The Associated Press, Bloomberg (here too) The Hill, The New York Times, Politico, The Wall Street Journal and The Washington Post all have roundups of President Obama’s State of the Union address last night. Politico notes the president mentioned his deficit commission.

CBS reveals five myths about Social Security.

Roll Call updates readers on negotiations over a plan to extend the 2011 payroll tax cut for a full year.

Politico reports Democrats on the Senate Budget Committee plan to mark up a budget this year.

Politico also says some Republicans are worried the party doesn’t have a broad enough legislative agenda for the year.

Fox News reveals that hundreds of House and Senate staffers have unpaid tax bills from 2010.

Gallup says Americans’ financial worries are as profound as they were during the 1992 election, another year in which the country was struggling to recover from a recession. Meanwhile, CNBC reports Americans are cutting their debt faster than their counterparts in other countries.

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In the absence of any progress from the supercommittee, Erskine Bowles, a former co-chair of the deficit commission and chief of staff in the Clinton administration, produced his own plan that would reduce the deficit by $2.6 trillion over 10 years. Bowles’s plan is intended to draw a compromise between the positions of Republicans and Democrats on the committee.

Politico explains some of the specifics:

Over the course of the next decade, the new Bowles proposal would raise $800 billion in revenue, cut $600 billion from health care programs, slash annual discretionary spending by $300 billion, save $400 billion in interest payments because of the other cuts, and reap $200 billion from changes to the way the consumer price index is calculated, he told the members of the supercommittee.

While it’s less than the $1.3 trillion supercommittee Democrats sought in their initial offer to Republicans, the $800 billion in revenue could require hiking taxes on some Americans.

Delivering remarks at the supercommittee’s public meeting yesterday, Bowles issued a stern assessment of the panel. “I have great respect for each of you individually, but collectively I’m worried you’re going to fail — fail the country.”

And he’s hardly the only one with that sense. That has become the prevailing sentiment on the likelihood of committee’s to reach an agreement. Sen. Jeff Sessions remarked, “I am concerned that they might reach only a minimal agreement or no agreement at all. Dams sometimes break, but it doesn’t look good.” Also testifying in front of the supercommittee, The New York Times reports former Senator Alan Simpson warned that if members were to bend to pressure from outside groups, “we haven’t got a prayer, and neither have you.”

It’s hard not to be skeptical the supercommittee will produce a serious plan. Of course, we all want to be proved wrong. We all want to see the country back on the road to recovery. That’s why it’s so important the committee realizes what’s at stake. We’ve placed billboards in Times Square and Washington D.C. urging the members to keep their promise and reminding them that we’re all watching. We’ll shortly see whether they will answer the country’s call for fiscal sanity.BA

An interest rate increase could have a significant affect on our nation’s finances and suggests that lawmakers are working off conservative estimates of our future economic standing.

The Hill reports:

Lawmakers are worried that uncertainty over a national default and concern over deficit spending could swell interest rates and cost the government over a trillion dollars in the next decade.

The wild card of interest rates has added a wrinkle in the debate over how much to slash spending and raise taxes to reduce the long-term national debt.

And the concern over interest rates is not contained to one party – the alarms are being sounded across the aisle.

The Hill continues:

“If interest rates go up 1 percent, that adds $1.3 trillion to the debt over the next 10 years,” said Sen. Kent Conrad (D-N.D.), chairman of the Senate Budget Committee. “Anybody that thinks somehow those concerned over the deficit and debt [are participating in] some kind of green-eyeshade exercise — no.”

Sen. Rob Portman (R-Ohio), who served as White House budget director under former President George W. Bush, shares Conrad’s worry.

“It’s a big concern. Think about it. A 1 percent increase in interest rates means more than $100 billion more in deficit spending,” Portman said. “The lack of confidence in the ability of Washington to deal with our historic deficits and debts [means] that investors could ask for a higher rate of return to invest in our country.”

This is just further evidence that we must act now to control our debt and deficit. The country’s finances are too volatile to allow Congress to continue to play partisan politics with our economic future. Decisive action from lawmakers is not only good for the nation’s economy, it’s good for their careers as well. As our poll shows, more than half (54%) of all voters would be more likely to vote for a Member of Congress who voted to raise the debt ceiling if significant spending cuts were also put in place.

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Treasury Secretary Timothy Geithner maintains that these measures can only be sustained until August 2^nd at which point the U.S. runs the risk of defaulting on it financial obligations.

Today, Fitch Ratings warned it would consider downgrading the United States’ debt rating if Congress is unable to reach an agreement on the limit by the Treasury Department’s deadline. According to The Wall Street Journal, the head of the ratings agency cautioned that “failure to raise the debt ceiling in time would imply a crisis of governance.” The warning from Fitch echoed a similar alert from Moody’s last week that the agency could perform a review of the country’s rating as early as July.

Meanwhile, ratings agencies aren’t the only ones raising a red flag. Officials in China are also sounding off on the debt limit struggle. Reuters reports:

Li Daokui, an adviser to the People’s Bank of China, said a default could undermine the U.S. dollar, and Beijing needed to dissuade Washington from pursuing this course of action.

“I think there is a risk that the U.S. debt default may happen,” Li told reporters on the sidelines of a forum in Beijing. “The result will be very serious and I really hope that they would stop playing with fire.”

China is the largest foreign creditor to the United States, holding more than $1 trillion in Treasury debt as of March, U.S. data shows, so its concerns carry considerable weight in Washington.

Despite all this, lawmakers continue to play partisan politics on the issue. The House recently held a “clean” debt ceiling vote – a vote to raise the limit without spending cuts – knowing it would fail. Now the Senate appears poised to do the same.

At a time when American families are struggling, no one is impressed with Washington’s political gamesmanship. If lawmakers could take a cue from many of their constituents and learn to budget and spend responsibly, we could avoid ever discussing the debt limit again.

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Across the nation, newspapers’ editorials were largely critical of the budget, noting it failed to address many of the nation’s greatest fiscal challenges. A notable exception was The New York Times, which called the budget “encouraging.” However, it cautioned that “Obama’s budget is most definitely not…a blueprint for dealing with the real long-term problems…. Rather, it defers those critical issues, in hopes, we assume, that both the economy and the political environment will improve in the future.”

The Washington Post: “President Obama’s budget kicks the hard choices further down the road”

“The president punted. Having been given the chance, the cover and the push by the fiscal commission he created to take bold steps to raise revenue and curb entitlement spending, President Obama, in his fiscal 2012 budget proposal, chose instead to duck.”

USA Today: “Our view: Obama’s budget ducks tough choices”
“President Obama likes to talk about those ‘Sputnik moments’ when the nation rises to difficult challenges…. On Monday, he had a chance to turn his federal budget proposal into his own such moment. He whiffed.”

LA Times: “Obama’s overly tame budget”

“The proposal was a remarkably tame response to Washington’s fiscal problems, not the bold statement about belt-tightening that the White House had suggested was coming. Yet the biggest shortcoming is that it all but ignored the most important long-term financial challenge, which is the growing cost of entitlements such as Medicare and Medicaid.”

Investor’s Business Daily: “Editorial: Obama’s Gutless Budget Proposal”

“The White House’s new budget is far worse than merely bad. By not attacking the underlying cause of our debt explosion and by raising taxes, it will lead inevitably to a weaker economy and perhaps even default.”

The Wall Street Journal: “The Cee Lo Green Budget”

“This $3.73 trillion budget does a Cee Lo Green (“Forget You,” as cleaned up for the Grammys) to the voter mandate in November to control spending. [I]t ignores almost entirely the recommendations of Mr. Obama’s own deficit commission. No wonder the commission’s Democratic co-chairman, Erskine Bowles, said Monday that this budget goes ‘nowhere near where they will have to go to resolve our fiscal nightmare.’ And he’s an ally.”

Meanwhile, there is still a fight brewing on the current-year spending level as Congress failed to pass a budget last year, and the continuing resolution (or “CR”) expires on March 4. This week, the House will consider $100 billion in cuts proposed by Republicans. Reuters and The Hill cover the story.

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The budget deficit now represents 9.8 percent of the U.S. economy, or a towering $1.48 trillion for the current fiscal year, according to the latest estimate by the nonpartisan Congressional Budget Office.

“The [President’s budget proposal] will show a very serious path of deficit reduction,” [White House Office of Management and Budget Director Jack] Lew said in an interview.

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Obama is under pressure to make deep cuts in government spending from Republicans, who have greater strength in the Senate and control of the House of Representatives after winning big in November elections following a campaign built largely around fiscal austerity.

Obama announced last week he would propose a five-year freeze in non-security discretionary spending in his new budget that will lower the deficit by $400 billion over 10 years.

The president’s deficit commission, which delivered its report in December, sought much more dramatic reductions in spending as well as a shakeup in the Social Security retirement program and a tax code overhaul.

“There definitely will be items that are familiar from the deficit commission” in the budget…. There’s not going to be a question of not putting a budget out there with tough choices and tough cuts,” Lew said.

We say, it’s about time. Stay tuned!

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Cartoon: Debt-reduction commission

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“President Obama has reached a deal with Republicans to extend the Bush tax cuts, in exchange for extending jobless benefits. Republicans in Congress say they’re thrilled with the tax cuts, while Democrats leaving Congress say they’re thrilled with the jobless benefits.” – Jimmy Fallon

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“Obama was going to have a meeting with Afghan President Karzai about the country’s corruption, incompetence, and the wasting of American tax dollars. And that’s just what Karzai was going to lecture Obama about.” – Jay Leno

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“Because of a printing error, a billion new $100 bills have to be destroyed. They’re going to burn $100 billion dollars — just like they did with the last stimulus program.” – Jay Leno

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Cheat Sheet: Fiscal Commission releases final proposal

What happened in Ireland?

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Gretchen Hamel, Public Notice’s Executive Director, stated:

“Pass or fail, the Commission’s report is an historic step toward critical reform. I may not agree with every provision – clearly, the Commissioners themselves don’t agree with every provision – but the fact that they were able to work together, in a bi-partisan way, to propose real, significant spending reforms should be considered an enormous win in-and-of itself.

Now it’s Congress’ and the Administration’s turn. No one is required to act – or even to debate – the findings of the Commission’s report. But failing to do so would be inexcusable. Washington has been punting on dealing with its unsustainable spending growth for decades. The time for excuses has passed; the economic and fiscal crisis is today at our doorstep.

“It’s time for every American to demand our elected representatives do what we sent them there to do: return fiscal sanity to Washington before it’s too late.

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Other lawmakers are starting to weigh in on the Commission’s proposals. Sen. Jim DeMint (R-SC) said he is “intrigue[d]” by the plan, and spoke positively about its proposals for tax reform. Commissioner Sen. Kent Conrad (D-ND) has encouraged the President to weigh in on the Commission’s proposals before the vote.

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