Coins can be bought in batches of 1000 and Kindle Users have been given 500 Coins for free
Plans to launch Coins in the UK and for non-Kindle users have not yet been announced
By Victoria Woollaston | dailymail.co.uk
Amazon has launched its own currency called Amazon Coins.
It’s currently only available in the States for Kindle Fire owners, but the Coins can be used to pay for games, apps and in-app purchases from the Amazon Appstore.
One Amazon Coin is worth one US penny, and Kindle Fire owners are getting 500 Coins ($5) for free as part of the launch.
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Amazon has launched its own virtual currency called Coins in the US. It is only available for Kindle Fire users, for the time being, but can be used to buy games, apps and in-app purchases from the Kindle Appstore, as well as buy items from Amazon’s retail store
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The Coins will also be able to be used on the company’s retail site when they become more widely available.
Amazon has not yet confirmed when the scheme will be launched outside of the US, or if it will be available to non-Kindle users.
Amazon Coins can be bought in batches of 1000, 2500, 5000 and 10,000.
The more you buy, the bigger the discount and 10,000 Coins costs $90, for example.
Customers will also get a 10% discount on items bought using Amazon Coins.
Amazon isn’t the first company to introduce it’s own currency; Microsoft Xbox and Windows Live customers can use Microsoft Points to pay for games, upgrades, bonus levels and so on.
Amazon Coins are only currently available in the US. The company has not yet confirmed when the scheme will come to the UK. All Kindle Fire users in America have been given 500 Coins worth $5 for free, to spend in the Kindle Appstore
Nintendo similarly has Nintendo Points that can be used in the Wii Shop Channel.
Facebook launched Facebook Credits in 2009, which could be used for apps and games on the social network site, but scrapped the scheme last year in favour of local currency.
Amazon has said it has launched its Coins program as a way for developers to make more money by making it easier for shoppers to buy apps and games.
It hopes Coins will make it easier for customers to pay for items because they can buy and store Coins in their Amazon Appstore accounts to use as and when.
Amazon already accepts card payments and gift cards for Kindle purchases and has said that these payment options will remain.
Amazon developers had until April 25 to submit their app if they wanted it to run on the new Coins currency.
Developers will continue to get 70% revenue share for any apps or in-app purchases bought using Coins.
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MICROSOFT POINTS
Microsoft Points are the currency of the Xbox Live Marketplace, Games for Windows Marketplace, Windows Live Gallery, Xbox Music and Video online stores.
Points can be used to buy content from the respective stores.
They can be bought using a credit card and the credit card can then be removed.
This means parents can buy their children Points to spend on games and upgrades, and control how much they spend without adding a credit card to the account.
However, in October 2012, Windows 8 began support local currency in the Xbox Video Store instead of relying on Microsoft Points.
This suggests that Microsoft may move away from its virtual currency, in the same way Facebook did with its Credits scheme last year.
Only in Southern California will you have someone moan about making six-figures while driving their European financed car and not being able to “live well” while the weather is near perfect all year round. There is one thing you can’t complain about and that is the weather. Ironically though, some of the cheaper SoCal counties like the Inland Empire have weather on par with Arizona or Nevada. So the groaning comes from people looking to buy cheap beach front property for example. Newsflash, beachfront property will be expensive in boom and bust. Yet let us focus on bigger markets since SoCal is vast. Last month sales reached a five year high for April but guess what? So did the use of jumbo loans. Jumbo loans accounted for 26 percent of originated loans, the highest since September of 2007. Another 33 percent of purchases were made by all cash buyers. FHA insured loans still accounted for 21 percent of mortgages and this will be an interesting figure to watch as FHA insured loans become incredibly expensive in June. Little by little certain areas of SoCal are being gentrified as those unable to buy are pushed further inland or are forced to move out of state (or rent which isn’t such a bad deal).
Population growth
First, let us look at population growth for Los Angeles County:
Population growth for L.A. County has remained steady for most of the 2000s and interestingly enough, started going down prior to the official start of the recession. It has now picked back up but the year-over-year growth rate has definitely slowed down over past decades:
For the first time since the 1970s, L.A. actually saw annual population growth decline in 2006 and 2007. That has now reversed but the growth rate is slow.
SoCal home prices are on a tear. The median priced L.A. County home is now up to $395,000 (up from $310,000 last year). This is a 27 percent year-over-year gain. Regardless of market mix, this pace is fully unsustainable. Good luck trying to time this rollercoaster ride!
Foreclosure resales are now a tiny part of the market making up 12 percent of sales. Jumbo loans and all cash offers are a big part of the home sale mix and these are going to either investors or higher income households. We see the gentrification of certain hipster neighborhoods in Los Angeles like Silver Lake and Echo Park.
Take a look at this home for sale:
1140 Manzanita St, Los Angeles, CA 90029
Looks nice right? Well this is a 1 bedroom 632 square foot home. Some of you may have offices larger than that. Just look at the sales history:
They actually tried for $399,000! When you see this kind of random pricing, you know you are in full fledged mania. What suddenly changed in a few months to warrant the $40,000 price drop? When you are this off, you are basically trying to sell into momentum. The place was bought for $195,450 back in 2005 which actually is more of a reasonable price for the size of the home. What is funny is that the Zestimate on this place is $419,000.
Silver Lake is a very high priced hipster market. Just look at all the homes for sale (in red):
The Hallmark of total gentrification is Whole Foods and Silver Lake now has that:
“(Curbed) It has arrived: Silver Lake’s gentrification singularity. Whole Foods is moving into the Ralphs site at Glendale near Fletcher (in not the prettiest section of SL). There’s been renovation/redevelopment gossip swirling around the site for a while now–Ralphs claimed it was just updating its store as several of the smaller businesses on site have closed (the landlord hasn’t been renewing leases).”
So what is my take on the low population growth, higher prices in targeted markets, and high jumbo activity? Essentially lower income families are being pushed out of these areas and creating a 1-to-1 exchange where population stays unchanged yet those that can afford or overstretch move in. Speculation is still rampant and flippers are active in these hipster markets. Finally, families are diving in with jumbo loan activity reaching a five year high.
These markets are gentrifying yet prices at current levels go beyond regular gentrification. We are now into a deep seated fever of people feeling they will be left out if they don’t buy today. Go ahead and pull income tax data for all zip codes of Silver Lake or Echo Park. It is an interesting contrast to what is happening in housing. Inventory remains low and we are just starting to enter the summer selling season. If Whole Foods is part of the gentrification singularity, then high usage of jumbo loans is a sign of real estate fever.
DETROIT (WWJ) - Detroit’s emergency manager says the city is bleeding much more red ink than originally thought. That’s what Kevyn Orr told WWJ City Beat Reporter Vickie Thomas in an exclusive one-on-one interview.
“The situation is severe,” Orr said. “It’s worse that we originally thought. It ain’t good.”
With just 39 days under his belt, Orr is already putting the final touches on a draft of his 40-plus page financial report, which must be submitted to the state on Monday.
“I’ve been spending virtually every day from March 25 when I got here, looking at the city’s financials. This is an emergency. I’ve got 16 and three-quarters months to deal with it,” he said. “This is truly a financial emergency and we need to move with speed because frankly, we can’t be here in the same position next year.”
In the report, Orr uses charts and graphs to paint the bleak picture of the city’s finances, including over $15 billion in long-term debt and an accumulated operating deficit of $325 million.
“We’ve been collecting operating deficits at about $18 million to $20 million a year. That’s nobody’s fault, I think, frankly, the mayor and the council has done the best they can with what they have. The city has probably cut as much as it can cut to the bone now, and so its been trying to operate on the basis of borrowing short-term loans all the time,” he said.
Orr said he isn’t ruling out bankruptcy for the city just yet.
“Frankly, from my perspective, if I can accomplish what I need to accomplish without bankruptcy, I’d be elated,” he said. “I can’t guarantee that [bankruptcy won't happen] in the least, in fact, to a large degree that’s going to be dependent upon the positions of a lot of other stakeholders that they have in this, some of whom might prefer a court order to make them do the things they need to do.”
AMSTERDAM (AP) — International Monetary Fund head Christine Lagarde criticized the U.S. government’s budget policies as too tight on Tuesday, in an appearance in Amsterdam that was interrupted by student protestors.
Lagarde said the U.S. government’s debt reduction plans are too abrupt, including the $85 billion in federal budget cuts known as the sequester. She said that the current policies would lower the U.S. economy’s growth rate.
The IMF’s most recent forecast in April said the U.S. economy would expand by 2 percent this year, 1.75 percentage points slower than it would have grown without the tax hikes and spending cuts.
The U.S. “should consolidate less in the short term, but give…economic actors the certainty that there will be fiscal consolidation going forward,” she said.
Lagarde had just begun speaking to students at the University of Amsterdam when the protestors began an organized, chanting disruption. One would call out “mic check!” and dozens more would yell back “Madame Lagarde!”
Then individual students mocked her as supposedly believing that “technocracy is better than democracy” and satirized her as having said that Greeks should “help themselves…by paying all their tax.”
Security guards dragged students away until there were none left shouting, and eventually the interview resumed.
Lagarde defended reforms the IMF had recommended be carried out in Greece, but admitted they had caused a greater economic decline than expected.
“What we underestimated is the consequences, that’s clear,” she said.
The 17-country eurozone is in recession, and Lagarde and an increasing number of economists now criticize a German-led drive for all members to get their budget deficits under 3 percent as soon as possible.
Lagarde said that the IMF doesn’t believe “that austerity and growth are mutually exclusive,” but she said the fund doesn’t believe austerity policies alone can lead to growth.
She praised a recent European Commission decision to allow France and the Netherlands more time to get their budget deficits down.
“The fact that they are allowing more time is a good move,” she said.
One student attempted to pose a question out of turn later in her talk and guards began dragging him away. When he began questioning why Lagarde was only willing to field pre-approved questions, she intervened and asked him to be allowed to pose his question.
The guards allowed him to return, and he asked whether IMF aid doesn’t usually end up disproportionately benefitting the rich.
She said economic reforms work better in countries with less income inequality, and the IMF tries to include that in its advice – which is not always heeded by governments.
“We’re not imposing a particular system,” she said, “We’re trying to be rational about what can actually balance a country.”
President Barack Obama’s 2014 budget puts a $3 million cap on tax-advantaged retirement accounts to crack down on “wealthy individuals” using these investment vehicles to earn “substantially more than is needed to fund reasonable levels of retirement savings.”
But an analysis by Forbesfinds that a 20-year old saving for retirement would need to amass a $9.97 million portfolio to fund just a $60,000 lifestyle by age 65. What’s more, writes David John Marotta of Forbes, $3 million today represents just $500,000 in 1970s dollars.
Kathleen Pender of the San Francisco Chronicle also notes that Obama’s plan would not apply to himself:
The limit would not apply to Obama’s own pension, which is worth at least $5 million, because it is not in a tax-advantaged account, according to Brian Graff, executive director of the American Society of Pension Professionals & Actuaries. Obama’s pension, which guarantees him a Cabinet-level salary for life indexed to inflation, is a “non-qualified deferred compensation plan, similar to what corporate executives get,” he says.
“No legislation should inhibit individuals from taking care of their own retirement,” says Marotta. “Government officials know very little about retirement planning. They haven’t even had the foresight to keep Social Security solvent.”
US airports began feeling the impact Monday of the cuts imposed by the sequester, a day after the Federal Aviation Administration (FAA) began to furlough air traffic controllers. By Monday afternoon, flight delays and cancellations were noticeable in and out of airports in Washington, DC, New York, Boston and Charlotte. Some flights headed into Los Angeles’s LAX were delayed by more than three hours Sunday night.
The FAA is cutting $637 million as part of the sequestration order signed into law by President Obama on March 1. Overall, the order mandates $85 billion in federal spending through September. It will affect federal workers’ jobs across a wide range of government departments, as well as impose deep cuts to education, housing and many social programs and services depended upon by millions of people. (See “Communities across the US feel impact of sequestration cuts”)
Ten percent of the FAA’s controller workforce—about 1,500 controllers—were required to take an unpaid day off Monday. Some Transportation Security Administration (TSA) workers were also forced to take unpaid furloughs, causing peak-hour backups at security checkpoints. The FAA expects to achieve $200 million of the $637 million it must ax from its budget through the airport furloughs.
The FAA estimates that a full third of all passengers will face delays as a result of the furloughs. The agency is projecting that up to 6,700 flights at more than a dozen major airports will be delayed each day, more than double the toll on the worst travel day in 2012, when severe weather caused about 3,000 delayed flights.
The worst delays are expected at the busiest hub airports, including the three serving New York, two in Chicago, and those serving San Diego, Los Angeles, San Francisco, Miami, Charlotte, Atlanta, Philadelphia and Fort Lauderdale, Florida. On good days at these locations, passengers have already come to expect delays with predictable regularity.
By midday Monday, airlines had cancelled 19 flights bound for New York’s LaGuardia Airport, and some flights there were being delayed by an average of nearly two hours due to “wind” and “volume.” The “volume” delays suggest the reduced staffing of control towers is to blame.
In addition to the LaGuardia cancellations, by midday Monday seven flights bound for the DC area’s Reagan National had been cancelled, along with five at Boston’s Logan airport and five in Charlotte, North Carolina.
With fewer controllers to monitor traffic, the distance between aircraft needs to be lengthened—a method referred to as “traffic metering”—or planes must be directed to take more circuitous routes to spread out takeoffs and landings. Philadelphia, Charlotte and Reagan National briefly exhibited traffic metering efforts Monday morning.
The sequester-imposed furloughs are not only subjecting air traffic controllers to significant cuts in pay, but are threatening the safety of air travel. A plan to close 149 air traffic control towers at smaller airports nationwide was put on hold temporarily earlier this month, but is expected to go forward mid-June.
Despite some bickering between the Obama administration and Congressional Republicans over how to distribute the cuts, they are in agreement that sequestration should serve as the new baseline for the type and volume of spending cuts that must be imposed to jobs and services in the interest of “deficit reduction.”
In particular, the two big business parties are eyeing Social Security and Medicare for deep cutbacks through means testing, raising the age of eligibility, cutting cost-of-living increases and other measures that will severely reduce benefits for millions of seniors.
The Obama administration’s attitude to the cuts at the FAA and the reckless disregard for passenger safety was summed up by White House press secretary Jay Carney on Monday. He commented that the Transportation Department, which includes the FAA, “is required by law to cut about $1 billion. Furloughs cannot be avoided.”
Furloughed air traffic controllers are among the more than 1 million federal workers who are set to begin unpaid furloughs this month, which could amount to pay cuts of anywhere from 20 to 30 percent. Sequestration has also prompted the extension of a pay freeze already in force for federal workers.
On Sunday, the National Park Service began requiring police who guard monuments in Washington and other landmarks to take eight hours of unpaid leave every other week. The agency has also implemented a hiring freeze on permanent staff and will employ about 1,000 fewer seasonal workers this fiscal year.
The Smithsonian museums—which will see a $41 million sequester cut—will be forced to close some art galleries on a rotating basis due to lack of security beginning May 1. The National Museum of African American History and Culture, scheduled to open in November 2015, will likely see delays in construction, fundraising and hiring.
The Internal Revenue Service faces a sequester cut of more than $600 million. All of the agency’s nearly 90,000 employees are facing between five and seven unpaid furlough days between May and September. On the designated dates, all “public-facing operations,” including toll-free help lines and taxpayer assistance centers, will be shut down.
Public education will see one of the biggest hits from sequestration, with about $3 billion cut from K-12 education. The National Education Association estimates that over 30,000 teachers and school faculty will lose their jobs as a result.
Overall, the Congressional Budget Office projects that the sequester will lead to the equivalent of 750,000 full-time job losses throughout the economy. At the same time, states are already beginning to implement 11 percent sequester cuts to federal extended unemployment benefits depended upon by the nearly four million long-term jobless across America.
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AS FLIGHT DELAYS INCREASE, SO DOES THE FINGER-POINTING IN WASHINGTON
By John Whitesides
WASHINGTON (Reuters) – Federal officials reported flight delays at U.S. airports for a third consecutive day on Tuesday, fueling a political blame game as Republicans and Democrats accused each other of causing the furloughs of thousands of air-traffic controllers.
On Capitol Hill and at the White House, the rhetoric over across-the-board federal budget cuts known as “sequestration” became increasingly biting. Both sides tried to take political advantage – and avoid responsibility – for cuts by the Federal Aviation Administration that officials say could plague the country’s aviation system during the summer travel season.
Republicans accused Democratic President Barack Obama of needlessly forcing the furloughs so he could blame Republicans for failed negotiations over the nation’s debt. They said the FAA and Obama could adjust federal spending priorities to avoid affecting travelers so significantly.
“Stop punishing the American people,” Republican Representative Virginia Foxx of North Carolina said in a speech on the floor of the House of Representatives that was directed largely at Obama.
Republican Senator Pat Toomey of Pennsylvania accused Obama’s administration of making a “willful choice” to “inflict as disruptive a process as possible on the American public and on our economy, all to further a political agenda.”
White House spokesman Jay Carney fought back, blaming Republican-backed spending cuts for the furloughs and saying they could be stopped only by congressional approval of a new budget plan.
“Republicans made a choice,” Carney said. “This is a result of the sequester being implemented. We made it clear that there would be these kinds of negative effects if Congress failed to take reasonable action to avert the sequester.”
The furloughs of air-traffic controllers by the FAA, intended to reduce staffing by 10 percent across the nation, began on Sunday and led to delays in more than 10,000 flights and the cancellation of 600 over the first two days, the controllers’ union said.
On Tuesday, the FAA indicated there were more delays at a number of Eastern airports that it tied to “staffing,” including New York’s LaGuardia and Washington’s Reagan National.
The FAA’s 47,000 employees, including 13,000 air-traffic controllers, will be furloughed for about one day every two weeks to cut costs under a budget-cutting program set to last through September, the end of the U.S. government’s fiscal year.
Some analysts predict flight delays and congestion at airports could increase through the busy summer travel season – a scenario that would spread the impact of the sequestration cuts to millions of Americans, and likely ignite more anger at Washington and its political gridlock.
POLITICAL RISKS FOR BOTH SIDES
An aviation system in disarray, along with the fallout from a range of other prolonged budget cuts, could put both Obama and congressional Republicans at considerable political risk, analysts said.
Obama is entering a crucial round of negotiations on spending and on legislation to overhaul immigration. After falling short in his effort to get significant gun-control legislation through even the Democrat-controlled Senate, Obama’s image as a leader could be damaged if the aviation system becomes unreliable to travelers, the analysts said.
“If this becomes a symbol of him as an ineffective leader and Republicans smell blood, they might be less inclined to enter into a deal now and it could impact other kinds of legislation,” said Julian Zelizer, a Princeton University historian.
But polls indicate more Americans blame Washington’s problems on congressional Republicans, whose party is viewed as less flexible and more ideologically extreme. Analysts say that ongoing problems caused by sequestration could fuel a public opinion backlash against Republicans – and put Republican House Speaker John Boehner and his colleagues at a disadvantage in any confrontation with Democrats over budget issues.
“While everybody’s image was hurt in the debt ceiling fight, Republicans’ were hurt worse,” said Michael Dimock, director of the Pew Research Center.
Karlyn Bowman, a public opinion analyst at the American Enterprise Institute, said the public had soured on Washington’s political gamesmanship to the point that any extended fight over furloughs and flight delays would hurt both sides.
“People are so sour about Washington right now,” Bowman said. “Even though the numbers might suggest Republicans will get more blame than Obama – and institutions often get more blame than individuals – I would say the public will lay the blame on Washington as a whole.”
‘WHY IS OBAMA DELAYING YOUR FLIGHT?’
In Washington, the finger-pointing heated up. Republican congressional leaders have fired off a coordinated series of tweets under the hash tag #Obamaflightdelays.
“Why is President Obama unnecessarily delaying your flight?” House of Representatives Majority Leader Eric Cantor of Virginia asked on Twitter.
Democrats responded with their own Twitter hash tag: #GOPSequester, and suggested Republicans who were angry about the FAA cuts did not seem as upset when the budget cuts hit social initiatives such as the Meals on Wheels program for the elderly and the Head Start education program for children of low-income families.
Democrats cast the FAA furloughs as the result of a Republican drive to cut spending across the government.
Transportation Secretary Ray LaHood and FAA Administrator Michael Huerta said they had little flexibility under the sequester law to change spending levels for the aviation system.
“I only hope public outcry over long delays at airports will serve as a wake-up call to my Republican colleagues,” Democratic Majority Leader Harry Reid of Nevada said, urging Republicans to negotiate with Democrats on a new budget agreement.
Reid said Democrats had a new plan to turn off the sequester for five months by claiming savings from the drawdown of Afghanistan and Iraq war spending. Democrats hoped to bring the bill to the floor, but it would face a tough road to passage and is unlikely to come to a vote before early May.
U.S. Senate Commerce Committee leaders from both parties pressed the administration on Tuesday for more information on the furlough plan.
Chairman Jay Rockefeller, a West Virginia Democrat, and Senator John Thune of South Dakota, the panel’s top Republican, said in a letter that the furloughs, along with a plan to close some air-traffic control towers, raised “serious safety and operational issues.”
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FAA FURLOUGHS IMPACT PASSENGERS AND BUSINESSES
DALLAS (CBSDFW.COM) – Mandatory furloughs of air traffic controllers are affecting more than just passengers at Dallas/Fort Worth International Airport and Love Field. The impact was felt by passengers stuck at terminals and business owners who depend on customers coming to and from the airports.
The longer Joseph Farhat waits, the more money he loses. “A couple a hundred a day and it’s not good for business,” said Farhat, who owns a limo service for DFW passengers.
He said flight delays forced him to cancel customers who overlap and it’s never been this bad. “This is the worst I’ve ever seen because for two weeks every flight has been delayed.”
DFW terminals were full of people waiting hours for their loved ones to arrive Tuesday.
Ashley Clark waited more than two hours for her boyfriend to get here on a flight from Detroit. “It bothered me because I wanted to see him earlier but he’s here now so I’m good,” said Clark.
The airline blamed a mechanical problem for the delay, which didn’t sit well with Clark’s boyfriend, Marty Crandall.
“I was looking on the phone to see what kind of passenger rights we had.”
The Federal Aviation Administration is using fewer air traffic controllers because of recent budget cuts, which forces planes to sit on runways longer before taking off.
“We got there and it was just wait and wait and wait… they kept delaying the time we were going to take off and we didn’t get any explanation except there’s a delay in Dallas and whether that had anything to do with the sequester I don’t know, said Bill Rickenbacher, airline passenger.
Both DFW and American Airlines deny that the delays passengers are experiencing are the result of anything abnormal.
“American and American Eagle are not experiencing any significant issues in their operations beyond normal ground-delay programs. These programs are due to weather or airport issues such as runway construction,” said Mary Frances Fagan, American Airlines Spokesperson.
Professionally made signs at a North Carolina campground are warning visitors that the site is closed because of an “operational change due to sequestration.” Two Republican members of Congress have demanded Secretary of the Interior Sally Jewell explain how and why the signs appeared, and how they were paid for.
“CLOSED,” reads a metal sign posted at a road into the Linville Falls Campground in North Carolina. “Operational Change Due to Sequestration.” The signs, at a National Park site along the Blue Ridge Parkway, bear the official logo of the National Park Service and read “National Park Service, U.S. Department of the Interior.”
The existence of the signs has come up as the politics of sequestration — an extremely slight slowing in the rapid growth rate of federal spending — has begun to heat up. Republicans and some Democrats say the Obama administration is making budget decisions in ways designed to maximize inconvenience for taxpayers and turn public opinion against Republicans, who allowed President Obama’s sequestration plan to be put into practice in March.
Recent controversies have centered on whether the Transportation Security Administration is making staffing decisions that slow down air travel, and whether planned furloughs of air traffic controllers are necessary. Obama also came under fire for cancelling White House tours shortly after sequestration began.
The issue of the Linville Falls signs was mentioned during April 15 House testimony by Jonathan Jarvis, director of the National Park Service. Jarvis noted that such signs would be “inappropriate” but claimed to be “unaware of any signs.”
House Committee on Oversight and Government Reform Chairman Rep. Darrell Issa of California has sent a letter [pdf] to Interior head Jewell requesting an explanation for the signs. The letter is co-signed by Committee member Rep. Mark Meadows of North Carolina, whose 11th District contains the campground.
“At a time when agencies must seek ways to be more fiscally responsible and reduce spending,” the letter reads, “the Committee is concerned that NPS is using taxpayer dollars to publicize sequestration.” Meadows and Issa are asking for the cost of the signs, which they call “another tactic by the Administration to politicize sequestration.” They also want to know how many of the signs were made and placed.
Meadows told The Daily Caller the Linville Falls signs are part of a pattern of high-profile service cutbacks designed to forefront sequestration. “Under sworn testimony,” Meadows said in an email, “the FAA Administrator admitted that the agency’s original warnings of 90-minute delays were not based on any data or meaningful analysis. Too many estimates have been given about the potential impact of sequestration with very little planning or analysis to justify them. These park signs are yet another example of an agency playing politics.”
Further complicating the issue is that the Park Service’s budget has not actually been cut. According to NPS budget records, the Park Service’s enacted 2012 budget was $2,983,623,000. For 2013 the budget request is $2,986,130,000.
“Based on their current budget, the National Park Service could manage the sequestration process without any park closures or visual impact on park visitors,” Meadows told TheDC.
A National Park Service representative said the agency would be unable to respond by publication time to The Daily Caller’s questions on the cost of the signs, the decision to place them, and whether the language about sequestration was deemed helpful to campground visitors.
If you are a federal worker on furlough this week — or an airline passenger delayed by federal furloughs — you might want to save your blood pressure and go read another story.
This one is about all the money the U.S. government spends on . . . nothing.
It is one of the oddest spending habits in Washington: This year, the government will spend at least $890,000 on service fees for bank accounts that are empty. At last count, Uncle Sam has 13,712 such accounts with a balance of zero.
They are supposed to be closed. But nobody has done the paperwork yet.
So even as the sequester budget cuts have begun idling workers and frustrating travelers, the government is required to pay $65 per year, per account to keep them on the books.
In this time of austerity, the accounts are a reminder of something that makes austerity hard: expensive habits, built into the bureaucracy in times of plenty. The Obama administration has spent the past year trying to close these accounts, with only some success.
“If anyone had kept open a bank account with no money, and was getting a charge every month, they would do everything they could to close it,” said Thomas A. Schatz of the watchdog group Citizens Against Government Waste. But, he said, the government hasn’t shown the same kind of urgency with taxpayers’ money.
“It’s just lack of attention to detail. And poor management,” he said. “And, clearly, the fact that no one gets penalized for paying money to keep the accounts open.”
The money spent on the empty accounts is a tiny fraction of the federal budget. But, in its own way, it is something special: Washington’s waste, a rare specimen of cost untainted by any reward.
The Pentagon once paid $435 for a hammer, after all. But at least in that case it got a hammer.
Administration officials said they’re trying. Last year, the Office of Management and Budget urged agencies to crack down on these “zero balance” accounts. And this year, it proposed a wide-scale push for better oversight.
“We have worked with agencies to improve the timely closeout of grants,” Danny Werfel, the controller at the OMB, said in an e-mail. “Agencies have made noteworthy progress so far, with the number of zero-balance accounts falling by more than 50 percent since the end of fiscal year 2011.” Back then, the total was more than 28,000.
Here is how the government winds up spending money on nothing:
First, a federal agency gives a grant. It doesn’t just write a check; it creates an account within a large, government-run depository. The grantee can draw money from it. The agency that created the account is charged a monthly fee, which goes to the government depository and is used to cover the costs of operating it.
Then, at some point, it’s over. The money runs out. Or the grant’s time limit expires. The agency is given notice: It’s time to close the account.
But that takes work. An agency is first required to audit the account, to make sure the money was spent properly. (In rare cases, some money is returned to the grantee and the dead account comes alive again.) That’s generally supposed to happen within 180 days. If it doesn’t happen, however, there is no formal consequence. So sometimes it doesn’t happen. OMB officials say some grants, such as those involving homeland security and complex building projects, could require unusually long audits.
“Construction grants, as another example, may require additional time for grantees to consolidate and submit invoicing information from multiple parties to meet agency close-out reporting requirements,” Werfel said in testimony prepared for Congress.
Right now, about 7 percent of the 202,000 government grant accounts are devoid of money. These sit on the books, costing about $5.42 per month. The service fees are the same, whether an account is full or empty.
“Agencies paying fees for expired accounts with [a] zero dollar balance are paying for services that are not needed,” the watchdog agency noted.
Around Washington, there are plenty of problems like this one — old bugs, built into the machine of government, that make spending money seem easier than saving it. Things such asthe red tape that delays the sale of excess government buildings, or the long-standing tolerance of duplication. Currently, for instance, six government agencies have begun separate projects to do the same thing: build a computer program to track personnel background checks.
Last summer, the Obama administration sought to fix this bug. It sent a memo to agencies that said, “Focus first on closing out expired grants that are several years past their end dates or have no remaining funds.”
But in other places, it did. The Agriculture Department eliminated 74 percent of its empty accounts, saving $90,000 per year. The National Park Service closed all 705 of its empty accounts.
The Department of Health and Human Services also had success. It had been paying for 21,000 empty accounts but the total is now 9,286 — a major cut, but still an expense of about $604,000 per year.
Could the agency get that number lower?
Officials answered this way: They could never imagine getting it to zero. The government would always have to spend something on nothing.
“We will continue our efforts to accelerate grant closeouts,” said Nancy Gunderson, who oversees grants at HHS. “These accounts are a normal part of the grants business cycle and will never be totally eliminated.”
REMARKS BY THE PRESIDENT ANNOUNCING THE FISCAL YEAR 2014 BUDGET
Rose Garden
11:00 A.M. EDT
THE PRESIDENT: Good morning, everybody. Please, please have a seat. Well, as President, my top priority is to do everything I can to reignite what I consider to be the true engine of the American economy: a rising, thriving middle class. That’s what I think about every day. That’s the driving force behind every decision that I make.
And over the past three years, our businesses have created nearly 6.5 million new jobs. But we know we can help them create more. Corporate profits are at an all-time high. But we have to get wages and incomes rising, as well. Our deficits are falling at the fastest pace in years. But we can do more to bring them down in a balanced and responsible way.
The point is, our economy is poised for progress — as long as Washington doesn’t get in the way. Frankly, the American people deserve better than what we’ve been seeing: a shortsighted, crisis-driven decision-making, like the reckless, across-the-board spending cuts that are already hurting a lot of communities out there — cuts that economists predict will cost us hundreds of thousands of jobs during the course of this year.
If we want to keep rebuilding our economy on a stronger, more stable foundation, then we’ve got to get smarter about our priorities as a nation. And that’s what the budget I’m sending to Congress today represents — a fiscally responsible blueprint for middle-class jobs and growth.
For years, the debate in this town has raged between reducing our deficits at all costs, and making the investments necessary to grow our economy. And this budget answers that argument, because we can do both. We can grow our economy and shrink our deficits. In fact, as we saw in the 1990s, nothing shrinks deficits faster than a growing economy. That’s been my goal since I took office. And that should be our goal going forward.
At a time when too many Americans are still looking for work, my budget begins by making targeted investments in areas that will create jobs right now, and prime our economy to keep generating good jobs down the road. As I said in my State of the Union address, we should ask ourselves three questions every day: How do we make America a magnet for new jobs? How do we give our workers the skills they need to do those jobs? And how do we make sure that hard work leads to a decent living?
To make America a magnet for good jobs, this budget invests in new manufacturing hubs to help turn regions left behind by globalization into global centers of high-tech jobs. We’ll spark new American innovation and industry with cutting-edge research like the initiative I announced to map the human brain and cure disease. We’ll continue our march towards energy independence and address the threat of climate change. And our Rebuild America Partnership will attract private investment to put construction workers back on the job rebuilding our roads, our bridges and our schools, in turn attracting even more new business to communities across the country.
To help workers earn the skills they need to fill those jobs, we’ll work with states to make high-quality preschool available to every child in America. And we’re going to pay for it by raising taxes on tobacco products that harm our young people. It’s the right thing to do. (Applause.)
We’ll reform our high schools and job training programs to equip more Americans with the skills they need to compete in the 21st century economy. And we’ll help more middle-class families afford the rising cost of college.
To make sure hard work is rewarded, we’ll build new ladders of opportunity into the middle class for anybody who is willing to work hard to climb them. So we’ll partner with 20 of our communities hit hardest by the recession to help them improve housing, and education, and business investment. And we should make the minimum wage a wage you can live on — because no one who works full-time should have to raise his or her family in poverty. (Applause.)
My budget also replaces the foolish across-the-board spending cuts that are already hurting our economy. And I have to point out that many of the same members of Congress who supported deep cuts are now the ones complaining about them the loudest as they hit their own communities. Of course, the people I feel for are the people who are directly feeling the pain of these cuts — the people who can least afford it. They’re hurting military communities that have already sacrificed enough. They’re hurting middle-class families. There are children who have had to enter a lottery to determine which of them get to stay in their Head Start program with their friends. There are seniors who depend on programs like Meals on Wheels so they can live independently, but who are seeing their services cut.
That’s what this so-called sequester means. Some people may not have been impacted, but there are a lot of folks who are being increasingly impacted all across this country. And that’s why my budget replaces these cuts with smarter ones, making long-term reforms, eliminating actual waste and programs we don’t need anymore.
So building new roads and bridges, educating our children from the youngest age, helping more families afford college, making sure that hard work pays. These are things that should not be partisan. They should not be controversial. We need to make them happen. My budget makes these investments to grow our economy and create jobs, and it does so without adding a dime to our deficits.
Now, on the topic of deficits, despite all the noise in Washington, here’s a clear and unassailable fact: our deficits are already falling. Over the past two years, I’ve signed legislation that will reduce our deficits by more than $2.5 trillion — more than two-thirds of it through spending cuts and the rest through asking the wealthiest Americans to begin paying their fair share.
That doesn’t mean we don’t have more work to do. But here’s how we finish the job. My budget will reduce our deficits by nearly another $2 trillion, so that all told we will have surpassed the goal of $4 trillion in deficit reduction that independent economists believe we need to stabilize our finances. But it does so in a balanced and responsible way, a way that most Americans prefer.
Both parties, for example, agree that the rising cost of caring for an aging generation is the single biggest driver of our long-term deficits. And the truth is, for those like me who deeply believe in our social insurance programs, think it’s one of the core things that our government needs to do, if we want to keep Medicare working as well as it has, if we want to preserve the ironclad guarantee that Medicare represents, then we’re going to have to make some changes. But they don’t have to be drastic ones. And instead of making drastic ones later, what we should be doing is making some manageable ones now.
The reforms I’m proposing will strengthen Medicare for future generations without undermining that ironclad guarantee that Medicare represents. We’ll reduce our government’s Medicare bills by finding new ways to reduce the cost of health care — not by shifting the costs to seniors or the poor or families with disabilities. They are reforms that keep the promise we’ve made to our seniors: basic security that is rock-solid and dependable, and there for you when you need it. That’s what my budget represents.
My budget does also contain the compromise I offered Speaker Boehner at the end of last year, including reforms championed by Republican leaders in Congress. And I don’t believe that all these ideas are optimal, but I’m willing to accept them as part of a compromise — if, and only if, they contain protections for the most vulnerable Americans.
But if we’re serious about deficit reduction, then these reforms have to go hand-in-hand with reforming our tax code to make it more simple and more fair, so that the wealthiest individuals and biggest corporations cannot keep taking advantage of loopholes and deductions that most Americans don’t get. That’s the bottom line.
If you’re serious about deficit reduction, then there’s no excuse to keep these loopholes open. They don’t serve an economic purpose. They don’t grow our economy. They don’t put people back to work. All they do is to allow folks who are already well-off and well-connected game the system. If anyone thinks I’ll finish the job of deficit reduction on the backs of middle-class families or through spending cuts alone that actually hurt our economy short-term, they should think again.
When it comes to deficit reduction, I’ve already met Republicans more than halfway. So in the coming days and weeks, I hope that Republicans will come forward and demonstrate that they’re really as serious about the deficits and debt as they claim to be.
So growing our economy, creating jobs, shrinking our deficits. Keeping our promise to the generation that made us great, but also investing in the next generation — the next generation that will make us even greater. These are not conflicting goals. We can do them in concert. That’s what my budget does. That’s why I’m so grateful for the great work that Jeff Zients and his team have done in shaping this budget. The numbers work. There’s not a lot of smoke and mirrors in here.
And if we can come together, have a serious, reasoned debate — not driven by politics — and come together around common sense and compromise, then I’m confident we will move this country forward and leave behind something better for our children. That’s our task.
Thank you, God bless you. God bless the United States of America. (Applause.)
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THE PRESIDENT’S FISCAL YEAR 2014 BUDGET – OVERVIEW
The President’s Fiscal Year 2014 Budget demonstrates that we can make critical investments to strengthen the middle class, create jobs, and grow the economy while continuing to cut the deficit in a balanced way.
The President believes we must invest in the true engine of America’s economic growth – a rising and thriving middle class. He is focused on addressing three fundamental questions: How do we attract more jobs to our shores? How do we equip our people with the skills needed to do the jobs of the 21st Century? How do we make sure hard work leads to a decent living? The Budget presents the President’s plan to address each of these questions.
To make America once again a magnet for jobs, the Budget invests in high-tech manufacturing and innovation, clean energy, and infrastructure, while cutting red tape to help businesses grow. To give workers the skills they need to compete in the global economy, it invests in education from pre-school to job training. To ensure hard work is rewarded, it raises the minimum wage to $9 an hour so a hard day’s work pays more.
The Budget does all of these things as part of a comprehensive plan that reduces the deficit and puts the Nation on a sound fiscal course. Every new initiative in the plan is fully paid for, so they do not add a single dime to the deficit. The Budget also incorporates the President’s compromise offer to House Speaker Boehner to achieve another $1.8 trillion in deficit reduction in a balanced way. When combined with the deficit reduction already achieved, this will allow us to exceed the goal of $4 trillion in deficit reduction, while growing the economy and strengthening the middle class. By including this compromise proposal in the Budget, the President is demonstrating his willingness to make tough choices and his seriousness about finding common ground to further reduce the deficit.
KEY BUDGET FACTS
- Creates jobs by responsibly paying for investments in education, manufacturing, clean energy, infrastructure, and small business.
- Includes $1.8 trillion of additional deficit reduction over 10 years, bringing total deficit reduction achieved to $4.3 trillion.
- Represents more than $2 in spending cuts for every $1 of new revenue from closing tax loopholes and reducing tax benefits for the wealthiest.
- Deficit is reduced to 2.8% of GDP by 2016 and 1.7% by 2023 with debt declining as a share of the economy, while protecting the investments we need to create jobs and strengthen the middle class.
- Includes $400 billion in health savings that crack down on waste and fraud to strengthen Medicare for years to come.
Making America a Magnet for Jobs
To compete in the 21st Century economy and make America a magnet for jobs, the Budget invests in American innovation, reviving our manufacturing base and keeping our Nation at the forefront of technological advancement. And to ensure our energy security and combat climate change, it continues to focus on energy production, the development of clean energy alternatives, and the promotion of energy efficiency efforts in both the public and private sectors.
- Transforms regions across the country into global epicenters of advanced manufacturing with a one-time, $1 billion investment to launch a network of up to 15 manufacturing innovation institutes.
- Maintains our world-leading commitment to science and research by increasing nondefense research and development (R&D) investment by 9% above the 2012 levels.
- Continues President’s “all-of-the-above” strategy on energy – investing in clean energy R&D, promoting the safe production of natural gas, encouraging States to cut energy waste with a Raceto-the-Top challenge to cut energy waste and modernize the grid, creating an Energy Security Trust to fund research efforts that would help shift cars and trucks off oil, and making permanent the tax credit for renewable energy production.
- Enhances preparedness and resilience to climate change, safeguarding communities and Federal investments, while strengthening efforts to reduce carbon pollution domestically and internationally.
Building a 21st Century Infrastructure
The Budget invests in repairing our existing infrastructure and building the infrastructure of tomorrow, including high-speed rail, high-tech schools, and power grids that are resilient to future extreme conditions. These investments will both lay the foundation for long-term economic growth and put workers back on the job now.
- Provides $50 billion for upfront infrastructure investments, including $40 billion for “Fix it First” projects, to invest immediately in repairing highways, bridges, transit systems, and airports nationwide; and $10 billion for competitive programs to encourage innovation in completing highvalue infrastructure projects.
- Boosts private investment in infrastructure by creating a Rebuild America Partnership.
o Establishes an independent National Infrastructure Bank to leverage private and public capital to support infrastructure projects of national and regional significance.
o Creates America Fast Forward (AFF) Bonds, building on the successful Build America Bonds program to attract new sources of capital for infrastructure investment.
- Dedicates funding for the development of high-speed rail to link communities across the country, the Next Generation Air Transportation System (NexGen) to improve air travel and safety, and a robust long term increase in levels for core highways, transit, and highway safety programs.
- Expedites infrastructure projects by modernizing the Federal permitting process to cut through red tape while creating incentives and better outcomes for communities and the environment.
Establishes a new goal of cutting timelines in half for major infrastructure projects in areas such as highways, bridges, railways, ports, waterways, pipelines, and renewable energy.
Equipping Americans with the Skills They Need
To equip our workers with the skills they need to fill the jobs of the 21st Century economy, the Budget includes investments and reforms in education and training. It makes a major new commitment to early childhood education; sustains investments in K-12 schools, while ramping up innovation; redoubles our focus on science, technology, engineering, and mathematics (STEM) education to prepare our students for the jobs of tomorrow; and includes new initiatives to make college more
affordable.
- To build a foundation for success in the formative early years of life, increases access to highquality early childhood education with a Preschool for All initiative.
o In partnership with the States, provides all low- and moderate-income four-year-olds with highquality preschool, while encouraging States to serve additional four-year-olds from middle class families. The initiative also promotes access to full-day kindergarten and high-quality early education programs for children under age four.
o The Preschool for All initiative is financed by raising the Federal tax on cigarettes and other tobacco products, which would also have substantial public health impacts, particularly by reducing youth smoking.
o The Budget makes companion investments in voluntary home visiting programs, preserving child care access, and expanding high-quality care for infants and toddlers through new Early Head Start-Child Care Partnerships.
- Creates a new, competitive fund for redesigning high schools to focus on providing challenging and relevant experiences, while promoting and developing partnerships with colleges and employers that improve instruction and prepare students to continue education or transition into skilled jobs.
- Strengthens and reforms career and technical education to better align programs with the needs of employers and higher education to ensure that graduates are poised to succeed.
- Prepares students for careers in STEM-related fields by reorganizing and restructuring Federal STEM education programs to make better use of resources and improve outcomes; and invests in recruiting and preparing 100,000 STEM teachers and creating a new STEM Master Teachers Corps to improve STEM instruction.
- Improves college affordability and value with a continued commitment to Pell Grants; budgetneutral student loan reforms that will make interest rates more market-based; a $1 billion Race-tothe-Top fund to support competitive grants to States that drive higher education reform, while doing more to contain tuition; a $260 million
First in the World fund to spur cutting-edge innovations that decrease college costs and boost graduation rates; and reforms to Federal campusbased aid to reward colleges that set responsible tuition policy, provide a high-quality education and better serve students with financial need.
- Improves services for workers and job seekers by revisiting the structure of the Federal job training system, including through the creation of a Universal Displaced Worker program; drives innovation through the Workforce Innovation Fund by testing new State and regional ideas to better deliver training and employment services; and provides $8 billion for a Community College to Career Fund to support State and community college partnerships with businesses and other stakeholders.
Making the Tax Code More Simple and Fair
The President believes that today’s tax code has become overly complex and inequitable and that we should immediately begin the process of reforming the individual and business tax systems. As a down payment on comprehensive tax reform, the Budget offers detailed proposals to broaden the tax base, close tax loopholes, and establish a Buffett Rule that will prevent millionaires from taking advantage of special provisions to pay taxes at lower rates than many middle-class families do.
- Raises $580 billion for deficit reduction by limiting high-income tax benefits, without raising tax rates.
o Implements the Buffett Rule, requiring that households with incomes over $1 million pay at least 30% of their income (after charitable giving) in taxes.
o Limits the value of tax deductions and other tax benefits for the top 2% of families to 28%, reducing these tax benefits to levels closer to what middle-class families get.
- Provides new tax cuts to encourage hiring and wage increases and to support middle-class families.
o Provides a 10% tax credit for small businesses that hire new employees or increase wages.
o Provides a new tax credit to encourage employers to offer retirement savings plans and expands a tax credit that helps middle-class families afford childcare.
o Makes permanent the American Opportunity Tax Credit, which currently helps about 11 million students and families afford college, as well as improvements to the Earned Income Tax Credit and Child Tax Credit that help millions of working families with children make ends meet.
-Pays for middle-class tax relief by eliminating tax loopholes that benefit the wealthy and special interests.
o Ends a loophole that lets wealthy individuals circumvent contribution limits and accumulate millions in tax-preferred retirement accounts.
o Ends a loophole that lets financial managers pay tax on their carried interest income at the lower capital gains rate.
- Eliminates business tax loopholes while providing incentives for research, manufacturing, and clean energy and cutting taxes for small businesses.
o Reforms and makes permanent important tax incentives for research and development, renewable energy, and energy efficiency.
o Cuts taxes for small businesses by letting them claim tax write-offs for up to $500,000 of new investment.
o Eliminates loopholes such as oil and gas tax breaks and special tax rules for corporate jets.
o Proposes reforms to prevent companies from shifting profits overseas to avoid U.S. taxes and to encourage “insourcing” and job creation here in the United States.
Ensuring Hard Work Leads to a Decent Living
The Budget builds on the progress made over the last four years to expand opportunity for every American and every community willing to do the work to lift themselves up. It creates new ladders of opportunity to ensure that hard work leads to a decent living. It expands early childhood education to give children a foundation for lifelong learning. It supports a partnership with communities to help them thrive and rebuild from the Great Recession. It creates pathways to jobs for the long-term
unemployed and youth who have been hard hit. It rewards hard work by increasing the minimum wage so a hard day’s work pays more. And it strengthens families by removing financial deterrents to marriage and supporting the role of fathers.
- Creates Promise Zones to rebuild high-poverty communities across the country by attracting private investment to build new housing, improving educational opportunities, providing tax incentives for hiring workers and investing within the Zones, reducing violence and assisting local leaders in navigating Federal programs and cutting through red tape.
- Creates a Pathways Back to Work fund to support summer and year round jobs for low-income youth, subsidized employment opportunities for unemployed and low-income adults, and other promising strategies designed to lead to employment.
- Supports the President’s call to reward hard work by raising the minimum wage to $9.00 an hour.
- Strengthens families by allowing Federal programs like the child support program to implement models that get more men working and engaging with their children, and by addressing financial deterrents to marriage.
Cutting the Deficit in a Balanced Way
The President is committed to continuing to reduce the deficit in a balanced way. He is determined to do this in a way that replaces the economically damaging across-the-board cuts of sequestration with smart, targeted efforts to cut wasteful spending, strengthen entitlements, and eliminate loopholes for the wealthiest through tax reform.
The President stands by the compromise offer he made to Speaker Boehner during “fiscal cliff” negotiations in December 2012. The Budget includes all of the proposals in that offer, which would achieve $1.8 trillion in additional deficit reduction over the next 10 years, bringing total deficit reduction to $4.3 trillion. This represents more than enough deficit reduction to replace the cuts required by the Joint Committee sequestration. By including this compromise proposal in the Budget,
the President is demonstrating his willingness to make tough choices to find common ground to further reduce the deficit. This offer includes some difficult cuts that the President would not propose on their own, such as an adjustment to inflation indexing requested by Republicans. But there can be no sacred cows for either party.
The key elements of the offer include:
- $580 billion in additional revenue relative to the end-of-year tax deal, from tax reform that closes tax loopholes and reduces tax benefits for those who need them least;
- $400 billion in health savings that build on the health reform law and strengthen Medicare;
- $200 billion in savings from other mandatory programs, such as reductions to farm subsidies and reforms to federal retirement benefits;
- $200 billion in additional discretionary savings, with equal amounts from defense and nondefense programs;
- $230 billion in savings from using a chained measure of inflation for cost-of-living adjustments throughout the Budget, with protections for the most vulnerable;
- $210 billion in savings from reduced interest payments on the debt; and
- $50 billion for immediate infrastructure investments, as noted earlier, to repair our roads and transit systems, create jobs, and build a foundation for economic growth.
In addition, the Budget includes a series of new proposals to root out waste and reform and streamline government for the 21st Century. In total, it includes 215 cuts, consolidations, and savings proposals, which are projected to save more than $25 billion in 2014.
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BRIEFING ON PRESIDENT OBAMA’S FISCAL YEAR 2014 BUDGET
Published on Apr 10, 2013
Office of Management and Budget Acting Director Jeffrey Zients discusses the President’s FY 2014 Budget with Alan Krueger, Chairman of the Council of Economic Advisers, Gene Sperling, Director of the National Economic Council, and Cecilia Muñoz, Director of the Domestic Policy Council. April 10, 2013.
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THE PRESIDENT’S FISCAL YEAR 2014 BUDGET (PDF)
Budget of the United States Government, Fiscal Year 2014 contains the Budget Message of the President, information on the President’s priorities, budget overviews organized by agency, and summary tables.
To download “Budget of the United States Government, Fiscal Year 2014″ as a single PDF click here
President Obama released a 2014 budget on Wednesday that would leave the nation with a $744 billion budget deficit despite new entitlement cuts and tax hikes.
The $1.058 trillion budget for fiscal year 2014 — which arrived on Capitol Hill about two months late — includes $3.77 trillion in total spending, including entitlements.
It would add $5.3 trillion in new deficit spending over 10 years and increase spending in 2014 by $160 billion compared to current law.
The budget would turn off the automatic spending cuts known as the sequester and raise about $1 trillion in new tax revenue over 10 years compared to the Congressional Budget Office’s baseline.
Because the budget turns off the sequester, it would increase spending in 2014 compared to a budget that leaves the sequester in place. The latter would lead to $966 billion in discretionary spending in 2014.
For the first time, Obama’s budget counts revenue from a “Buffett Rule” requiring that households with annual income more than $1 million pay at least a 30 percent tax rate after charitable deductions. The rule is named after investor Warren Buffett and was only a suggestion in the last Obama budget.
The budget would cut entitlement spending and raise revenue by $230 billion by adopting a new formula known as “chained consumer price index” that would more slowly increase benefits for Social Security and other programs for inflation.
Unlike the House Republican budget, Obama’s budget would not balance, though it would reduce the deficit as a percentage of gross domestic product to 1.7 percent by 2023. The deficit was 7 percent of GDP in 2012 and is projected to be 5.3 percent at the end of 2013 by the Congressional Budget Office.
In a statement Wednesday from the Rose Garden, Obama said the main goal of his proposal was to “reignite the true engine of the economy” — the middle class. He argued his budget could lead to stronger economic growth and more jobs while also reducing the deficit.
“This budget answers that argument because we can do both,” Obama said of growing the economy while shrinking the deficit. “These are not conflicting ideas. We can do them in concert … nothing shrinks deficits faster than a growing economy.”
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EARLY ANALYSIS: OBAMA’S 2014 BUDGET NUMBERS ARE BASED ON BAD MATH, PHANTOM REVENUES, IMAGINED SPENDING CUTS AND A MIDDLE-CLASS TAX HIKE
White House promises $1.8 trillion in deficit reduction, although similar previous claims have been debunked
New method of measuring cost-of-living increases will lower benefit payouts and push middle-class earners into higher tax brackets
Speaker Boehner’s spokesperson: ‘Any deficit reduction will come exclusively from tax hikes’
Administration’s formula depends on cost savings from Obamacare, which may be more costly to implement than previously thought
By David Martosko | dailymail.co.uk
The Obama administration released an outline of its fiscal 2014 budget today promising that the president’s budget ‘reduces the deficit and puts the Nation on a sound fiscal course.’
‘Every new initiative in the plan is fully paid for, so they do not add a single dime to the deficit,’ the White House pledges.
An initial walk through the budget proposals released overnight to reporters, however, suggests that Republicans in Congress will need some convincing.
The budget will hit congressional offices less than 24 hours after the government’s top watchdog agency declared that nearly $100 billion was wasted last year in duplicative and overlapping programs stretching into every corner of the Washington bureaucracy.
The star attraction of Tuesday’s Capitol Hill hearing on the subject was the tale of three separate government agencies that spend money inspecting catfish, and the annual waste of $14 million that goes along with it.
House Republicans in the oversight committee hearing room were not amused. And GOP budget hawks won’t be smiling when they read a prominent declaration in the White House’s outline that has already been shown to be an exaggeration.
The budget, it says, ‘would achieve $1.8 trillion in additional deficit reduction over the next 10 years, bringing total deficit reduction to $4.3 trillion. This represents more than enough deficit reduction to replace the cuts required by the Joint Committee [on] sequestration.’
The implication, one which the White House has made more deliberately in the past, is that Barack Obama has already squeezed $2.5 trillion out of the government’s next ten deficit statements.
Obama himself said during a press conference on January 14 that he had signed bills into law that contained ‘a total of about $2.5 trillion in deficit reduction over the past two years.’
FactCheck.org, a program of the University of Pennsylvania’s Annenberg Policy Center, reported in February that Obama’s total sum included about $600 billion, however, in new taxes – not spending reductions. It also included $500 billion in reductions of the amount the federal government planned to pay in future interest on its debts.
Only about $1.4 trillion consisted of actual spending cuts – or at least what Washington wonks call spending cuts.
Obama on Wednesday defended his budget, saying, ‘when it comes to deficit reduction, I’ve already met Republicans more than halfway.’
‘The numbers work. There’s not a lot of smoke and mirrors in here,’ he said in announcing the budget plan from the White House Rose Garden.
‘Our economy is poised for progress, as long as Washington doesn’t get in the way,’ he added, calling the budget a ‘fiscally responsible blueprint for middle-class jobs and growth.’
Federal budgets are configured along what’s called a ‘baseline,’ providing a predetermined level of year-on-year increases that Congress has set on auto-pilot, and with which the White House generally considers it unwise to interfere.
The $1.4 trillion in cuts were merely reductions in those planned rates of spending increases.
The Daily Caller quoted House Speaker John Boehner’s press secretary, Brendan Buck, who dismissed in an email the idea that the White House’s budget will actually trim spending.
‘So where are the net spending cuts? I guess they don’t exist,’ Buck wrote. ‘The president’s budget will – at best – be flat on spending – or potentially even be a net spending increase [and] any deficit reduction will come exclusively from tax hikes.’
Senate Minority Leader Mitch McConnell practically begged the White House on Tuesday to get serious.
‘Mr. President, if you are ready to embrace bold reform — to take the steps that are needed to make our entitlement programs permanently solvent and grow the economy — then Republicans are ready to work with you,’ McConnell said.
‘The time has come to summon the political courage to move beyond the status quo, to put the tax hikes and the poll-tested gimmicks aside, and to do what must be done.’
Estimates like the one included in the White House’s budget preview are prepared by the Office of Management and Budget, which has habitually included projected savings from the Obamacare health care law in its reports.
The $1.8 trillion in new savings promised by the Obama White House in Tuesday’s embargoed outline include ‘$400 billion in health savings that build on the health reform law.’
But Health and Human Services Secretary Kathleen Sebelius conceded on March 26 that many Americans’ health care premiums will increase under the new law, an indication that participation rates may not be at the level the administration wants to see.
‘These folks will be moving into a really fully insured product for the first time,’ the Wall Street Journal quoted Sebelius saying, ‘and so there may be a higher cost associated with getting into that market.’
She admitted Tuesday for the first time that the administration also greatly underestimated the complexity of the 2,700-page law and its accompanying 17,000 pages of regulatory instructions.
That’s an indication that future Obamacare reports may feature spending overruns – not savings – as the viability of health care exchanges, the administration’s silver-bullet marketplaces that are supposed to drive costs down, are challenged by dozens of state governments that don’t want to participate.
Another $580 billion of the newly promised $1.8 trillion in savings comes from tax increases on upper-income earners, a feature that will make the budget contentious, if not ‘dead on arrival,’ in the House of Representatives.
The White House characterized it as ‘additional revenue relative to the end-of-year tax deal, from tax reform that closes tax loopholes and reduces tax benefits for those who need them least.’
House Republicans, though, may see the prominence of that mention – it comes first on the White House’s list – as a thumbed nose, or a veiled threat of more tax increase demands to come.
The larger problem for the White House is that Obama’s promise of $580 billion in new tax revenues over ten years isn’t nearly large enough to cover the spending bloat that Washington insiders continue to acknowledge as a crippling force.
The public debt now stands at roughly $17 trillion, up $6 trillion from the debt when Obama took office in 2009. Even if the federal government takes ten years to rack up its next $6 trillion in accumulated deficits, the new taxes would contain less than 10 percent of the damage.
The budget’s most controversial feature may be the adoption of what economists call the ‘Chained Consumer Price Index’ measure of inflation, and what the administration referred to as ‘using a chained measure of inflation for cost-of-living adjustments.’
The chained CPI signals a shift in how the federal government will calculate everything from Social Security payouts and congressional pensions to college students’ Pell Grants and veterans’ benefits. Anything tied to cost-of-living increases would be subject to a new formula.
The White House’s budget blueprint suggests that these programs would see $230 billion in costs savings over 10 years. The Congressional Budget Office puts the number at $216 billion.
The CBO also notes, however – and the White House omits – that a switch to the chained CPI will also raise more than $124 billion in new tax revenues.
The money will come pouring in because the consumer price index also controls income tax brackets, tax filers’ standard deductions, nontaxable contribution limits for 401(k) retirement plans, and more.
So millions of individual Americans will see themselves moved involuntarily to higher tax brackets, and middle-class taxpayers in particular will lose some of the tax credits and deductions that they count on.
White House Press Secretary Jay Carney conceded as much during an April 5 briefing, when CBS News Chief White House Correspondent Major Garrett asked if it would ‘raise taxes on middle-income Americans.’
‘I’m not disputing that,’ Carney said, adding that ‘it is not the president’s ideal policy.’
It will, however, be part of his budget.
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This crucial excerpt from the president’s 6-page budget outline, distributed to reporters Tuesday under a strict embargo order, shows how the Obama administration proposes to create new cost savings over the next ten years
Liberal activists have taken issue with the chained CPI in recent weeks, turning up by the hundred in front of the White House to protest what they predict will be Social Security and Medicare cuts related to the government’s new cost-of-living math. The prospect of a middle-class tax hike will mobilize conservatives.
The resulting discord may give Obama enough cover to proceed with some other elements of his budget, including $50 billion in new stimulus spending on roads, transit systems and other public works projects.
Also expected is a tax increase on tobacco that would fund a new program of universally available preschool. The Washington Post reported Tuesday morning that the budget will include $235 million in new mental health spending, aimed at helping schools prevent the next Newtown, Connecticut-style gun massacre.
And White House leak to CNN Tuesday night indicates at least one potential victory lap for which the administration is already preparing.
Those extra catfish inspectors? They’ll be gone, an unnamed official told the news network.
By ANDREW TAYLOR and JIM KUHNHENN | Associated Press
WASHINGTON (AP) — Mixing modest curbs on spending with tax increases reviled by Republicans, President Barack Obama proposed a $3.8 trillion budget on Wednesday that would raise taxes on smokers and wealthy Americans and trim Social Security benefits for millions.
Obama’s 2014 blueprint combines a $242 billion infusion of new spending for road and rail projects, early education and jobs initiatives – all favored by Democrats – with longer-term savings from programs including Medicare and the military. It promises at least a start in cutting huge annual federal deficits.
The president pitched his plan as a good-faith offer to his GOP rivals since it incorporates a proposal he made to Republicans in December that wasn’t radically different from a GOP plan drafted by House Speaker John Boehner. But it follows January’s bitterly fought 10-year, $600 billion-plus tax increase that has stiffened GOP resolve against further tax hikes.
“I have already met Republicans more than halfway, so in the coming days and weeks I hope that Republicans will come forward and demonstrate that they’re really as serious about the deficit and debt as they claim to be,” Obama said.
After four years of trillion-dollar-plus deficits in his first term, Obama’s plan projects a $973 billion deficit for the current budget year and red ink of $744 billion for the 2014 fiscal year starting in October. By 2016, the deficit is seen as dropping below 3 percent of the size of the economy, a level that many economists say is manageable.
Obama cast his budget as a compromise offer that would bridge differences between Republicans and their desire for reducing government spending and Democrats who want more revenue from taxpayers. But it’s difficult to overstate the gulf between Obama and the conservatives who are in the GOP driver’s seat in Congress.
While the budget proposal will not prompt any immediate congressional action, it will probably surface this summer when Republicans are expected to demand additional reductions in the deficit in exchange for increasing the nation’s borrowing authority.
Obama claims $1.8 trillion in deficit savings over the coming decade, but the budget tables show the savings are actually $1.4 trillion. And $1.2 trillion of that is devoted to reversing automatic, across-the-board spending cuts required because of Washington’s inability to follow up a 2011 budget pact with further deficit action.
“This is worse than a status quo budget,” said House Budget committee Chairman Paul Ryan, R-Wis. He said it has about $1 trillion in new taxes, $1 trillion in new spending with deficit reduction of only $119 billion over 10 years under GOP math that sorts through interpretations employed by the White House that could be open to question.
For instance, Obama claims $167 billion in lower war costs – money the administration never intended to spend – and uses that “savings” for road projects and other undertakings it bills as jobs initiatives.
The real cuts include $400 billion scrubbed from health care programs like Medicare over the coming decade, including cuts in payments to drug companies and higher Medicare premiums for people who are better off.
The administration would modestly cut the annual operating budgets for both the Pentagon and domestic agencies while reprising ideas like higher Transportation Security Administration fees on airline tickets, the end of Saturday mail delivery and higher pension contributions for federal workers.
“He does deserve some credit for some incremental entitlement reforms,” said Boehner, R-Ohio. “But I would hope that he would not hold hostage these modest reforms for his demand for bigger tax hikes. Listen, why don’t we do what we can agree to do?”
That’s not the way it works, countered Gene Sperling, the director of Obama’s National Economic Council. “The offer that is there for Speaker Boehner is not an a la carte menu.”
The White House budget claims $580 billion in tax increases on the wealthy over 10 years, including a 28 percent cap on itemized deductions that’s never gotten anywhere on Capitol Hill.
The total climbs closer to $1 trillion in tax increases after adding in ideas like a 94 cents-per-pack increase in taxes on cigarettes, changes for corporate foreign earnings, slower inflation adjustments to income tax brackets, elimination of oil and gas production subsidies, an increase in the estate tax, a new “financial crisis responsibility” fee on banks and new taxes on trading of exotic financial instruments known as derivatives.
Republicans predictably slammed Obama’s plan for its tax increases while his Democratic allies generally held their tongues over cuts to Social Security benefits.
“It’s not the budget I would write on my own, and it includes several policies that I don’t think are the best ways to tackle the deficit and debt,” said Senate Budget Committee Chairman Patty Murray, D-Wash.
The Social Security cuts would come from a slightly stingier inflation adjustment known as “chained CPI” that would reduce annual cost-of-living increases for a variety of programs by about 0.3 percentage points a year. It would reduce federal spending on government programs over 10 years by $130 billion and promises to save far more in subsequent decades.
Once the change was fully phased in, Social Security benefits for a typical middle-income 65-year-old would be about $136 less a year, according to an analysis of Social Security data. At age 75, annual benefits under the new index would be $560 less. But after age 75, Social Security recipients would receive larger-than-scheduled benefit increases by 0.5 percentage points a year through age 85.
Obama promises to ease the burden of the proposal on the poor and the very elderly by not applying it to programs meant for low-income Americans. That means annual increases in assistance programs such as Social Security Supplemental Security Income and Pell Grants for student aid would not be calculated by using the lower inflation formula.
Despite Obama’s vows not to raise taxes on the middle class, the chained CPI proposal also would result in higher taxes because tax brackets would be adjusted for inflation more slowly, with much of the effect felt by middle class taxpayers. The provision would raise about $100 billion over 10 years. At the same time, raising the cigarette tax from $1.01 to 1.95 per pack would be disproportionally felt by the poor. That tax increase would raise $78 billion over 10 years.
Obama’s plan generally tracks a nonbinding budget measure that passed the Senate last month, though Democrats controlling the chamber left out the chained CPI proposal.
House Republicans, by contrast, muscled through a far more austere plan in March that contains big cuts to Medicaid and would reduce domestic agency budgets by about 20 percent below levels contemplated in a hard-fought 2011 budget pact that set tight “caps” on spending passed by Congress each year.
“I don’t think we should be talking about grand bargains because that implies the president and Senate Democrats are ready to embrace fundamental entitlement reform, which they have shown absolutely no indication of doing,” said House Budget Chairman Ryan, his party’s vice presidential nominee last year.
Such pessimism is also felt by Democrats. Asked this week about the prospects for a broad budget deal, Murray said: “I think we’re a long ways from there right now.”
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THE OBAMA BUDGET PROPOSAL: TAX INCREASE ON CHARITY
By Howard Husock, Contributor | Forbes
President Obama’s long-awaited budget proposal, to be released today, does not come right out and say that it intends to reduce contributions to charity—but that is almost certainly what would happen were it to become law. Here’s why. The White House has effectively doubled down on a tax change it has been pushing for four years that would limit the value of the charitable tax deduction. The Administration has, since 2009, pushed unsuccessfully to allow only 28 cents on a dollar donated to charity to be deducted—even though the top tax rate for the wealthy donors who make most use of the deduction has been 35 percent. In the budget released today, the President again proposes to cap the charitable deduction at 28 percent—despite the fact that the top rate on the highest earners has increased to 39.6 percent. Think of it this way: the White House proposal would raise the cost of giving to charity from 60 cents per dollar to 72 cents per dollar. That’s a 20 percent increase in what can be called the “charity tax.”
When one taxes something more, of course, one gets less of it—and it’s likely that the current $168 billion in itemized charitable giving would decline. Indeed, Indiana University’s Center for Philanthropy has previously estimated that capping the charitable tax deduction’s value at 28 percent—even when the top income tax rate was 35 percent—would lower giving by 1.3 percent, or some $2.18 billion in 2010. The new proposal would likely take an even bigger bite from giving. The Chronicle of Philanthropy reports that the reduction in giving could be as high as $9 billion a year.
For the Obama White House, this is a matter of tax fairness—in keeping with the Administration’s overall proposal to cap the deductibility of other significant tax expenditures, notably the home mortgage interest deduction and the deduction for state and local taxes. These, like charitable donations, are typically used to the greatest extent by the most wealthy taxpayers who, the Administration has reminded us time and again, should, in its view, pay their “fair share.”
But all these tax deductions are not created equal.
The home mortgage interest deduction, for instance, which reduces tax revenues by some $70 billion annually, has the perverse effect of driving up home prices and providing the greatest benefit to those with the most expensive homes. It’s used, moreover, as an argument by advocates for increased housing subsidies for low-income families—which have their own perverse effects, increasing dependency and discouraging work (as I’ve written in City Journal). Those liberal critics are right. If we want to increase home-ownership—a tricky goal, as the bursting of the housing bubble taught us—an open-ended mortgage interest deduction is not the best way to do so.
So, too, with the deduction for state and local taxes, which decreases federal tax revenues by some $43 billion annually. As my Manhattan Institute colleague Stephen Eide has observed, in his paper entitled Could Tax Reform Defund the “Blue State Model”?, these deductions make it easier for free-spending politicians in New York, Illinois, California and other high-tax jurisdictions to continue their profligacy, because their upper -income taxpayers don’t feel the full bite of high income and sales taxes.
Is the charitable tax deduction really different? Fundamentally, the answer is yes. Although it decreases the tax liability of the affluent, it provides no direct personal benefit that’s the equivalent of a McMansion or gold-plated local schools or parks. It’s true that it leaves more money in taxpayers’ pockets to spend as they wish—but that’s only because of the social benefits their donation is providing, whether in the form of a food pantry or medical research. Indeed, without saying so explicitly, the Obama charity tax increase implicitly assumes, under cover of “fairness,” that Washington will do a better job spending the money than private donors will. But by encouraging philanthropy, we encourage imagination and innovation—in ways the political process, more likely to be constrained by conventional wisdom, will not.
For example, it’s not easy for the federal Department of Education to tell the public that a college education might, in some cases, be counter-productive for young entrepreneurs. But, in his role as a philanthropist, serial entrepreneur Peter Thiel (eBay, Facebook), did just that, when his foundation offered $100,000 for students with the best business plans—who would agree to drop out of school. Of course, it’s quite possible that Thiel would have done the same thing even if the value of the charitable deduction were slightly lower, as the White House proposes. But many less wealthy donors to local causes—including start-up nonprofits with good new ideas—might well be deterred.
The charitable tax deduction is far from perfect, as it stands. It creates the opportunity for mischief—as when liberals such as Stanford University’s Rob Reich suggest that it be limited only to donations which have a direct, redistributional effect. Indeed, America could, arguably, be better off with a far simpler tax code, characterized by lower rates—and the higher economic growth which would likely result. It’s new wealth which ultimately most fuels charitable giving, after all. Another possibility: the straight charitable tax credit—which would benefit anyone owing federal income taxes; that was actually proposed by the President’s own Simpson-Bowles deficit reduction commission. No such proposal has been offered by the White House, however—which apparently is willing, instead, to decrease charity in order to increase federal spending. Let’s hope that the House and Senate have the wisdom not to go along.
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OBAMA’S INTRANSIGENT BACKBENCH
By Dana Milbank | The Washington Post
Sen. Bernie Sanders of Vermont, red in the face, took off his jacket and rolled up a shirt sleeve — but there was no relief from the discomfort of his affliction.
The poor guy is suffering from triangulation.
The man triangulating him, President Obama, has proposed cuts to Social Security and Medicare as part of an attempt to find a middle ground in the budget debate. For Sanders (I), a liberal member of the Senate Democratic caucus, the betrayal stung so badly that he literally took to the streets, joining left-wing activists for a protest Tuesday afternoon outside the White House.
“When Barack Obama was running for president in 2008, he said that he would not cut Social Security. We want the president to remember what he said and not go back on his word!” Sanders shouted into a microphone, as cops watched warily.
Calling Obama’s offer “nuts,” Sanders went on: “The White House tells us they want to defend the middle class — that’s their mantra. If you want to defend the middle class you don’t cut Social Security, you don’t cut Medicare, and you don’t cut benefits for disabled vets.”
“Say it!” somebody shouted.
“Give it to ’em!” somebody else called out.
Sanders’s ire was real, as was that of his fellow demonstrators: a pair of congressmen plus representatives of the AFL-CIO, the National Organization for Women, MoveOn.org, Campaign for America’s Future and the rest of the liberal establishment. “Inhumane,” they said of Obama’s proposal. “Dickensian … reprehensible.”
But, in reality, the progressives’ street protest did Obama a favor. He needs to have the likes of Bernie Sanders against him. It strengthens his hand and helps him negotiate a better deal with Republican leaders, who can now see that liberal backbenchers and interest groups can sometimes be as intransigent as conservatives.
At a Republican presidential debate in 2011, all eight candidates on the stage said they would reject a budget deal that raised taxes even if it had $10 of spending cuts for every dollar of tax increases. At Tuesday’s protest, I put the reverse question to participants: Could they accept a dollar of cuts in Medicare and Social Security benefits for every $10 of increased taxes on corporations and the wealthy? All those I asked said they would decline.
“Not for me, no,” said Rep. Rick Nolan (D-Minn.).
“I’m not taking your offer,” said Stephanie Taylor, co-founder of the Progressive Change Campaign Committee.
“No, it’s not negotiable,” said Damon Silvers, the AFL-CIO’s policy director.
“Uh, no,” said Jim Dean, the chairman of Democracy for America.
Similar answers came from Roger Hickey of the Campaign for America’s Future, Manny Herrmann from MoveOn — and, of course, Sanders.
The liberals’ objections are legitimate — particularly their resistance to a stingier inflation formula for Social Security, which isn’t as big a budget problem as Medicare. There’s a case to be made that the president shouldn’t negotiate with himself by opening the bidding with his final offer. There’s also a concern that he now “owns” Social Security cuts, and Republicans can use that against him.
But Obama’s proposal, if the details turn out to be as advertised, restores his credibility on the budget. His previous budgets, which skirted entitlement cuts, weren’t taken seriously.
Now Obama, by publicly defying liberals in his party, looks like the reasonable one — and Republicans look unreasonable if they continue to carp about Obama’s proposal without offering more tax hikes.
It’s perhaps the most brazen attempt at triangulation in the Democratic Party since Bill Clinton (whose adviser Dick Morris popularized the term) defied liberals on welfare reform. That worked well for Clinton, and this may work well for Obama – but in the short term he’s going to hear a lot of gasping and wheezing from those being triangulated.
Rep. Mark Takano (D-Calif.), at the White House protest, complained that the proposed cuts would break “the sacred promises that we made to our nation’s seniors.”
Max Richtman of the National Committee to Preserve Social Security called Obama’s justifications “malarkey.”
“Damned malarkey,” NOW’s Terry O’Neill amended.
Nolan, the Minnesota congressman, was particularly agitated. He got in a showdown with police for standing too close to the White House; he dared the officers to arrest him.
Another speaker on the program, a Social Security beneficiary named Phyllis Zolotorow, got personal: “Believe me, Mr. President, this is not the way to honor your mother’s memory.”
The liberal activists cheered. They were angry with Obama — and defiant.
Jim Dean, Howard’s brother, shouted into the microphones: “The era of triangulation is over!”
Or is it just beginning?
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OBAMA: REPUBLICANS SHOULD HELP ‘FINISH THE JOB’ OF DEFICIT REDUCTION
By Olivier Knox, Yahoo! News
President Barack Obama declared on Wednesday that his newly unveiled fiscal 2014 budget would “reignite” sputtering economic growth and pressed skeptical Republicans to help him “finish the job” of deficit reduction. But while GOP leaders embraced Obama’s call for cuts to entitlement spending, they decreed that his appeal for further tax hikes on the rich ensured that the symbolic blueprint would be dead on arrival in Congress.
“Our economy is poised for progress—as long as Washington doesn’t get in the way,” Obama said in the White House Rose Garden. “Frankly, the American people deserve better than what we’ve been seeing: a shortsighted, crisis-driven decision-making.”
The president’s $3.77 trillion budget—a symbolic, nonbinding spending blueprint—includes many of his 2012 campaign themes: higher taxes on the rich, modest investments in education and infrastructure, cash for scientific endeavors. It also includes elements of his past offer to the GOP as part of a quest for a “grand bargain” that would reduce deficits by at least $4 trillion over 10 years, like adopting “chained CPI.” This would reduce cost-of-living increases to Social Security and Medicare, a step loathed by liberal Democrats but heralded by Republicans in the past as a potential trade-off for higher taxes.
“When it comes to deficit reduction, I’ve already met Republicans more than halfway,” Obama declared. “So in the coming days and weeks, I hope that Republicans will come forward and demonstrate that they’re really as serious about the deficits and debt as they claim to be.”
In his actual budget submission, Obama served notice to liberals that he won’t shy from potentially painful entitlement cuts. “I am willing to make tough choices that may not be popular within my own party, because there can be no sacred cows for either party.”
Republicans panned the president’s budget, but seized on his offer to reduce the growth of mandatory programs like Social Security and Medicare.
Republican House Speaker John Boehner said Obama “does deserve some credit” for those proposals, but said the White House should not “hold hostage these modest reforms” by using them to win GOP support for higher tax revenues. Republican leaders have repeatedly said they aren’t interested in discussing boosting tax revenues in the aftermath of the so-called “fiscal cliff” deal adopted in the early hours of 2013. That agreement extended Bush-era tax cuts on income up to $400,000 for individuals and $450,000 for households, while letting rates rise above that level.
“The president got his tax hikes in January. We don’t need to be raising taxes on the American people,” Boehner said. “So I’m hopeful in the coming weeks we’ll have an opportunity, through the budget process, to come to some agreement.”
Republican Senate Minority Leader Mitch McConnell was a bit more biting, dismissing Obama’s budget as “just another left-wing wish list.” Oh, except for the entitlement changes. “Let me clarify: a wish list with an asterisk.”
Presidential budgets are symbolic documents that don’t directly decide government spending even if they pass Congress (this one won’t) and accordingly don’t typically do much to create jobs.
But the nonbinding blueprint already has done something that the president himself has only rarely accomplished since taking office: It’s basically united Washington. In opposition.
Boehner had repeatedlyattacked the plan, based on carefully calculated disclosures from the White House about what it would include. At the other end of the spectrum, independent Sen. Bernie Sanders of Vermont promised to fight against Obama’s call for adopting a less generous cost-of-living formula for entitlements such as Social Security.
Despite all that, the document could still matter.
While budgets serve chiefly as political mission statements for presidents, and political punching bags for their opponents, they can still cast a long shadow over public debates. And there’s no shortage of urgency for Washington to do something in the face of sluggish economic growth and unsettlingly weak job creation.
“The timeline between the submission of a president’s budget and someone saying the phrase ‘dead on arrival’ is the shortest measure of time in Washington,” Tony Fratto, a spokesman for George W. Bush’s Treasury Department and later his White House, joked to Yahoo News.
But Fratto still calls himself “a big believer” in the process. Why?
“They are the aspirational game plans for each party. It’s the way they would like to see the world, lays out markers for the programs they consider priorities,” Fratto said.
And by offering to cut entitlement spending—a key driver of U.S. government deficits and the debt—in exchange for new tax increases that chiefly target the well-off, Obama aims to bridge the gap between Republicans and Democrats and restart so-called “grand bargain” talks aimed at finding $4 trillion in deficit reduction over the next 10 years. Obama aides, though, say any big deal has to include new revenues, something that makes Republicans balk.
“We don’t view this budget as a starting point,” a senior White House official told reporters on a conference call on Tuesday. “This is an offer where the president came more than halfway toward the Republicans in an attempt to get a fiscal deal.”
The White House says that, if reflected in spending legislation, Obama’s new budget would cut $1.8 trillion over 10 years. Republicans say the real figure is $600 billion because the budget replaces existing so-called “sequestration” spending cuts of $1.2 trillion with an equivalent amount.
But both sides agree the budget does not balance over its 10-year horizon. The House-passed GOP budget does so thanks to mostly undetailed spending cuts to mostly unidentified programs.
The White House budget predicts the deficit will run $744 billion in fiscal year 2014 (which starts Oct. 1). That’s about 4.4 percent of gross domestic product. And senior administration officials, briefing reporters on condition of anonymity, said Tuesday that it would fall to 2.8 percent of GDP by 2016 and 1.7 percent by 2023. They did not give a dollar figure, which means those estimates could rely on rosy predictions of economic growth that are typical in any president’s budget.
Budgets serve as guidelines, sometimes influential ones, but they don’t become law. Actual spending levels for individual agencies are supposed to come in a two-step legislative process of authorizing programs and then appropriating funds for them, though this spring it’ll be in the form of a catch-all continuing resolution.
All this is to say that, when you hear a politician compare a government budget with a family budget, that’s true only if your family disregards its budget.
One early test of whether the GOP—anyone in the GOP—is willing to consider Obama’s offer will come on Wednesday night, when he is scheduled to host 12 Republican senators for a fence-mending dinner where the budget will surely be discussed. (Sanders, meanwhile, tells ABC/Yahoo that progressives are still waiting for their invitation.)
But Fratto warned there might not be an opportunity for a major budget breakthrough even if both sides want it, thanks to a deal reached during the so-called “fiscal cliff” negotiations in early January when Republicans agreed to raise taxes on higher earners.
A major budget agreement “may be too much to ask, because I don’t know that the components of a grand bargain exists any more since the tax increase deal, tax cut deal, whatever you want to call it,” Fratto said.
In that accord, Republicans agreed to extend Bush-era income tax cuts on income up to $400,000 for individuals and $450,000 for households. Since then, GOP leaders have publicly ruled out new tax hikes even as the White House has pushed for raising revenues, notably by closing loopholes and slicing into deductions for wealthier Americans.
“What we’re left with now is a situation where all of the components of a so-called grand bargain cause pain for somebody—except for inside-the-beltway deficit hawks,” Fratto said. “It would be some combination of tax increases, entitlements cuts, discretionary spending cuts, so who are the winners?”
One possibility is that Obama views a grand bargain as a way to polish his legacy—he would be The Democratic President Who Reined In Entitlement Spending. He still has the “bully pulpit”—the ability to dominate the national political conversation.
Whether Democrats see it that way and are prepared to run the political risks to help the White House is an open question.
Party strategists say Democrats got clubbed like baby seals in the 2010 midterm elections in large part because of GOP ads accusing the president’s party of wanting to cut Medicare. That line of attack was based on Democratic support for Obamacare, which reduced Medicare spending by $716 billion, mostly taken from insurance companies and hospitals rather than beneficiaries.
And the 2014 midterms aren’t that far away.
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JOHN BOEHNER: IT’S TIME FOR WASHINGTON TO DEAL WITH ITS SPENDING PROBLEM
Published on Apr 10, 2013
House Speaker John Boehner (R-OH) made the following remarks at a press conference with Republican leaders today discussing President Obama’s budget.
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WASHINGTON’S TAXING AND SPENDING IS MAKING IT HARDER FOR AMERICANS TO FIND WORK
By John Boehner
Apr 5, 2013Washington- Today, Congressman John Boehner (R-West Chester) released the following column discussing the president’s budget:”After a long delay, the White House has announced that President Obama will finally release his budget on April 10. So far the preview we’re getting is not good.”With millions of American families struggling in this weak economy, I had hoped that President Obama would use this opportunity — like President Clinton did — to work across the aisle and balance the budget. Sadly, media reports indicate the president’s budget will not balance. Ever.”What it reportedly will do is make modest entitlement savings conditional upon another round of tax hikes. This would be a step in the wrong direction, making savings we agree upon conditional on another round of tax increases.”If President Obama believes – as Republicans do – that responsible reforms are needed to shore up programs like Social Security, there’s no reason why they should be held hostage for more tax hikes. Tax increases will impede economic growth and make balance and job creation harder.”In all, it’s been reported that President Obama’s budget will reduce the deficit by a meager $600 billion over the next 10 years. Currently, the budget deficit for this year alone is a projected $845 billion. Given that the president’s budget will reportedly increase taxes by at least $600 billion, it appears that there will be no net spending cuts. That means any deficit reduction under the president’s plan would come solely from tax hikes.”Fortunately for American families who know that spending is the problem, Republicans are offering an altogether different approach. Last month we passed a balanced budget in the House that cuts wasteful spending, unleashes North American energy like Keystone, and fixes our broken tax code. We’ve also acted twice in the House to replace President Obama’s sequester with smarter cuts and reforms that protect our national security.”As the minority party in Washington, House Republicans take our responsibility to offer alternative solutions seriously because we know that a budget isn’t just abstract lines on paper. A budget is a blueprint, and it’s an opportunity to help grow our economy and expand opportunity for everyone.”And after five years of massive deficits, tax hikes, and big government takeovers, it’s clear that our alternative vision of freedom and opportunity is desperately needed. Every day we continue to learn more about how ObamaCare is increasing costs and making it harder for small businesses to hire. Hundreds of thousands fled the workforce last month and unemployment remains far above what the Obama administration promised when it enacted its ‘stimulus’ spending plan.
“We’re not optimistic, because the reason President Obama’s budget has all these problems is that the president fundamentally believes more government and more spending is the solution to all our nation’s challenges – but it’s not too late for him to follow the House and outline a balanced budget. One that includes entitlement reforms that are not conditional on enactment of more tax increases, which will suppress growth instead of encourage it.
“After all, President Obama already missed the February legal deadline to submit his budget. Why not take a little more time to get it right?”
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OBAMA AND WHITE HOUSE BRAG ABOUT $1 TRILLION IN BUDGET SLASHING
April 11th, 2013
Declaring that their objective is the $4 trillion in deficit reduction promoted by the Simpson-Bowles “Catfood” Commission, President Obama and his budget spokesmen bragged that Obama’s budget proposal, presented yesterday, “finishes the job” of reaching that goal. The White House said that, on top of the $2.5 trillion in cuts already agreed to by Obama and Congress, his new proposals (which actually are not new), would reduce the deficit by another $1.8 trillion.
Beyond the smoke and mirrors of claims about new revenues and interest-payment reductions, there are hard spending cuts totalling more than $1 trillion projected over the next decade. According to figures presented by the OMB today, this consists of:
— $400 billion “savings” achieved by Obamacare and Medicare “reforms;”
— $230 billion “savings” from the Chained CPI for Social Security and other programs;
— $200 billion from other mandatory programs such as farm subsidies and federal retirement benefits;
— $200 billion in discretionary spending cuts, half of which is defense and half non-defense programs.
In Congress, Obama’s proposal was received much more favorably among Republicans than Democrats, according to Capitol Hill tipsheets such as Politico and the Hill. Gratified that Obama is “showing a little leg,” GOPers said that it’s a good start, but he needs to display more. For example, Sen. Ted Cruz (Tex.) said he’s “encouraged” by Obama’s proposals. Sen. John Boozman (Ark.) said it’s good that Obama is putting Social Security and Medicare on the table. Mike Johanns (Neb.) called it a step in the right direction. Dean Heller (Nev.) called it “positive.” Richard Shelby (Ala.) called it a jumping-off point. Johnny Isakson (Ga.) praised Obama. Saxby Chambliss (Ga.) called it a step in the right direction.
Among Democrats, the reaction was generally nervous silence or worse. Senate Budget Committee Chairwoman Patty Murray (D-Wash.) and Majority Leader Harry Reid both contrasted the budget passed by the Senate to Obama’s, noting that they did not include the Chained CPI, and essentially saying: we have our budget, and Obama has his. Sen. Tom Harkin (D-Iowa) was more explicit, saying, “There are a lot of progressives that share my view on this, that chained CPI is a nonstarter.”
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BERNIE SANDERS: “WE’RE TALKING ABOUT MAJOR, MAJOR CUTS TO BENEFITS FOR DISABLED VETERANS”
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OBAMA BUDGET SLASHES SOCIAL SECURITY AND MEDICARE
By Andre Damon
11 April 2013
US President Barack Obama unveiled his budget proposal Wednesday, calling for a historic attack on Medicare and Social Security. The move, coming after the imposition of $1.4 trillion in spending cuts over the past two years, marks a new stage in the US ruling class’s offensive against the social rights of the population.
“I am willing to make tough choices that may not be popular within my own party, because there can be no sacred cows for either party,” Obama wrote in a letter to Congress included in the budget, referring to the move’s repudiation of the Democrats’ traditional association with the programs of the Great Society and New Deal.
The budget proposes to slash $400 billion from Medicare spending over ten years, and would introduce a new measure of the cost of living that would mean an effective cut of $130 billion from Social Security benefits during the same period.
Cuts to these programs are overwhelmingly unpopular, with a Pew Research poll finding earlier this year that 87 percent of the population is opposed to cuts in Social Security, while 82 percent oppose cuts in Medicare.
The budget proposal comes less than a week after a disastrous March jobs report, which showed the lowest jobs growth in nine months, with 496,000 people dropping out of the labor force last month. Obama’s budget does nothing to address the fact that four million people are soon to see their federal extended unemployment benefits slashed by 11 percent until at least October 1.
In a press conference Wednesday morning, Obama sought to downplay the attacks on Social Security and Medicare contained in the budget, seeking to palm off the socially regressive proposals as intended to defend “a rising, thriving middle class” through a “balanced and responsible” proposal.
In tacit recognition of the overwhelming unpopularity of attacks on Social Security, Obama made no mention of the program by name in his speech. Instead, he referred to these cuts indirectly, saying, “My budget does also contain the compromise I offered Speaker Boehner at the end of last year, including reforms championed by Republican leaders in Congress. And I don’t believe that all these ideas are optimal, but I’m willing to accept them as part of a compromise.”
Aside from cuts to Medicare and Social Security, the budget contains a myriad of right-wing proposals, including expanding “education reform,” tax breaks to manufacturers, and a regressive $1-per-pack tax increase on cigarettes.
The budget proposes to create an “Infrastructure Bank” that would “leverage private and public capital to support infrastructure projects,” and take “action to modernize and improve the efficiency of the Federal permitting process” for building projects, including pipelines—in other words, speed up such projects to the detriment of public health and worker safety.
Obama called for further deregulation and tax subsidies for US corporations, with Obama noting that the budget includes “initiatives to support manufacturing communities, including a new tax credit to strengthen their ability to attract investments and jobs. And it expands my Administration’s SelectUSA initiative to help draw businesses and investment from around the world to our shores.”
The introduction of a new measure of the cost of living, referred to as the “Chained CPI” will cut Social Security payments by $130 billion over ten years, as well as $35 billion from federal workers’ retirement benefits.
In addition to the sharp cuts to Medicare and Social Security, the budget proposes other benefit cuts, such as a measure that prevents disabled workers from collecting both unemployment and disability benefits at the same time, leading to a $1 billion benefit cut over 10 years.
The budget likewise forges ahead with the attack on public education, introducing competitive funding for high schools, and facilitating the phasing out of liberal arts programs and their replacement with curricula that “today’s employers seek to fill the jobs available right now and in the future.”
This policy also applies to colleges, with the budget including measures that would “ensure affordability and value are considered in determining which colleges receive certain types of Federal aid,” meaning that those that do not “reform” their curriculum to topics demanded by corporations would be defunded.
To offset the public impact of the right-wing policies being proposed, the budget includes token measures that stand little chance of being implemented. Among these is a “Preschool for All” initiative, funded with a measly $750 million in preschool development grants to the states. But even this proposal this would be paid for by a 94-cents-per-pack increase in the federal tax on cigarettes, which would overwhelmingly affect the poorest and most vulnerable section of society.
Even after the significant concessions made by Obama, the Republicans maintained their demands for more cuts. “It looks like there’s less than $600 billion worth of reduction in there—and that’s over a decade—all of it coming from tax increases. In other words, it’s not a serious plan. For the most part, just another left-wing wish list,” said Senate Minority Leader Mitch McConnell. House Budget Committee Chairman Paul Ryan likewise said that he is “disappointed by the president’s proposal because it merely ratifies the status quo.”
While Obama noted in his speech Wednesday that he has already met the Republicans “more than halfway,” it is clear that Obama’s budget represents merely the starting point of negotiations, and that the Administration will move even further to meet the Republicans’ demands.
While Obama has boasted that he has already implemented $2.5 trillion in deficit reduction, these cuts have up to this point avoided entitlement spending. Now, the ruling class, through the medium of the two big-business parties, is barreling ahead with their plans to gut the bedrock programs of the US social safety net. This drive inevitably puts the entire political system on a collision course with the demands of the population, and must lead to mass political upheavals.
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DEPARTMENT OF JUSTICE WANTS MORE FOR PRISONS THAN U.S. SECURITY
President Obama’s proposed 2014 budget for the Department of Justice will spend $4.1 billion more on prisons than on “national security,” the Justice Department revealed Wednesday.
Attorney General Eric Holder on Wednesday released the proposed 2014 budget for the Department of Justice: $27.6 billion – $1.6 billion less than the FY 2013 Justice budget, due to sequestration.
President Obama’s proposal for the Justice Department is up 3 percent from the FY 2012 proposal, but less than this year’s budget, the Department of Justice said in a statement.
According to the Justice Department statement, the proposal includes:
$8.5 billion for federal prisons and detention;
$4.4 billion for national security;
$395.1 million for (undefined) protection from gun violence;
$92.6 million enhancement for cyber security;
$55 million increase for investigating and prosecuting financial and mortgage fraud;
$25 million increase for immigration enforcement;
$258.6 million for civil rights;
$2.3 billion in assistance to state, local and tribal law enforcement;
$561.4 million in federal program offsets and rescissions.
Holder called the last item “efficiencies,” required by the budget sequestration.
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SEQUESTER BUDGET CUTS LIKELY MEAN THE END OF NEW YORK CITY’S ‘FLEET WEEK’
Memorial Day Week Tradition Is Apparently Thrown Overboard With No Lifejacket
NEW YORK (CBSNewYork) — In a surprising announcement, the U.S. Navy has informed New York City officials that federal budget cuts may keep aircraft carriers and destroyers from sailing into New York Harbor for Fleet Week.
The Navy’s jets are expected to be grounded too, ending a 26-year tradition, CBS 2’s Marcia Kramer reported Thursday.
“No branch of the armed forces which, in our case, includes the Navy, Marine Corps and Coast Guard team may participate in community relations or outreach efforts that come at additional cost to the government,” Navy Mid-Atlantic Region spokeswoman Beth Baker told WCBS 880′s Marla Diamond.
In his 12th and final year as mayor, Michael Bloomberg will have to pull a rabbit out of a hat to find a way to celebrate Fleet Week without the fleet.
“Everyone, I think, can recognize and understand and appreciate the support and the patience that the great city of New York is giving us as we really work through some of these difficult situations to try to do as much as we can within what we’re allowed and able to do,” Baker told Diamond.
Baker told 1010 WINS’ Eileen Lehpamer festivities will be scaled back to smaller, local events as ordered by the Department of Defense.
“Whatever we do during the week or the weekend of Memorial Day, that outreach will be done using local assets,”she said.
“There definitely is going to be an impact for us, if we’re not having that. We have thousands of cutovers just from the ships and tourists. It’s going to be a big impact. Lots of money, lots of money,” said Monica Aguirre, manager of Daisy May’s BBQ.
Daisy May’s is just one block from the West Side piers in Midtown, where in years past, thousands of soldiers, sailors and Marines gathered for a week of Memorial Day shore leave and celebration to honor the work of American servicemen in defending the homeland.
It’s just one of many businesses in the city that will be hurt by the Navy’s decision that sending the fleet to New York City was just not affordable due to the federal budget cuts known as “sequester.”
“We’ll be off; we’ll be off a lot. I’m not saying it just because of the business. It’s just good for the morale of the men, and good for all of the places around here. I just don’t see why they’re doing it. We spend money all over the world. You can’t spend money here in the states for the troops? It’s crazy,” said Tom Hummel of Landmark Tavern in Queens.
Last year, the 25th anniversary of Fleet Week and the bicentennial of the War of 1812, there were among other things nine tall ships, nine Navy aircraft carriers and destroyers and three Marine units just back from a one-year tour in Afghanistan.It’s a very, very popular part of the tourism life of New York City and the Hell’s Kitchen neighborhood. It contributes tens of millions of dollars to the economy and millions in city tax revenue.
City and suburban residents were none too pleased when hearing the news.
“That’s horrible. That’s horrible. People enjoy that. It’s like a huge thing all over Twitter. All the girls love it. They want to all go out with the men. It’s a shame that it’s not going to be here,” said Mike Connolly of Staten Island.
“There’s plenty of money to give tax breaks to companies like GE and others that do very well, so this year is a little unfair,” said Jennifer Kupla of South Orange, N.J.
“Oh no. It’s always a fun time out here. Lots of people come out to see it. It’s not going to happen,” said Ward Billeison of Hell’s Kitchen, who lives just down the block from where the soldiers and sailors congregate.
The mayor’s office said it’s still trying to find some way to celebrate, but as of right now, it looks like the May 23 of Fleet Week will find the West Side piers looking much like they looked Thursday — the Intrepid will be there and not much else.
“I think it’s terrible. I look forward to it every year, seeing the soldiers and sailors. I think it will have a big impact on this area, definitely,” said Robin Weisberg of Waldwick, N.J.
A spokeswoman for Mayor Michael Bloomberg said Fleet Week has been a great event for the city and they will continue working with the Navy to try to figure out a way to celebrate the commitment of our service members.
The city is still trying to figure out something, trying to see if some local-based Coast Guard ships can make it, but right now plans are sketchy at best.
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REVEALED: OBAMA TO COLLECT RECORD TAXES IN 2013
By Paul Bedard, Washington Secrets | The Washington Examiner
The federal Treasury expects to collect a record $2.712 trillion in taxes on Americans and U.S. business this year, shattering the 2007 high of $2.5 trillion in taxes.
Despite the sputtering economy and sustained high unemployment, the fine print in President Obama’s budget belatedly presented Wednesday revealed that the administration expects to take more in taxes than the Congressional Budget Office projects. CBO put the 2013 estimate at $2.708 trillion.
Republicans have seized on the number to bolster their fight against Obama’s goal of raising taxes, especially on the wealthy.
“We are projecting to see revenues double over the next decade. I think this year will be the highest revenue number ever in the history of the country. I think we have enough revenue in Washington,” said Rep. Dave Camp, chairman of the House Ways and Means Committee, which writes tax law. During a breakfast session hosted by the Christian Science Monitor, he pledge to move toward closing loopholes that will have the effect of lowering tax rates.
More shocking in the president’s 376-page “Historical Tables,” is the projection that tax receipts will soar during the remainder of the president’s second term, reaching nearly $4 trillion in 2018, four times Uncle Sam’s take in 1989.
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GOVERNMENT SPENDING PER HOUSEHOLD EXCEEDS MEDIAN HOUSEHOLD INCOME
By Terence Jeffrey
As reported in my new book, “Completely Predictable,” the combined spending of federal, state and local governments per American household actually exceeded the median household income for 2010, which is the latest year for which all relevant government data are available.
In fiscal 2010, according to numbers published by the Census Bureau and the Office of Management and Budget (OMB), net spending by all levels of government in the United States was $5,942,988,401,000. That equaled $50,074 for each one of the 118,682,000 households in the country.
In that same year, according to the Census Bureau, the median household income was $49,445.
That means total net government spending per household ($50,074) exceeded median household income (49,445) by $629.
Government in the United States, of course, has not always spent more per year than the median household earns. As recently as 2000, the relationship between government spending and household income was dramatically different.
Data from the Census Bureau and the OMB show that in that year net spending by all levels of government was $3,239,913,876,000. That equaled $29,941 for each of the nation’s then 108,209,000 households. In 2000, the median household income was $41,990.
Thus, between 2000 and 2010, government in this country went from spending $12,049 less than the median household income to spending $629 more.
This is how I derived these startling numbers:
First, I took the figure for each year’s total state and local government spending (published by the Census Bureau) and subtracted from it the money that state and local governments had received from the federal government. That left the net total of state and local spending for the year.
Then I took the total federal government spending for the year (published by OMB) and subtracted from it the money the Census Bureau said state and local governments had sent to the federal government. That left net total federal spending.
I then added the net total of state and local spending to the net total of federal spending to get the net total of all government spending for the year.
I divided that number by the number of households in the country that year (published by the Census Bureau) to get total net government spending per household.
In 2000, according to the Census Bureau, state and local governments spent a total of $1,746,942,699,000 and received $291,949,750,000 from the federal government, leaving net total state and local spending at $1,454,992,949,000.
The federal government spent a total of $1,788,950,000,000 in 2000, according to OMB, and received $4,029,073,000 from the states, leaving the net total of federal spending at 1,784,920,927,000.
The net total state and local spending of $1,454,992,949,000 and the net total federal spending of $1,784,920,927,000 combined for a net total of $3,239,913,876,000 in all government spending in 2000. Dividing by the 108,209,000 households the Census Bureau said were in the United States that year equals $29,941 — or $12,049 less than the 2000 median household income of $41,990.
Similarly, in 2010, according to the Census Bureau, state and local governments spent a total of $3,114,846,571,000 and received $623,732,004,000 from the federal government, leaving net total state and local spending for that year at $2,491,114,567,000.
The federal government spent a total of $3,456,213,000,000 in 2010, according to OMB, and received $4,339,166,000 from the states, leaving the net total of federal spending at $3,451,873,834,000.
The total net state and local spending of $2,491,114,567,000 and the total net federal spending of $3,451,873,834,000 combined for a total net $5,942,988,401,000 in government spending in 2010. Divided by the 118,682,000 households the Census Bureau said were in the United States that year, that equals about $50,074 — or $629 more than the 2010 median household income of $49,445.
I calculated the total net government spending per household in 2010 for my new book, “Completely Predictable.” I think the number demonstrates how completely predictable the fiscal crisis our country faces has become.
A nation whose government spends per family more than the typical family earns is on the road to ruin.
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OBAMA’S BUDGET
By Joseph Kishore
The Obama administration’s budget released on Wednesday is a historic milestone. The Democratic Party administration is taking direct aim at the two core federal social programs established in the United States in the 20th Century, Social Security and Medicare.
The consequences of Obama’s proposals are not hard to predict: millions more people, particularly the elderly, will be thrown into poverty or be cut off from life-preserving medical care.
The corporate and financial elite that runs the United States has long complained of the “unreasonable” sums of money spent on preserving the health and well-being of the elderly. In the minds of the Wall Street speculators and corporate executives that control both political parties, broad sections of the population simply live too long.
While the administration and the corporate media have sought to downplay the significance of the attack, the cuts proposed are a significant step in dismantling the programs altogether. The $400 billion in Medicare cuts, when combined with the $500 billion already included as part of the administration’s health care overhaul, add up to 13 percent of total spending on the program over the next decade.
As for Social Security, by modifying the way the government calculates inflation, the program will be cut by $130 billion. According to one analysis, for a worker retiring at the age of 65, this will amount to a loss of $650 a year in benefits by the time the worker reaches 75, and a loss of $1,130 by the time he reaches 85. About 70 percent of seniors depend on the already meager benefits for at least half of their income, with 40 percent depending on it to keep them above the poverty line.
The administration’s proposal, with a raft of other cuts in key social programs, is only the starting point for negotiations with Congressional Republicans, a process that will drive the whole discussion even further to the right. The dog and pony show of American politics will enter a new phase, as the two big business parties, united on all essentials, conspire to gut and eliminate programs that have the overwhelming support of the American population.
To the extent the American ruling class had a policy of social reform, it is embodied in the two targets of Obama’s budget. Social Security was established in 1935, while Medicare came into being in 1965.
Both were byproducts of mass social struggle and represented attempts to contain social conflict. Social Security was part of a series of reforms implemented by the administration of Franklin Roosevelt during the Great Depression, in the midst of insurrectionary class battles (including a series of general strikes throughout the US). The political backdrop was the Russian Revolution, which inspired working class struggles and provided the ruling class with a portent of its own future.
Medicare came in the midst of the mass civil rights movement and the wave of strikes of the 1960s. Enacted as part of the Great Society program of Lyndon B. Johnson, it was the last gasp of social reform in America.
In those periods, the ability of the ruling class to implement reform measures ultimately reflected the strength of American capitalism. The situation today is vastly different. The financial aristocracy that runs the United States has presided over a steady erosion of the country’s economic foundations. It has amassed its wealth primarily though looting and speculation.
For four decades, the American ruling class has been engaged in an unrelenting attack on the working class, a social counterrevolution that has produced an enormous increase in inequality. Up until the present, however, it has been deemed politically impossible to directly attack Social Security and Medicare. Obama has taken up this task.
Obama’s assault on health care programs began with the 2010 overhaul, hailed by the “left” supporters of the Democratic Party as a major social reform. Such attempts to cover up the reactionary character of the administration have now been thoroughly exposed.
To the ruling class, Obama has made clear that, in the defense of their wealth, everything is “on the table.” There are no “sacred cows,” he wrote in a letter to Congress. In a move that has both immense symbolism and practical implications, the administration said it was also considering the sale of the Tennessee Valley Authority, the largest publicly-owned US power company, and the most significant public entity set up during the Great Depression to provide electricity to large parts of the American South.
Earlier this week, Obama took the occasion of the death of former British Prime Minister Margaret Thatcher to associate his administration with the policies initiated by Thatcher in Britain and by Reagan in the United States during the 1980s, including efforts to “roll back” everything that detracted from corporate profits or restricted wealth accumulation.
“Here in America,” Obama declared in a press release, “many of us will never forget [Thatcher] standing shoulder to shoulder with President Reagan, reminding the world that we are not simply carried along by the currents of history—we can shape them with moral conviction, unyielding courage and iron will.”
The “iron will” that Obama is emulating is the will to ensure that trillions can continue to be handed to Wall Street, and that corporate profits can continue to soar, through an increasingly frontal attack on every social right of the working class.
All of this has consequences, for the Obama administration and the political establishment as a whole.
In 2008, Obama was brought forward by sections of the ruling class seeking a facelift for its reactionary policies. He replaced George W. Bush, the most hated president in US history. The fact that he was the first African American president was used to promote the illusion of change, with the assistance of the upper middle class proponents of identity politics who orbit around the Democratic Party.
The “transformative president” hailed by the liberal establishment and pseudo-left has become the most reactionary administration in American history. This will not dissuade the professional promoters of the Democratic Party, who will do everything they can to maintain political illusions in the two-party capitalist system, though with increasing difficulty.
The United States is heading toward a social explosion. By its own actions, the ruling class is demonstrating the necessity for revolution. The immense anger and opposition that is building up in the American working class must and will increasingly be directed against the Democratic Party.
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6 WAYS OBAMA’S BUDGET IS WORSE THAN EVERYONE THINKS
Investors Business Daily
Fiscal Policy: Shorn of its accounting gimmicks, the president’s budget isn’t a “balanced” plan to get the debt crisis under control. It’s a monument to fiscal irresponsibility.
With much fanfare and a lot of media hype, President Obama unveiled his latest budget plan — two months late. An IBD review of Obama’s budget finds that, among other things, it:
• Boosts spending and deficits over the next two years. Obama’s own budget numbers show that he wants to hike spending over the next two years by $247 billion compared with the “baseline,” which even after his proposed new tax hikes would mean $157 billion in additional red ink.
Obama claims he’ll get tough on spending and deficits later, but every budget expert knows boosting spending today only makes it harder to cut later.
• Vastly exaggerates spending cuts. The press has widely reported that Obama’s budget would cut spending a total of $1.2 trillion over the next decade. But Obama’s own budget shows that he actually cuts spending a mere $186 billion. (The relevant tables can be found at http://www.whitehouse.gov/sites/default/files/omb/budget/fy2014/assets/tables.pdf on Pages 187-190.)
Obama inflates his claimed savings by first canceling the automatic sequester spending cuts he previously signed into law, then reclaiming them as new savings, and by adding in cuts in interest payments on the debt.
• Relies almost entirely on tax hikes. Obama’s budget shows his plan would increase revenues by $1.14 trillion over the next decade. That means his budget proposes $6 in new taxes for every $1 in spending cuts.
• Cuts the deficit less than claimed. “My budget will reduce our deficits by nearly another $2 trillion,” Obama said Wednesday. But his budget shows total deficit reduction over the next decade would be just $1.4 trillion. Plus, deficits start rising again after 2018.
• Creates a new entitlement without a reliable means to pay for it. Obama claims he can finance a new $76 billion “preschool for all” program by raising tobacco taxes again. But after an initial spike, tobacco tax revenues will start trending downward year after year as more people quit smoking, while the costs of this new program will keep climbing.
The last time Obama hiked tobacco taxes — to pay for an expansion of Medicaid — revenues came in $2.2 billion less than expected.
• Boosts taxes on the middle class. Obama proposes to change the government’s “consumer price index” in a way that will lower the official inflation rate. He’s selling it as a way to cut Social Security annual “cost of living” adjustments, which are based on the CPI.
But because his “chained CPI” would also apply to annual tax bracket adjustments, it will end up hiking taxes by $124 billion — mainly on the middle class — over the next decade through bracket creep, according to the Congressional Budget Office.
In his remarks Wednesday after releasing his 65-day-overdue budget, Obama claimed: “The numbers work. There’s not a lot of smoke and mirrors in here.”
Fact is, if it weren’t for smoke and mirrors, Obama would have no budget plan at all.
The effects of the sequestration order signed by President Obama on March 1 began to be felt in earnest beginning April 1. The $85 billion cut in federal spending through September 30 will affect federal workers’ jobs across a wide range of government departments and will impose deep cutbacks to education, housing and many social programs and services, which are depended on by millions of working-class families.
Over one million federal workers are set to begin unpaid furloughs this month, amounting to pay cuts of anywhere from 20 to 30 percent. Sequestration has also prompted the extension of a pay freeze already in force for federal workers. The cuts will result in the equivalent of 750,000 full-time job losses throughout the economy, according to the Congressional Budget Office. Other projections place the job losses as high as 2 million with the cuts reducing the gross domestic product by 0.6 percent this year.
Even as the US Labor Department announced last week that the number of people applying for jobless benefits had jumped to a four-month high, extended unemployment benefits are being cut by about 11 percent as a result of the sequester. As just one example, 99,000 unemployed workers in Pennsylvania will see their benefits cut by 10.7 percent, while some 2,700 in the state may lose their benefits altogether.
The devastating impact of sequestration appears to be the “new normal,” serving as the model for future budget proposals for both big-business parties. On Wednesday, Barack Obama will formally present his fiscal year 2014 budget, which includes deep cuts to Medicare and other health programs, as well as an attack on the inflation adjustment for Social Security recipients.
Sequestration calls for cuts of $42.7 billion to discretionary defense spending, $28.7 billion in nondefense discretionary spending, $9.9 billion from Medicare, and $4 billion in other mandatory reductions. It is becoming clear that the cutbacks will have a devastating impact on workers and the poorest sections of society, who have already seen a drastic decline in living standards in the wake of the recession.
Nondiscretionary funding for the military is not affected by the sequester, leaving in place the vast military machine of the US, as it continues its occupation of Afghanistan and US officials ratchet up their threats against North Korea. The departments of Defense and Homeland Security have also been allowed some discretion in the implementation of civilian furloughs and other measures.
The director of national intelligence, James Clapper, has also warned against sequester cuts that could hamper national security. “For intelligence, this is not quite like shorter hours for public parks or longer lines at the airports,” he told reporters Friday. “For intelligence, it’s insidious.”
While accommodations are certain to be made for the military-intelligence apparatus of US imperialism, for the vast majority of ordinary Americans in communities across the country, the sequester cutbacks are not negotiable.
Public education will see one of the biggest hits. The National Education Association estimates that about $3 billion will be cut from K-12 education, causing over 30,000 teachers and school faculty to lose their jobs. Well over a million students will feel the effects of sequestration, according to the NEA.
In California alone, the government will cut $87.6 million from primary and secondary schools, potentially putting 10,000 teaching jobs at risk and reducing funds for teaching and staff positions in special education. Some 96,000 low-income students will lose financial aid. A staggering $62.9 million of the cuts are to the budget for students with disabilities.
Head Start, the early childhood education program that provides free medical and dental care, meals and after-school activities, will see a five percent cut in funding for fiscal year 2013. How those cuts are to be implemented will be up to local administrators. According to the Office of Head Start, which administers the program, about 70,000 children across the country will lose access to the program.
Federal funding for Section 8 housing vouchers will be cut by $938 million, six percent below what is needed to maintain assistance to low-income households at current levels. This translates into 140,000 fewer low-income families receiving housing vouchers. Families on waiting lists for vouchers are already being told that they will not be eligible for assistance even if other families leave the program. The Huffington Post reports that the Huntsville, Alabama housing authority will be serving about 300 fewer people due to the cutback.
Some 600,000 low-income women and children served by the Supplemental Nutrition Program for Women, Infants and Children (WIC) are threatened with being thrown off the program. An array of programs providing nutrition assistance to seniors and the poor are feeling the pinch. The Salt Lake Community Action Program is closing its food pantry in Murray, Utah. The Meals on Wheels program in Tarrant County, Texas, which has lost $400,000 in cuts from state and local agencies since 2001, is facing a $100,000 sequester cutback.
Medicare payments to hospitals, doctors and other health care providers are being reduced by two percent across the board. Small community hospitals and clinics that serve large senior populations will carry more of this burden than larger hospital systems. One private practice in Manchester, Connecticut has already informed patients it will no longer be accepting Medicare patients, the Huffington Post reports, a situation that will undoubtedly be repeated at practices nationwide.
Due to a cut to Medicare reimbursement for expensive chemotherapy drugs, cancer clinics across the country have already begun to turn away thousands of Medicare patients, forcing them to seek treatment at hospitals, which may not be able to accommodate them and where care is more expensive.
The Federal Aviation Administration has delayed until mid-June the closing of 149 airport control towers, but still plans to go forward with the plan, leaving pilots to fend for themselves on landing and takeoff at smaller regional airports. In Massachusetts, five municipal airports will lose their towers and controllers as part of the $637 million sequestration cutback.
A $350 million cut to the federal court system could result in up to 2,000 staff being laid off or furloughed. Federal public defenders’ officers, whose budgets were cut by 5.17 percent in February, have been forced to cut another 5.52 percent. The Atlantic reports that the District of Arizona’s public defenders office has laid off 10 employees. Sequestration is also hampering the ability of public defenders to pay for translation services and psychiatric evaluations in their representation of indigent and mentally ill defendants.
The National Institutes of Health (NIH), which finances most medical research in the country, will see forced cuts of 5.1 percent, or $1.5 billion. Federal funding for the NIH has stalled at about $30 billion since 2010, meaning the effects of the sequester cuts amount to a cumulative funding reduction of 11.4 percent.
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OBAMA DEFENDS PLAN TO CUT MEDICARE AND SOCIAL SECURITY
By Andre Damon
9 April 2013
After media reports that the Obama administration plans to slash Medicare and Social Security in its latest budget proposal due to be released Wednesday, government officials have been seeking to diffuse popular opposition to the cuts.
In his weekly radio address Saturday, Obama sought to portray the budget proposal, which slashes $1.2 trillion in spending over the course of ten years, as an unavoidable compromise in the face of intransigent demands by the Republicans. “While it’s not my ideal plan to further reduce the deficit, it’s a compromise I’m willing to accept in order to move beyond a cycle of short-term, crisis-driven decision-making… It includes ideas many Republicans have said they could accept as well.”
The Obama administration’s budget proposal, due to be released on Wednesday, will incorporate all of the spending cuts included in previous “Grand Bargain” proposals, including sharp cuts in Medicare, Social Security, federal worker pensions and other vital programs.
White House officials indicated in a press conference last week that the budget proposal will include $1.2 trillion in spending cuts over ten years, including $400 billion in cuts to Medicare and other health care programs and $130 billion from reducing inflation calculations linked to Social Security payments.
In the course of discussions over the “fiscal cliff” earlier this year, the administration publicly released a proposal that includes many other cuts—such as $35 billion in the “reform” of federal retirement programs, the ending of Saturday delivery for the US postal service, and increased fees for airline travel.
The White House budget will be the basis for further negotiations with Republicans, which will inevitably mean even more cuts.
The Medicare cuts will reportedly include means testing for recipients—a move that would transform it from a universal entitlement to an antipoverty program, in preparation for its gutting and ultimate destruction—and a cigarette tax, a regressive consumption tax. The means testing proposal in particular marks a sharp escalation in the attack on Medicare.
“The budget reflects his priorities within a budget world that is not ideal,” White House press secretary Jay Carney said Friday, when the bill was announced. “It requires compromise, negotiation and a willingness to accept that you won’t get 100 percent of what you want.”
But even while seeking to blame the Republicans for the most draconian elements of his proposal, Obama was unapologetic in his calls for slashing entitlements, a proposal opposed by the overwhelming majority of the population. Obama defended the cuts as a way to strengthen a “rising, thriving middle class,” adding that he is in favor of “tough reforms required to strengthen Medicare for the future.”
Talk of “strengthening” Medicare is the standard Orwellian argument employed by both political parties to justify unpopular cuts.
According to the White House, the budget proposal will contain significantly more cuts than the Democratic-controlled Senate’s budget proposal. The Senate budget, which balances out spending cuts and revenue increases equally, was intended largely as political posturing.
As the Washington Post commented, “The budget request reflects Obama’s stark shift in strategy over the past month, as he has adopted a far more congenial posture toward the opposition.” Obama plans to sit down for dinner with Republicans Wednesday, within hours of the announcement of his budget.
Far from drawing the line at the cuts Obama has already proposed, Democratic Party leaders have indicated that the latest budget would be the stepping-stone toward further concessions to Republican demands. Chris Van Hollen, the ranking Democrat on the House Budget Committee said, “From the Republican perspective, the president’s budget is the starting point for negotiation.”
Republicans responded positively to Obama’s proposal. “The president is showing a little bit of leg here, this is somewhat encouraging,” said South Carolina Republican Lindsey Graham Sunday on NBC’s Meet the Press. He added that Obama has “made a step forward in the entitlement-reform process that would allow a guy like me to begin to talk about flattening the tax code and generating more revenue.”
Publicly, Obama claims to be exchanging cuts to social programs for getting Republicans to agree to new sources of revenues, which the White House claims will come mostly from the wealthy. In reality, the White House proposal includes a variety of regressive taxes and funding measures, including a tax on cigarettes and a measure to block individuals from receiving unemployment insurance and disability payments at the same time.
As the White House has ever more openly come out in favor of cuts to the bedrock social programs, his professional “left” apologists have been mobilized in an attempt to channel popular opposition back behind Obama and the Democratic Party. On Monday the AFL-CIO published a statement urging those who oppose slashing Social Security to sign a petition urging Obama to reconsider its support for the cuts.
Calling the cuts “unconscionable,” the AFL-CIO’s statement concluded, “These cuts are bad policy. And the only way we’re going to stop them is if President Obama and all members of Congress hear that we’re not going to tolerate them.”
The Nation, the mouthpiece of what remains of American liberalism, was reserved in its opposition to the cuts, calling them “wrong economically, and politically.”
All of these forces had endorsed Obama for a second term, even after four years of war and austerity. Their central political function is to do whatever they can to prevent a break from the Democratic Party.
With the formal publication of Obama’s budget this week, Obama’s left apologists will be called on to diffuse the vast political opposition to cuts in Social Security and Medicare. But despite their best efforts, the administration’s assault on the most basic social rights of the US population must inevitably lead to mass opposition and social upheavals.
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U.S. SEQUESTER CUTS TREATMENT FOR THOUSANDS OF CANCER PATIENTS
By Kate Randall
5 April 2013
Cancer clinics across the US have begun to turn away thousands of Medicare patients as a result of the sequestration order signed into law by President Barack Obama on March 1. The action is mainly due to cuts to Medicare reimbursement for expensive chemotherapy drugs, which is making it financially untenable for clinics and oncologists to maintain their operations.
In a joint statement, the Community Oncology Alliance warned: “The sequester cut to cancer drugs threatens viability of community cancer care. In effect, the government is forcing clinics to subsidize Medicare—that is, to make up the difference between what Medicare pays and the actual cost of cancer drugs.”
The sequestration order mandates $85 billion in cuts by the end of this fiscal year to a wide range of government departments and services and will trigger furloughs of a million or more federal employees, as well as a pay freeze. States are already beginning to implement cuts affecting the nearly 4 million long-term unemployed who receive extended benefits funded by the federal government.
The 2 percent cut imposed on Medicare, while a smaller percentage than those targeting other programs, is still estimated to amount to some $11 billion by September 30. As a direct result of the cuts taking effect April 1, thousands of Medicare patients being treated at cancer clinics are now being told they must seek treatment elsewhere, such as in a hospital. Treatment in a hospital setting will be more expensive, and it is unclear whether hospitals will be able to handle the influx of patients.
The Washington Post reported Wednesday that North Shore Hematology Oncology Associates (NSHOA), with six locations in Long Island, New York, decided in a meeting on Tuesday that it will no longer provide services to one-third of its 16,000 Medicare patients. “If we treated the patients receiving the most expensive drugs, we’d be out of business in six months to a year,” NSHOA chief executive Jeff Vacirca told the Post .
The Charleston Cancer Center in South Carolina began informing Medicare patients weeks ago that doctors at the clinic would no longer be able to offer them treatment. It is unclear how many senior cancer patients will be affected nationwide, but the numbers could be in the hundreds of thousands.
The Post notes an analysis by the Center for Cancer and Blood Disorders of Bethesda, Maryland, which estimates that between 50 and 70 percent of the drugs it administers will become “money losers” with the 2 percent sequester cut in effect. Ralph Boccia, the clinic’s director, says about 55 percent of his center’s patients are covered by Medicare.
The dire impact on cancer clinics is a result of the way the sequester cuts are affecting payments to community oncologists for chemotherapy drugs. Medications for seniors are usually covered by Medicare Part D, but because cancer drugs are required to be administered by a physician, they are paid for by Part B, which covers doctors’ visits. Plan B is subject to the 2 percent Medicare sequester cut.
Under Medicare, the federal government typically pays for the average sales price (ASP) of the chemotherapy drugs, plus 6 percent toward the cost of storing and administering the medication. Because oncologists cannot change what they are charged for the drugs by the pharmaceutical companies, they argue that the 2 percent cut must come entirely out of the 6 percent overhead payment, effectively reducing this payment by about one-third.
For the most expensive chemotherapy drugs, reimbursement for cost and overhead through Medicare is already inadequate. While pharmaceutical companies can charge in the tens of thousands of dollars monthly per patient for some cancer drugs, profiting handsomely in the process, there is little oversight on prices for medications that can often mean the difference between life and death.
According to the Community Oncology Alliance: “Since 2008, more than 1,200 community cancer care centers have closed, consolidated, or reported financial problems.” The alliance cites a recent survey that projects that the sequester will force 72 percent of cancer clinics to stop seeing Medicare patients, or to send them to the hospital for treatment.
Medicare patients who are forced out of cancer clinics and are able to obtain treatment in a hospital will most likely see increased costs. A study by the actuarial firm Milliman found that chemotherapy delivered in a hospital setting costs an average of $6,500 more on a yearly basis than if it were done in a community clinic.
The Post notes, “Milliman found that Medicare patients ended up with an average of $650 more in out-of-pocket costs when they were seen only in a hospital setting,” due to patients’ responsibility to cover some of these increased costs. Those unable to come up with the money may be forced to forego care altogether, the end result being increased suffering and deaths from cancers going untreated.
While the impact of the sequester on cancer clinics is visible and will cause immediate hardship for potentially hundreds of thousands of seniors, Medicare payments to all hospitals, doctors and other health care providers were reduced by 2 percent beginning April 1. Private practices with large numbers of Medicare patients will be affected most severely, with the implication that significant numbers of practices will cut back on serving Medicare patients or stop accepting them altogether.
The sequester cuts are being eyed as a testing ground for even deeper cuts to social programs, particularly to Medicare, the Social Security retirement program, and Medicaid, the federal-state health insurance program for the poor. The 10-year budget proposals for both big business parties call for sweeping cuts to Medicare.
The Republicans are openly calling for a voucher plan for Medicare, which would essentially do away with it through privatization. In closed-door meetings with Congressional Republicans, Obama has signaled his agreement with a deal that would impose major increases in Medicare costs for seniors, through combining Medicare Parts A and B, which cover hospital care and doctor visits, respectively.
The sequester cuts are receiving little attention in the media, being accepted as a fait accompli. Meanwhile, jobs and services for millions of people are under threat as the cutbacks begin to take shape. In addition to the federal workers, teachers and others who will see furloughs and layoffs, programs and services dependent upon federal money are being slashed in every state.
Food pantries are closing, young children are being turned away from Head Start, Meals on Wheels deliveries are stopping for many seniors, National Park centers are limiting hours and closing visitor centers, air traffic control towers are being shuttered, research institutions are halting work, housing vouchers are being cut, and work-study jobs and training programs for students and young people are being eliminated.
In a cynical gesture, the White House announced Wednesday that the president would be giving up 5 percent of his $400,000 salary in light of the sequester. The $20,000 reduction is unlikely to win the sympathies of his fellow federal employees. No mention was made of Obama’s other perks of office, which include a $50,000 annual expense account, a $100,000 nontaxable travel account, and $19,000 for entertainment.
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THOUSANDS OF SCIENTISTS PROTEST U.S. CUTS TO MEDICAL RESEARCH
By Nick Barrickman
9 April 2013
Thousands of scientists and researchers marched in Washington, DC Monday as the US government was set to cut seven percent of its $140 billion annual budget for scientific research due to the federal sequester. Up to 15,000 scientists from around the country attended the rally, which was called by the American Association for Cancer Research.
One of the hardest hit areas will be funding meant to support medical research into finding cures for cancer, HIV/AIDS, heart disease, and other life-threatening illnesses. According to Alan Lesner of the American Association for the Advancement of Science (AAAS), agencies such as the National Science Foundation will give out “between 800 and 1,000 fewer research grants” due to the cuts.
Research into cancer, HIV/AIDS, Alzheimer’s and other life-threatening illnesses will be put on hold, Lesner stated, as the cuts were “beginning to deteriorate the quality of American science, and will unquestionably have a dramatic effect on innovation and the economy.”
Some commentators pointed to the threat to scientific research as a whole. “We are putting an entire generation of scientists at risk by the very significant difficulty they see in obtaining support,” said Francis Collins, director of the National Institute of Health (NIH).
Nearly 430,000 research-related jobs across the US depend upon government grants supporting biomedical research. The NIH reported that the nearly $1.5 billion cut to its agency could reduce the workforce by almost 20,000. Since 2010 the agency’s funding has leveled out at $30 billion per year. This has not included the effects of inflation, which, when considered with the sequester, amount to a 11.4 percent erosion in funding during the past three years, effectively reducing the agency’s budget to 2002 levels.
Protesters on Monday gathered outside of the Carnegie Library in Washington, DC to oppose cuts in government-funded research as well as demand increases in the NIH’s budget. Some states, such as Pennsylvania, would see as many as 1,200 jobs and $73 million in grant money lost because of the sequester cuts.
The attacks to scientific research come as both Democratic and Republican parties move to roll back bedrock social programs, such as Social Security and Medicare. An $11 billion cut in Medicare funding due to the sequester has already begun to throw the lives of thousands of senior citizens receiving cancer treatments into peril. Due to the nature of the cuts, all treatments administered by a physician, which fall under Medicare B are to be hit by the two percent cut, meaning many clinics will no longer be reimbursed for the patients they care for.
Last week, the Obama administration announced a $100 million grant to NIH for the mapping of the human brain. Dubbed the Brain Research through Advancing Innovative Neurotechnologies (BRAIN) Initiative, the study is meant to depict the behavior of neurons involved in activities such as learning, memory, and other forms of cognition.
Mainly preoccupied with economic concerns, Obama was quoted saying, “We can’t afford to miss these opportunities while the rest of the world races ahead. We have to seize them. I don’t want the next job-creating discoveries to happen in China or India or Germany. I want them to happen right here.”
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U.S. “SEQUESTER” CUTS SHUT 149 AIR TRAFFIC CONTROL TOWERS
By David Brown
25 March 2013
Around one third of all air traffic control towers in the United States are slated to close April 7 as part of the sequester cuts that a recently passed Senate bill would make permanent.
The cuts would close 149 control towers across the country, imperil safety and significantly reduce the integration of rural areas into the national transport system. Between 750 and 1,100 jobs are to be cut as a result.
As part of the sequester, $1 billion was cut from the Department of Transportation in 2013, with $637 million of this taken from the Federal Aviation Administration. Many of the FAA’s reductions are to come from cutting contracted control tower service at 149 airports, each with fewer than 10,000 commercial takeoffs and landings a year. Without a control tower, planes will still be able to use the airport, but they have to rely on direct radio contact with other pilots.
Control service was added to many of these regional airports to facilitate service to larger airline spokes. In around 190 airports, management of these control towers was contracted out. So far none of the FAA-staffed control towers are being eliminated, but they may face other cuts.
All 15,000 controllers employed by the FAA are facing furlough days, and overnight shifts may be eliminated at an additional 72 control towers. All of these cuts decrease the efficiency and safety of takeoff and landing.
Walter, a director of a regional airport in the Rocky Mountain area, spoke with the World Socialist Web Site about the effects of tower closings.
“When you remove a local tower, it is true that pilots use radar and share the same frequency to communicate. But it is only propaganda to claim there is some sort of redundancy or to make it seem wasteful to have a tower because planes are covered by radar.
“In many cases, especially in the mountainous West, a plane has to be as high as 10,000 feet to be picked up by radar, and the pilots are not seeing anything, they’re just talking to each other. Much of the activity takes place below that ceiling, including ground movements that are watched by the controllers in the tower.”
Even with the smaller craft that frequent these airports, miscommunication can have disastrous consequences. In 1996, confusion at the airport in Quincy, Illinois, which had no control tower, claimed 14 lives. Two planes were preparing for takeoff as another was looking to land, and radio difficulties resulted in a crash.
Walter added, “The whole process [of deciding to close the towers] was fast-tracked. The FAA sent its first letter on March 5 and told communities to write back by March 13. They made the closing announcement on March 22 and now they are going to be shutting the lights by early April.
“All of a sudden they’ve cut out the contract towers. Next on the list are the newer FAA-staffed towers; there’s around 40 of them. They’ve been looking to close these towers for a long time and see the sequester as a golden opportunity.”
The cuts to air traffic control have many similarities to the attack on the postal service and other basic infrastructure. These elementary aspects of efficient communication and safe travel are being sacrificed to the profit demands of the financial elite. The effect on rural areas can be drastic.
“The commercial airlines are already serving fewer small and rural communities, which are less profitable. With less controller service, they are going to be even less willing to serve these areas. These places will lose a critical component for economic development and become even more isolated.”
Without effective integration with the rest of the world, conditions in isolated parts of the country can almost seem like they are going back in time. Air traffic control helps coordinate firefighting and medical evacuation. As service decreases, isolated areas will be left with limited access to the basics of modern life.
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OBAMA BLASTED FOR KILLER AUSTERITY
April 9th, 2013
Democratic groups and representatives all strongly criticized Obama over this past weekend, in public statements and town meetings, for his killer austerity budget plan, due for formal release this week. From the large Los Angeles-area town meeting where a Democratic member of Congress pinned sequestration cuts squarely on Obama, to the large meeting in New York City’s black community where Nero was pronounced a failure, “The One” was getting rightly slammed.
Obama’s budget by all accounts proposes at least three kinds of new cuts (over and above sequestration) which are potential killers of Americans. First, the “chained”, or “chainsaw CPI” to progressively reduce seniors’ and disability benefits under Social Security, year after year, although they already replace less than 40% of working lifetime-average wages and although employer pensions and 401K “profits” are disappearing. Second, cuts in Medicare through increased premiums, surcharges, and copays on Part B and D supplement plans. Third, cuts in the TRICARE medical benefits of almost all serving military and large numbers of veterans. This is on top of the Obamacare cuts to cancer treatment clinics which have taken effect and “are causing a panic” and a nationwide mobilization of patient and treatments groups (see full report in separate slug). And it is on top of the cuts in long-term unemployment benefits which were fruit of Obama’s 2012 “negotiations” with House GOP, and which continue to ratchet in.
The AFL-CIO’s Damon Silver sent out e-mail alert calling Obama’s attack on Social Security “unprecedented for a Democratic president. It will propose a cut to Social Security benefits for seniors, veterans and people with disabilities. It appears the proposed cut will take the form of “chained” CPI—a discredited way of calculating annual cost-of-living increases that does not keep up with actual costs, eating into benefits.
“But there’s more. The president’s budget proposal also would require middle-class seniors—people who make $47,000 a year and more—to pay higher Medicare premiums. These cuts are bad policy. And the only way we’re going to stop them is if President Obama and all members of Congress hear that we’re not going to tolerate them.” Labor unions will be involved in a protest rally in Washington, D.C. tomorrow.
New America Foundation’s Michael Lind has a column on Salon called “President Obama making a historic mistake on Social Security.” Robert Kuttner on Huffington Post says Obama has picked the worst time, a downturn in employment as the time to attack Social Security and Medicare, and calls his proposals “insane.”
Progressive Caucus co-chair Rep. Raul Grijalva followed up his joint statement with Rep. Keith Ellison on Friday, and said on a Sunday talk show that he would “show the White House that this is a non-starter in the House.” The President may “find himself behind party lines” with extremely regressive cuts, Grijalva said, invoking a military image for the anti-constituency policies of this murderous president.
