department consumes 44.12% of the entire pot of discretionary spending is something we ought to be discussing.

Medicare is another matter.  IF we are truly serious about deficit reduction then we need to have more than the simplistic discourse already in evidence.  There is a false choice being presented, as though the only options are to privatize the Medicare program (give Granny a coupon and let her go out and find her own insurance) or to create a Single Payer national health care system.  While I wouldn’t be sorry to see a Single Payer system, this is an argument for another day.  The point is that there are options between these two proposals.

The central focus point should be that nothing which doesn’t have a bearing on health care cost containment is going to make much difference in the spending levels.   Privatization doesn’t address the cost containment issue, and a single payer system without cost containment elements is merely a recipe for increased expenses.

Now that the campaign season is over we can dismiss the Republican rhetoric about “Obama cut $716 out of Medicare,” and consign to the dust bin the notion that the Affordable Care Act somehow impinges on Medicare benefitsBusiness Week explains:

From 2010 to 2019, Obamacare trims payments to providers by $196 billion. They agreed to take a cut because they will get so many new patients, thanks to the individual mandate. Another $210 billion will be generated by raising Medicare taxes on the wealthy (that’s households earning more than $250,000). Another $145 billion comes from phasing out overpayments to Medicare Advantage. About 25 percent of seniors use the program—in which private plans compete for Medicare dollars—instead of traditional fee-for-service Medicare. Under Obamacare, the government has to keep Medicare Advantage costs in line with those of traditional Medicare. More savings come from streamlining administrative costs.

Thus, if we trim payments to providers, phase out over-payments for profitable private health care policies, and put some reins on administrative costs we’ll find about $716 billion in savings for the Medicare program.  Other cost savings may also be the result of more efficient record keeping, especially in the pharmaceutical segment.  Anyone who’s dealt with the medical issues of an elderly parent knows of multiple prescriptions written from several physicians who may or may not consult with one another.  The result can be as minimal as two (or three) prescriptions for the same medication at different dosages; or, as detrimental as two prescription medications which should not be taken together.

However, the bottom line is still the bottom line — unless and until we are ready to discuss health care cost containment we’ll be immersed in the rhetoric of low bludgeon and high dudgeon without much result.

When we discuss funding for the Department of Education it’s important to note that the FY 2013 discretionary requests yield an official number, $69.8 billion — if we include Pell Grants.  Pell Grants constitute about $22.8 billion of the total, a decrease from $23.8 billion in the FY 2011 budget.  Without the Pell Grants the total discretionary spending in the FY 2013 budget is $47 billion.   There are two constituencies with major stakes in arguing about these funds.

Parents.  Unless one is amenable to the elitist argument that kids should have access to only the level of education their parents can afford (which makes social mobility a moot point) parents are going to need assistance paying for their children’s education.  Whether we like it or no, education is a labor intensive business.  We can trim educational spending by continuing what the Obama Administration has started — saving approximately $61 billion by cutting the banks out of their role as middlemen in the student loan program [NYT]– but it really doesn’t do to cut efforts to educate our young people.  It also doesn’t make economic sense since a college degree is worth money in the marketplace.

Educations Pays Local school districts.  Cash strapped and semi-starved local school districts rely on funds for Special Education programs, Title I services, School Lunch programs, to make up budget shortfalls.  While the level of federal involvement at the local level isn’t all that much it does cover expenses local districts would be hard pressed to meet were the monies cut.

Hostage Taking

How we fund, or de-fund, these major activities depends on who is being held hostage and by whom.   Did the President allow the Republicans to gain “leverage” by taking the tax rates off the table in the next Congressionally manufactured debt ceiling debacle. Or, are we going to change hostages?

Will the Republican stance be that all other programs must be cut in order to spare the 44.12% consumed by the Department of Defense?

Will the GOP position be that Medicare must be privatized in order to practice “sound fiscal responsibility?”

Will the GOP position be that Social Security must be “reformed” (read cut) in the interest of “fiscal accountability and deficit reduction” even though it adds not a nickel to the federal debt?

Will the Administration simply say — You manufactured this debt ceiling “crisis” live with it?  Remembering that if the national credit rating is downgraded this will likely mean that the cost of borrowing (yields paid to those who invest in Treasuries) will go up, exacerbating the problem rather than addressing it.

Will the point be made to the American people that while the credit card analogy is handy, the United States of America doesn’t have creditors it has investors.  Our federal government accesses funds by issuing bonds.   And WE own most of those bonds.

Here’s the little chart again:

Who owns US debt

42.2% of the money “borrowed” by the U.S. government is an asset for U.S. individuals and financial institutions.   Today’s yield curve doesn’t indicate a government which is having to pay all that much to get people and institutions to invest in it:

Daily Yield CurveEven 30 year bonds are paying only 3.0% interest.

The amount of leverage always depends on where one stands and places the fulcrum.

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Filed under Congress, Economy, education, Federal budget, Health Care, Medicaid, Medicare, national debt, Obama, privatization, recession

The Crisis That Isn’t: The Romney/Ryan Campaign in Whopperville

Whopperville, U.S.A.At rally in Lima, Ohio, GOP VP Candidate Paul Ryan says Pres Obama not doing anything about the debt crisis & is making it worse.” via Mark Knoller.

Not doing anything? First, it’s hard to understand why a sitting member of Congress could miss the information that federal government spending has flat-lined during the Obama Administration.  Marketwatch explains:

“Although there was a big stimulus bill under Obama, federal spending is rising at the slowest pace since Dwight Eisenhower brought the Korean War to an end in the 1950s.  Even hapless Herbert Hoover managed to increase spending more than Obama has.”

For the arithmetically challenged, Marketwatch provides a chart:

How does Marketwatch substantiate the contention that spending increases during the Obama Administration are slower than even the Hoover Administration?

If spending increases are at the slowest rate in decades, AND federal spending has flat-lined during the Obama Administration — then how does one conclude the Obama Administration isn’t doing anything about the budget deficit and is actually “making it worse?”

One doesn’t … unless you are a resident of Whopperville in a Brave New World:

“One hundred repetitions three nights a week for four years, thought Bernard Marx, who was a specialist on hypnopaedia. Sixty-two thousand four hundred repetitions make one truth.”  – Brave New World (Aldous Huxley)

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Filed under 2012 election, Economy, Federal budget, Politics