A cut?

December 18, 2006 at 8:21 am

The Washington Post buys into the beltway mode of thinking about federal spending:

The Republican-controlled Congress’s decision to adjourn a week ago before completing many of the spending bills that finance the federal government will reverberate in ways large and small, such as understaffed U.S. attorney’s offices, delayed renovations at the University of Bridgeport in Connecticut and a scuttled global nuclear energy exchange.

Republican leaders left behind just enough spending authority to keep the government operating through mid-February, less than halfway through the 2007 fiscal year that began Oct. 1. Democrats have signaled that when they take control of Congress in January they will extend that funding authority for the remainder of the year based largely on the previous year’s spending levels, which will result in many cuts in programs.

If the funding is at last year’s levels that is by definition not a cut. It may mean that some programs will have to “cut” their planned spending for this year that was based on assumed future spending increases. But that is far different than a regressive cut in spending.

War spending

December 14, 2006 at 9:59 am

Democrats are talking about including war spending in the federal budget. This is a good idea, the “emergency” supplemental spending procedure has gotten way out of hand.

The New York Times reports:

In interviews, the incoming Democratic chairmen of the House and Senate Budget Committees said they would demand a better accounting of the war’s cost and move toward integrating the spending into the regular federal budget, a signal of their intention to use the Congressional power of the purse more assertively to influence the White House’s management of the war.

The lawmakers, Senator Kent Conrad of North Dakota and Representative John M. Spratt Jr. of South Carolina, said the administration’s approach of paying for extended military operations and related activities through a series of emergency requests had inhibited Congressional scrutiny of the spending and obscured the true price of the war.

“They have been playing hide-the-ball,” Mr. Conrad said, “and that does not serve the Congress well nor the country well, and we are not going to continue that practice.”

While Dems certainly have some anti-war alterior motives here, from a fiscal standpoint this makes sense.

Where will the money come from? II

December 12, 2006 at 3:09 pm

Democrats keep promising new programs: cutting rates on college loans is one of the latest.

Congressional Democrats say when they take the gavel from Republicans next month, they will put money in the pockets of college students and closely examine a law reforming elementary and secondary schools. How they will pay for their plans isn’t clear.
Democrats, who won the House and Senate in last month’s elections, say they will quickly move to slash interest rates on need-based college loans in half - from 6.8 percent to 3.4 percent.

“That will be done almost immediately, certainly within the first couple of weeks of the new session,” California Democratic Rep. George Miller, the incoming chairman of the House education committee, said in an interview.

But, as this article points out, where the money will come from is anyone’s guess:

Democrats haven’t spelled out how they’ll pay for their promises, which may run head-on into another pledge: to require any new spending to be offset with cuts elsewhere or new taxes to avoid increasing the deficit.

The “other pledge” mentioned above is a policy called PAYGO, or pay as you go. Democrats envision a PAYGO program in which future tax cuts must be offset by some other item in the federal budget while entitlement spending is alowed to remain on autopilot without any offsets. This version of PAYGO is a complete sham designed to rip off the taxpayer and prop up big government liberalism.

When Democrats try to enact PAYGO next year, conservatives will do their best to amend the new rule so that it applies equally to tax policy and social programs.

I hope this proves prophetic

November 29, 2006 at 9:32 am

Kevin Hassett in the Washington Post:

“Now that Republicans are in the opposition, they’re going to be the most saintly budget hawks you can imagine,” said American Enterprise Institute economist Kevin A. Hassett. With the absence of power, he notes, comes the absence of accountability and blame. As Hassett put it, “being in the minority means never having to say you’re sorry.”

Let’s hope so…but already, things are looking good:

Fiscal conservatives started to agitate days after the election, when the Republican-led 109th Congress reconvened to wrap up unfinished business. At the top of the to-do list: nine remaining spending bills for the fiscal year that started Oct. 1.

Few Republicans returned to Washington expecting to complete all the outstanding bills. But many wanted to pass at least a few, if only to show that the GOP wasn’t abrogating its governing duties. But several fiscal conservatives in the Senate saw an opportunity to take a stand against “earmarks,” the special projects that members from both parties had tucked inside the bills. The rebels announced their intention to block all spending bills from advancing — even one that financed veterans benefits and military housing.

“We need to examine the bills in the light of the last election, in which I think the American people were unhappy with our spending habits,” Sen. Jeff Sessions (R-Ala.) explained to reporters. He and his allies, including Sen. Jim DeMint (R-S.C.) and Sen. Tom Coburn (R-Okla.), want Congress to pass a “continuing resolution” to extend funding from the previous fiscal year. “We’d save the taxpayers a lot of money,” Sessions said.

Half right is still half wrong

October 13, 2006 at 9:06 am

This week’s news about the shrinking deficit is certainly good. But as has been noted on this blog, the downsized deficit is the result of increased revenues spurred by the Bush tax cuts. Our government got that one right, but meanwhile continue to get the other side of the equation — federal spending — wrong. I write about this in my coumn today.

More on the shrinking deficit

October 12, 2006 at 10:42 am

Stephen Slivinski at Cato at Liberty wonders how the news about the shrinking deficit is really all that good:

Although the deficit is certainly smaller, it’s not because the White House and Congress suddenly have a newfound respect for spending discipline. Federal spending grew in excess of 7 percent this fiscal year. That’s faster than the expected growth in GDP of 6.5 percent. Besides, the federal budget is chomping on 20 percent of GDP. It consumed 18.5 percent of GDP when George W. Bush was inaugurated. And unfunded liabilities of entitlement programs continue to grow. Remind me again how this is progress?

The shrinking deficit is good. But the deficit is not the real issue…spending is. As Slivinski points out federal spending still went up this year. What happened is revenues outpaced spending because of the Bush tax cuts. The federal government cannot always count on revenues to outpace spending. Spending needs to be curtailed so that deficits shrink even in the years where revenues are not so high.

Slivinski offers the following prediction:

For the next few weeks, Republican candidates will be engaged in an attempt to persuade fiscally conservative voters to forget everything that annoyed them about the GOP’s rush to expand government and instead welcome a much larger federal budget simply because it’s closer to being balanced.

The shrinking deficit

October 12, 2006 at 8:48 am

The New York Post today gives kudos to “Dubya’s Disappearing Deficit” in today’s editorial:

President Bush took a moment yester day to point with pride at a re election campaign promise kept: He vowed two years ago that his tax cuts would produce enough new revenue to cut the federal deficit by half in five years, and the latest figures show they’ve done just that - three years early.

It now stands at $247.7 billion - down from $520 billion in 2004.

And it’s continuing to drop.

“These budget numbers are proof that pro-growth economic policies work,” Bush said.

You’d think that Democrats - they are patriotic Americans, after all - would revel in the good news. Ha!


If Congress keeps spending more than the government takes in, the deficit will remain a club for Democrats to use on Bush’s economic policies.

But without those policies - the tax cuts, especially - the country would be looking at trillion-dollar deficits.

Bush’s tax cuts have created new jobs, enhanced investment, rejuvenated the stock market and made people wealthier.

Good for him.

Very good for the country.

Then there is this warning from the Heritage Foundation’s Brian Riedl:

Brian Riedl, a budget expert at the Heritage Foundation, said the 2006 deficit figure could be the lowest one for many years into the future. Revenues grew by 12 percent in 2006, he said, adding that it would be hard to match that record in the future as spending for entitlement programs begins to surge.

“I expect the deficit will rise by $50 billion a year for the next 10 years,” Riedl said, as Medicare and Medicaid costs skyrocket.

A good way to stave off this incoming spending tsunami would be to pass Senator Judd Gregg’s Stop Overspending Act of 2006. 

Big spending threatens GOP majority

September 16, 2006 at 1:51 pm

Bloomberg news:

“We’ve strayed a long way from the principles the party was founded upon,'’ said Representative Jeff Flake, an Arizona Republican.

Republicans need a big turnout by their core supporters if they are to avoid losing their majorities in the House of Representatives and, possibly, the Senate. Whit Ayres, a Republican pollster, said those core supporters are the very voters who are most likely to be angered by the increased spending, and who may stay home in protest.

“It’s one of a handful of reasons why Republicans are discouraged,'’ Ayres said. “I don’t know what you can say that will mollify the Republican base on this subject. You’re better off talking to them about other subjects.'’

There needs to be more weeks like last in which the GOP majority delivered reforms that would help tamp down federal spending.

House set to clear Coburn/Obama bill

September 13, 2006 at 2:35 pm

This press release was just released by Roy Blunt’s Majority Whip office:

WASHINGTON - House Majority Whip Roy Blunt, Senator Tom Coburn, Senator Barack Obama, and Government Reform Chairman Tom Davis will join OMB’s Deputy Director for Management Clay Johnson to pledge immediate action to implement the grants and contracts database included in the Federal Funding Accountability and Transparency Act.

The legislation, sponsored in the Senate by Coburn and Obama and in the House by Blunt and Davis, is scheduled to pass the House Wednesday and represents the final version of the legislation, which will be implemented by the Office of Management and Budget. Read the rest of this entry »