In what can now be considered traditional fashion, the Senate will continue to operate for the third straight year without a budget resolution controlling its spending limits. Meanwhile the government is on track to run a $1.2 trillion deficit this year, states are struggling to meet budget gaps due to a stagnate economy, and unemployment remains at 8.1 percent. Hopefully the Senate will soon follow the president and the House’s leads by fulfilling their constitutional duty and passing an annual budget.

The Five Budget Resolutions

President Obama’s Budget Proposal – 0 Yay – 99 Nay – 1 Not Voting

House Budget Committee Chairman Paul Ryan’s Proposal – 41 Yay – 58 Nay – 1 Not Voting

Senator Rand Paul’s Budget Proposal –16 Yay – 83 Yay – 1 Not Voting

Senator Pat Toomey’s Budget Proposal – 42 Yay – 57 Nay – 1 Not Voting

Senator Mike Lee’s Budget Proposal – 17 Yay – 82 Nay – 1 Not VotingBA

Now $16 billion –instead of the $9 billion predicted in January—California’s deficit poses major problems for the state. While borrowing has yet to be impeded by a lack of confidence in the state’s ability to pay off its debt, the massive deficit means lawmakers must make more cuts than originally planned to control the growing debt. The problem is that California’s Governor Jerry Brown would rather increase taxes and cut less than needed to bring the deficit down.

In November a ballot initiative will determine if the state will raise sales taxes a quarter of a point, up to 7.5 percent, and raise the marginal income tax on the rich to 13.3 percent from the already-high 10 percent. Ranking dead last in The Chief Executive’s ranking of business-friendly states, it is unlikely that the new taxes in November will encourage more business to locate in California.

While the tax increases stand to raise $9 billion in the upcoming budget year, this still leaves the state $7 billion in debt. If it were not obvious before that California was not in aposition to tax its way out of this mess, the shortfall after raising taxesshould make it very apparent. The only real solution for California is the same solution for spending in Congress: cut spending and implement a plan for long-term deficit and debt reduction. Until a plan is put in place to keep deficits from reaching this size again, California can increase its taxes all it wants and still not find its way out of debt.BA

The unemployment rate, remaining steady at 8.1 percent (around 12.5 million Americans), has actually slowly dropped due to a large portion of those looking for work giving up. Meanwhile 18 percent of Americans foresee a worsening of their household’s finances, and only 20 percent of the public called the economy “good.” Realizing that Washington—Congress specifically—would need to act in order to improve the situation, many top business executives and CEOs have begun courting lawmakers.

The relationship between the two groups has always been important since many of the top executives are responsible for the private sector’s expansion. Now, with the economy and country headed south though, many from the private sector have elected to join the discussion and push Congress to pass meaningful deficit reduction plans, maintain tax cuts, and put in place a long term plan for the national debt. The display conveys the need for real action on spending in Washington, or as Committee for a Responsible Federal Budget’s President Maya MacGuineas said it: “an acknowledgement of the political reality that to get something done everyone is going to have to come together and get out of their boxes.”

While the above poll and involvement from the private sector highlight the need for action on the deficit and debt, Senate Budget Committee Chairman Kent Conrad has already stated that no budget will be passed from his committee this year, making it now three years since the Senate has fulfilled their Constitutional duty to pass a budget. While the Senate does nothing, expiring tax cuts edge closer, the debt and deficit rise, and 8.1 percent of America is without work – and politics is the only reason.BA

4. Political Cartoon: EU Growth

3. “After just one term in office, French President Nicolas Sarkozy lost his re-election bid because he was unable to fix his nation’s economy. Or as Obama put it, ‘Uh-oh.’” –Jimmy Fallon

2. ”Michele Bachamnn has announced she is now also a citizen of Switzerland. What better way to protest a president you think is socialist than become a citizen of a country with a socialist philosophy and a mandated health care plan.” –Jay Leno

1. “New predictions out today claim 42 percent of Americans will be obese by the year 2030. They say the only way to stop that is for the government to step in. Oh yeah, when it comes to trimming the fat and tightening your belt, what better way than the U.S. government?” –Jay LenoBA

While the bill moves to the Senate, President Obama announced this week that he would veto any change in the cuts that would substitute defense cuts agreed to in the bipartisan Budget Control Act. Democrats in the Senate also have stated that revisions to the previously agreed upon cuts would not clear the Senate unless they were part of a “balanced approach”. As we discussed previously, defense spending makes up 20 percent of federal spending; it takes the world’s other top 17 defense-spending countries to equal what the U.S. spends on defense.

As we look to reduce the deficit and national debt, all expenditures must remain on the table. Whether that be defense spending, growing entitlement programs, or discretionary spending. If Congress is going to be serious about cutting the deficit, they must consider all the options, not just the ones they want.BA

None of the measures were accompanied with spending cuts or “pay-fors,” meaning they could have a sizeable impact upon the deficit and national debt. With the federal deficit for 2012 on pace to exceed $1 trillion, adding more programs is sure to push that number higher.

Job creation is a priority for all leaders in Washington, and the president should be commended for his active role. However businesses are slow to invest due to lack of certainty over our nation’s fiscal future. Going further in debt has held our economy back and will continue to do so unless spending is addressed.

With annual revenue for the country at $2.5 trillion we are sure that Congress and the president can find programs to cut in order to offset these proposed programs. Make sure to check out the measures here, and take a look below for a small list of programs and expenditures we think the president and Congress could stand to cut now to pay for the measures proposed.

1.     $14.5 billion for duplicative job training programs

2.     Conferences for the GSA

3.     Grants that are wasted by state and local governments

4.     Public relations for the IRS

5.     Unnecessary researchBA

I hate to criticize Sen. Feingold, he was a champion for humanitarian causes during his time in office, a passion we share. He also was a fierce proponent for eliminating wasteful spending (I know, I was surprised too) and regularly spoke out on spending programs that made no sense.

But going after Rep. Pelosi for being willing to address the largest driver of our debt, entitlements, smacks of partisan politics at its worst. We can’t afford to be blind supporters of entitlements simply because they have been there for so long. The path to a workable solution will require Democrats and Republicans to hammer out a compromise of some sort. Criticizing Minority Leader Pelosi for being willing to move, even an inch, towards that compromise is unhelpful at best and devastatingly partisan at worse.

If members of Congress are going to be attacked from members of their own party, how can they ever hope to reach an agreement across the aisle? So Sen. Feingold, I ask you to reconsider slamming the willing.BA

Politico reports the economy added 115,00 jobs in April and the unemployment rate was 8.1 percent.

The Associated Press looks at lawmakers’ hypocrisy over cutting spending.

The Washington Examiner says House investigators are looking into whether the General Services Administration offered kickbacks to contractors.

The Hill and Politico report House negotiators are close to a deal extending authorization for the Export-Import Bank, which provides subsidies to corporations.

According to The Washington Times, Social Security judges are losing one tool important to detecting fraud.

The Washington Free Beacon says U.S. taxpayers are facing the largest tax increase since World War II.

On the opinion pages: Mohamed A. El-Erian says Congress can’t delay efforts to get the debt and deficit under control.

BA

Politico reports House Republican freshmen may be waffling on their opposition to earmarks.

The Chicago Tribune looks at the number of Americans who have played an online debt reduction “game” and what it says about their willingness to change certain programs.

According to The Washington Post, the Treasury Department will announce today it plans to start issuing a new type of federal debt, reflecting the “government’s desire to avoid unexpected disruptions in its ability to borrow.”

Politico says 2012 is the year of the “wild” economy.

The Washington Free Beacon says money from the 2009 stimulus went to companies that ship jobs overseas.

On the opinion pages: Chuck Blahous and James Capretta say the 2010 health care bill will not cut the deficit while The Washington Post urges Congress to pass Postal Service reform.

BA

According to Fox News, when given two choices, 38% of registered voters say President Obama’s “Buffett Rule” proposal is a serious proposal that will reduce the budget deficit. 54% say it is an election year gimmick to avoid cutting government spending.

According to Rasmussen, 50% of likely voters think society would become less fair if the government got more involved in regulating the economy. Only 22% believe society would become more fair if there was greater government regulation. 21% feel things would remain about the same.

According to Fox News, when given four choices, 35% of registered voters would describe the economy as “in recession, things could get worse”; 48% would say “still in recession, but things could get better”; 9% would say the “recession is over, but another could be coming”; and 6% say the recession is over and the economy is recovering.

 BA