Posts Tagged ‘overspending’

ICYMI: Democrats Avoiding Spending Fights

Monday, July 12th, 2010

In today’s Roll Call, Kathleen Hunter writes that, with mid-term elections approaching, Congress continues to play politics with serious fiscal issues.

Democrats, with a few exceptions, are the only ones submitting House earmark requests this year, which Republicans hope will strengthen their hand to portray the majority party as oblivious to deficit concerns.

The circumstances surrounding this year’s appropriations debate are unprecedented. Republicans, minus a handful of rogue lawmakers, are adhering to a self-imposed one-year ban on all earmark requests. That puts Democrats — who had hoped to snag the high ground on earmarks when they adopted a permanent ban on Congressionally directed spending to for-profit companies — in a potentially vulnerable position.

Republicans are eager to use Democrats’ earmark requests and spending proposals to try to paint the majority as fiscally irresponsible. Although Democrats dismiss the GOP earmark ban as an election-year gimmick, the fact that the Democrats would have almost exclusive ownership over earmarks during debate on this year’s bills is just one more reason they are treading carefully.

Democratic leaders, faced with spending fatigue within their moderate ranks, wrestled with whether to adopt a budget resolution, before settling on a one-year “budget-enforcement” document, which they only narrowly adopted before leaving town for the July Fourth recess.

Click here to read the entire article.

Wednesday Waste: Washington offers “Free* with Purchase!”

Wednesday, July 7th, 2010

*Unless you’re a U.S. Taxpayer.

The same trillion-dollar ‘stimulus’ bill that gave us “Cash for Clunkers,” will soon present its “Chargers for Chevys” program.

As with “Cash for Clunkers,” in which Washington required American taxpayers to give other people $3,500 to $4,500 to buy nicer, newer, more energy-efficient cars, “Chargers for Chevys” will require American taxpayers to supply free* (*$2,000) home-electric charging stations for the first 4,400 people lucky enough to afford the new Chevrolet Volt (which the company plans to unveil in October).

Also like the “Clunkers” program, any boost from “Chargers” is likely to be temporary at best, and unlikely to benefit anyone beyond car dealers, a select few new-car buyers — and in this case, Chevy.

Beyond the obvious concerns of wasteful spending, “Chargers” calls into question whether Washington should be in the business of subsidizing a particular industry – or the buyers of a specific brand of product –  essentially picking marketplace winners and losers.

What is not in question:  Washington “stimulus” deals are not giving Americans what we need — real, sustainable economic growth that produces real, sustainable American jobs.

Spending Alert

ICYMI: “The Government Pay Bonus”

Tuesday, July 6th, 2010

In today’s Wall Street Journal, Andrew Biggs and Jason Richwine write that it takes private workers 13.5 months to earn what federal workers make in 12.

Pay cuts, layoffs and the highest unemployment rates in decades have reignited a debate over the relative treatment of public and private workers. USA Today reported in March that federal workers earn substantially higher wages than private sector employees who work the same types of jobs.

The federal wage premium for workers who have the same education and experience stands at 24.

Even using all the standard controls—including race and gender, full- or part-time work, firm size, marital status, region, residence in a city or suburb, and more—the federal wage premium does not disappear. It stubbornly hovers around 12%, meaning private employees must work 13½ months to earn what comparable federal workers make in 12.

Most academic studies dating back to the 1970s have found similar pay differences. In addition to the wage premium, federal workers enjoy more generous fringe benefits than do private workers. For instance, federal workers receive a defined benefit pension with benefit levels comparable to those from private 401(k) plans, except that federal workers contribute only 0.8% of pay and are not subject to any market risk. They also receive employer matches to the defined contribution Thrift Savings Plan that significantly exceed the typical private employer match.

Federal employment also carries significant nonfinancial benefits—in particular that layoffs and firings are much rarer. If you think these aspects of federal employment lack value, ask any private employee who is now looking for work. A federal pay premium is unfair both to private workers, who receive less than their government peers, and to taxpayers who must cover the difference. Given our 2.7 million-strong federal work force, the government effectively overbills Americans by almost $40 billion every year just on labor costs.

Click here to read the full column.

A bipartisan choir of concern about overspending

Tuesday, June 29th, 2010

Month after month, in poll after poll, Americans identify out-of-control government spending and debt among their greatest concerns; Washington may finally be ready to listen.

In a Roll Call piece yesterday several lawmakers admitted they are wary of new spending measures that aren’t offset. Rep. Gerald Connolly (D-VA) explained, “[W]e’re in a recovery … So now we do need to have a higher standard when we call for new spending. And that higher standard has to include, “What’s the offset?”’ Connolly’s colleague, Rep. Earl Pomeroy (D-ND) said simply, “we need pay-fors.”

In a speech in Washington last week, Chairman of the Joint Chiefs of Staff Mike Mullen warned: “I’ve said it several times publicly –I think the biggest threat we have to our national security is our debt.”

Federal overspending is hurting economic growth now and guarantees higher taxes, interest rates, and inflation – combined with fewer job opportunities, among other repercussions.

Many European leaders, as we noted yesterday and last week, have already begun reforms to address their nation’s unsustainable spending. It’s time for leaders in Washington to act like leaders, and do the same.

Did you get your money’s worth from Congress last week? (June 21-27)

Monday, June 28th, 2010

What you paid
Last week, taxpayers spent roughly $107 million on Congress.

Salaries of Members of Congress and their allowances/week:

Speaker of the House: $223,500/52 = $4,299
House and Senate Majority and Minority Leaders: ($193,400/52) x 4 = $14,877
Other Representatives and Senators: ($174,000/52) x 530 = $1,773,462
Allowance for staff salaries and misc
: ($1,500,000/52) x 535 = $15,432,692

Non-salary money allocated for Congress: $4.656 billion/52 = $89,538,462

What you got
The House voted on 13 bills or resolutions which will cost about $21 million (all costs over five years unless otherwise noted):

Iran Sanctions, Accountability, and Divestment Act. COST: $10 MILLION

Recognizing the 50th anniversary of the conclusion of the United States-Japan Treaty of Mutual Cooperation and Security. COST: $0

Democracy is Strengthened by Casting Light on Spending in Elections Act or the DISCLOSE Act. COST: $10 MILLION

Recognizing the important role that fathers play in the lives of their children and designating 2010 as the Year of the Father. COST: $0

Supporting the goals and ideals of National Hurricane Preparedness Week. COST: $0

Calling Card Consumer Protection Act. COST: $1 MILLION

To give subpoena power to the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. COST: $0

Recognizing the significance of National Caribbean-American Heritage Month.

Recognizing National Homeownership Month. COST: $0

To require the Treasury Secretary make a certification when making purchases under the Small Business Lending Fund Program. COST: $0

Supporting the goals and ideals of High-Performance Building Week. COST: $0

Recognizing the historical significance of Juneteenth Independence Day. COST: $0

Supporting National Mens Health Week. COST: $0

The Senate also passed the Iran Sanctions, Accountability, and Divestment Act.

The Senate leadership pulled from consideration a $100 billion package for unemployment benefits and aid to states. The chamber also confirmed Marc T. Treadwell to be U.S. District Judge for the Middle District of Georgia and Mark A. Goldsmith to be U.S. District Judge for the Eastern District of Michigan.


State news roundup

Thursday, June 24th, 2010

Here is our weekly look at some of this week’s most interesting, and consequential, budget- and economy-related issues in the 50 states:

The Economist takes a look at how the fiscal crises in the U.S. states are like the situation in Greece. The magazine concludes the analogy is a little overblown, but still says the nation’s capitals have plenty of problems.

Time this week takes a deep dive into the fiscal state of the states. It discussed taxes, spending, and the pension crisis and is a must read for anyone who thinks the fiscal crisis is contained to the federal government.

As Washington debates sending more stimulus money to the states, The Washington Times wonders whether this money is helping, or just delaying, the much-needed fiscal reform that needs to happen in state capitals. Evidence the answer is likely the latter: 30 states have passed budgets that require money from Congress in order to be in balance. (The Wall Street Journal reported Wednesday on the same issue.)

The Denver Post reports Colorado will start its next budget year — which begins in July – $72 million in the hole.

Some good news from The New York Times: states are starting to tackle the shortfalls in the pension system. Some states, like New Jersey, are cutting pensions for future hires while others, like Colorado, are cutting annual benefit increases.

Why are states and local governments in such trouble?  A little line in this Washington Post story tells us why: obligations by state and local governments have DOUBLED in the past 10 years.

Wednesday Waste: IN installs “green” trash cans at $4K a pop

Wednesday, June 23rd, 2010

Bloomington, Indiana has installed 10 solar-powered environmentally friendly self-compacting trash bins.  But going green wasn’t cheap; the total tab of the so-called “economic stimulus” project was $40,000.

Some residents have mistaken the trashcans for mailboxes; many continue to use traditional trashcans. One Bloomington, Indiana resident’s comments characterized the purchase well: “That’s a really expensive garbage can.”

Unfortunately, this is another example of a costly stimulus project that has done absolutely nothing to boost job creation.  The $40,000 worth of “green” trashcans may help reduce the city’s carbon footprint, but not its 10 percent unemployment rate.

While intentions of good environmental stewardship are commendable, spending tens of thousands on new trash cans seems far from responsible when so many Americans are out of work and our national debt spirals out of control.  It’s time to stop wasting taxpayers’ “green”.

Spending Alert

Just the Facts: Deficit Commission Member Alice Rivlin

Wednesday, June 23rd, 2010

Alice Rivlin was the first director of the Congressional Budget Office, the first female director of the Office of Management and Budget (serving under former President Bill Clinton), and has served as a vice chair of the Federal Reserve’s Board of Governors. Rivlin is currently a senior fellow at the Brookings Institution.

One thing clearly on Rivlin’s mind, as evidenced by her Brookings blog post cheering the creation of the deficit commission, is how to deal with entitlements. She recently told CNBC she favors raising the age at which workers can begin receiving social security and has suggested making reforms to the ways in which entitlement benefits are calculated.

In her interview with CNBC, Rivlin said income tax rates could be kept where they are, or even lowered, if lawmakers were wiling to get rid of “exclusions” in the code. She called the current tax system “unfair.” (We should note Rivlin was at the White House — as deputy director of the OMB — when President Clinton’s 1993 tax increases on income, gas, and Social Security benefits taxes went through.)

Rivlin is the author of the 2004 Brookings-published book Restoring Fiscal Sanity. In a 2005 paper of the same name Rivlin, on page 113, discusses a value-added tax as a good possibility for raising revenue. She also advocates for a carbon tax.

Krugman vs. Greenspan

Friday, June 18th, 2010

If you thought last night’s down-to-the-wire Celtics-Lakers battle was exciting, we’ve got a grudge match for you: Krugman versus Greenspan.

In this morning’s New York Times columnist Paul Krugman argues lawmakers — in Europe, and in the U.S. — should ignore “deficit hawks.” He calls for more spending and says plans to cut spending remind him of “1937, when F.D.R.’s premature attempt to balance the budget helped plunge a recovering economy back into severe recession.”

Over at The Wall Street Journal former Federal Reserve Chairman Alan Greenspan, in a timely and direct answer to Krugman’s analysis says, “I believe the fears of budget contraction inducing a renewed decline of economic activity are misplaced.” Greenspan says the U.S. is much closer to Greece than anyone wants to acknowledge.

Greenspan acknowledges common effects of high budget deficits — inflation and long-term interest rates — are low despite buckets of red ink, but warns the U.S. not to grow complacent just because these indicators are low. Greenspan says Americans should be concerned because the “budget constraints of the past are missing.”

Greenspan is — at the very least — right on that account. Federal spending per household has ballooned from around $20,000 in the 1990s to around $30,000 today.  That’s a 50 percent increase in just a decade.

If the type of spending Krugman advocates worked shouldn’t the U.S. economy be sailing along?

Who do you think is right? Krugman or Greenspan?

In Case You Missed It: European Central Bank: cut spending

Friday, June 18th, 2010

In today’s New York Times, Jack Ewing reports that the European Central Bank told European governments to cut their budgets to stimulate their economies:

“Less government spending will equal more economic growth, the European Central Bank asserted Thursday in a report, in an effort to keep up the pressure on less-troubled countries like Germany to cut their budgets.”

“Previous budget-cutting by countries including Ireland, the Netherlands and Finland led to faster growth fairly quickly, according to an analysis in the central bank’s monthly bulletin for June that appeared to reflect the thinking of members of the bank’s executive board.”

“In recent weeks the European Central Bank president, Jean-Claude Trichet, as well as presidents of national central banks have been urging governments — which only months ago were starting cash-for-clunkers programs and other costly attempts to stimulate growth — to move in the opposite direction.”

“’Sustainable growth is not possible without healthy public finances,’ the Bank of Finland governor, Erkki Liikanen, said Thursday in a statement that echoed Mr. Trichet and other central bank policy makers. While cuts in government spending might temporarily slow growth, Mr. Liikanen said, ’the longer-term impact will be positive.’”

“The central bank cited several academic studies to justify the counterintuitive claim that fiscal austerity would help Europe grow more quickly. ’Although fiscal consolidation may imply costs in terms of lower economic growth in the short run,’ the report said, ‘the longer-run beneficial effects of fiscal consolidation are undisputed.’”

The European Central Bank’s report only confirms what we’ve been saying – in order to get the economy back on track, governments must reduce spending.  During these troubled economic times, the American people have tightened their belts in order to get their fiscal houses in order.  Government leaders need to do the same.

Please click here to read the entire New York Times article.