Yesterday, House Budget Committee Chairman Paul Ryan released the House’s FY2013 budget. The Chairman’s budget includes spending cuts in the short term, but more importantly, addresses the unsustainable growth of entitlements in the long term. It is a budget that takes our economic problems seriously – something few in Washington are willing to do.

Though Ryan’s plan is a step in the right direction, producing a budget is arguably the easiest step in the process of tackling our economic problems. Rep. Ryan’s budget will surely draw vehement opposition. But we can all hope it becomes a proposal that brings people to the table and sparks an honest conversation on the nation’s economic reality. In the end, the real proof of Congress’ commitment to serious stewardship of our economy will be whether it makes the necessary reforms.

Our problems are profound. Millions of people around the country rely on the government for healthcare assistance. Yet these programs are driving our country deep into debt and will eventually simply run out of money. It’s time for Washington to work together and propose solutions that preserve these important programs, yet allows the United States to return to a firm financial footing. This is the great challenge facing our generation, and the chairman’s budget is a serious blueprint for tackling it.

I welcome any serious effort to address our current economic troubles, from Democrats or Republicans. This plan is an important part of the ongoing conversation about our budget woes, but we still have a long way to go before we have our financial house in order.BA

Recently governments around the world, including China’s, have been quick to criticize Washington’s handling of the economic crisis and the years of fiscal irresponsibility that have put us in this position.  While they have good reason to do so, many countries may want to take a look within their own borders before starting to point fingers. And this includes China.

Gordon Chang on The Daily Beast explains:

Despite all the apocalyptic pronouncements about America’s budget problems, the reality is that the U.S. has a higher credit rating than China and, unlike Beijing, has never repudiated its sovereign debt. More important, the People’s Republic has been understating its debt for years to avoid global attention and criticism.

Indeed, China claims its debt-to-GDP ratio—the standard measure of sustainability—was a healthy 17 percent at the end of last year. Yet Beijing-based Dragonomics, a well-respected consultancy, put China’s ratio at 89 percent—about the same as America’s. Worse still, a growing number of analysts think the Chinese ratio was really 160 percent. At that astronomical level, China looks worse than Greece.

[U]ntil now, just about everyone seemed to be looking to the Chinese to become the new engine of world economic growth. We will surely be disappointed.

And China’s neighbor across the East China Sea isn’t in any better shape. Today, Moody’s reduced Japan’s credit rating to Aa3, the fourth-highest rating. Part of the fault falls on the recent devastating natural disasters, far beyond anyone’s control. However, Japan’s troubles were taking root long before the earthquake and tsunami.

The New York Times reports:

Even before the disasters, Japan’s debt was expected to soar to almost 220 percent of its gross domestic product next year, according to the Organization for Economic Cooperation and Development, which would rank it as the largest debt-to-G.D.P. ratio in the world.

Moody’s said that it was worried by large budget deficits and the buildup of government debt. Frequent change in leadership had prevented the government from pursuing long-term fiscal reform, the agency said, while the recent disasters had delayed recovery. Meanwhile, weak prospects for economic growth were also hampering efforts to curb the country’s debt burden, the agency said.

BA

What else did Congress accomplish last week? Check below for details and tell us if you got your money’s worth.

What you paid
Last week taxpayers spent roughly $107.8 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

Average budget for Members of Congress: ($1,600,000/52) x 535 = $16,461,538

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

What you got
In addition to CR and the fiscal year 2012 budget resolution, this is what happened last week:

The House passed three bills and resolutions that could save taxpayers $16 billion over 10 years.

H.R. 1217, To repeal the Prevention and Public Health Fund. SAVINGS: $16 billion over 10 years

S. 307, To designate the Federal building and U.S. courthouse located at 217 West King Street, Martinsburg, WV as the W. Craig Broadwater Federal Building and U.S. Courthouse. COST: “No significant impact” on the budget

H.R. 1308, To amend the Ronald Reagan Centennial Commission Act to extend the termination date for the Commission. COST: Unknown

The Senate confirmed John A. Kronstadt to be a U.S. District Court judge.

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The Department of Housing and Urban Development’s Office of Inspector General concluded that PHA had paid $30.5 million to 15 law firms in a three-year period while providing inadequate documentation. It conducted a detailed audit of $4.5 million of those fees and found “the authority did not support $4.5 million that it paid to outside attorneys during the period of April 2007 to August 2010, virtually the entire amount we reviewed, raising questions about the propriety of the remaining $26 million.

The Inspector General’s office also discovered that the housing authority had employed law firms to stymie the progress of previous audits with $1.1 million in “unreasonable and unnecessary” costs. The report also cited an “apparent conflict of interest” with $7 million in payments to a law firm that employed the son of the housing authority board chairman and former city mayor, John Street.

The housing authority receives most of its $345 million annual budget from the federal government. The joint investigation by ABC News and the Center for Public Integrity found that HUD has struggled to combat waste, mismanagement and corruption in the more than 3,000 public housing agencies it funds nationwide, including PHA.

“Taxpayers can’t be on the hook for a blank check to law firms. Every dollar wasted is taken from the people waiting in droves for housing help in Philadelphia,” said Senator Chuck Grassley, who has been investigating HUD’s oversight of housing authorities. “[HUD] Secretary Donovan needs to take immediate action to recoup as much misspent money as possible and make sure this doesn’t happen again.”

Unfortunately, this is not the first time we have seen questionable spending from the Department of Housing and Urban Development. With these new developments, it has become clear it’s time for increased oversight and improved management of citizens’ hard-earned tax dollars.

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The Associated Press and Bloomberg report the House is expected to vote today on a continuing resolution that will fund the government through the next two weeks. Politico says the White House would rather the CR run through the next month.

According to Reuters, the Senate could vote this week on a plan to require the U.S. make certain payments even if it surpasses its statutory debt limit (a milestone the country’s expected to surpass in April or May).

The Government Accountability Office will release a report today outlining the cost to the federal government of duplicate programs. ABC, The Wall Street Journal and The Washington Post have a preview.

Federal Reserve Chairman Ben Bernanke will testify on Capitol Hill today. Bloomberg previews the hearing by outlining some of the Chairman’s recent statements on the budget deficit.

According to The Wall Street Journal, China owns 32 percent of the U.S. debt, a number that is much higher than previously estimated.

According to The Hill, Senate Democrats have pledged to cut five percent from the chamber’s own budget. The measure would save approximately $46 million.

The Los Angeles Times and The Washington Post take a look at the pressure freshmen House members are under to cut spending.

On the opinion pages: Mary Meeker outlines her ideas for cutting the budget deficit; David Brooks argues austerity could increase private sector productivity; David Yarkin says state governments could save a lot of money simply by buying in bulk; and Scott Shane explores how to reduce uncertainty in the economy.

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The New York Times, Politico, Roll Call and The Wall Street Journal report House Republicans are now looking at a two-week continuing resolution to replace the one that expires March 4. The measure would cut about $4 billion over two weeks from current spending levels.

Bloomberg and ABC say there is still the possibility of a government shutdown. According to The Wall Street Journal, Treasury Secretary Geithner is hopeful there will be a compromise. The Washington Post has some “facts and figures” on government shutdowns.

The Washington Post says the $41 billion in cuts proposed by Senate Majority Leader Harry Reid (D-NV) aren’t really cuts at all.

CBS points out the national debt has increased $3.5 trillion in the last two years.

Americans are mad about government overspending and are letting their representatives know. Politico reports.

According to The Washington Times, the Congressional Budget Office has increased its estimate for how much the 2009 stimulus bill will cost in the end. The CBO now expects the stimulus to cost $821 billion, $39 billion more than originally expected.

The Hill reports on Sen. John Cornyn’s (R-TX) advocacy on behalf of a balanced budget amendment.

On the opinion pages: Victor Davis Hanson has some tough words for the Obama Administration when it comes to the deficit. The Washington Times has a news story on the same topic.

BA

Americans know that improving heart health often starts with cutting the fat. But that’s just a first step; achieving long-term heart health requires a consistent regimen of moderation, exercise and other healthy behaviors. For many, this is a big change, and difficult transition. But think about the alternative… In the end, it is always worth the effort.

Improving our nation’s fiscal health is no different – the first step is cutting the fat. But that’s just a first step; achieving long-term budgetary health requires a consistent regimen of fiscal discipline. Yep, for many in Washington, this will be a big change and difficult transition. But think about the alternative…(you’ve had a glimpse). In the end, it will be well worth the effort.

So have a heart, Washington, cut the fat. Then make the big changes necessary for our nation’s long-term health.

BA

For example, in California, newly inaugurated Gov. Jerry Brown (D) yesterday unveiled his plan to bridge the state’s $25 billion deficit. Brown’s plan calls for $12.5 billion in spending cuts and a tax increase Brown says will generate $12 billion by extending temporary sales and income tax increases for five more years.

Not all governors are taking the same approach. Today The Wall Street Journal columnist William McGurn looks at two other large states: Illinois and New York. McGurn contrasts Gov. Andrew Cuomo (D-NY) – who will let a temporary income tax increase expire even though the state faces a $10 billion deficit – with his colleague Gov. Pat Quinn (D-IL), who needs to fill a $13 billion gap. McGurn applauds Cuomo for focusing on market-oriented reforms and concludes, “Mr. Quinn appears oblivious to the market-oriented policies next door (privatization of roads, the end of collective bargaining for state workers, etc.) that have helped Indiana Gov. Mitch Daniels turn his state [Indiana] around.”

In addition to gaping holes in their budgets, each of these states faces high unemployment rates (California’s is 12.4%; in Illinois it is 9.6%; and New York’s is 8.3%). How these governors choose to tackle their deficits could have an important impact to this indicator, so, stay tuned.

BA

The Bond Buyer says Senate Democrats are exploring ways to help out cash-strapped states. A spokesman for Senate Budget committee member John Cornyn (R-TX) says a bailout “is not an option.”

Is Spain the next European debt crisis? According to The Wall Street Journal, some investors think so.

The Hill takes a look at the political jockeying over the vote to increase the U.S.’s statutory debt limit (a vote that may come as early as late March).

The Wall Street Journal takes another look at the spending rules proposed by House Republicans, and concludes they might not be as strong as they seem.

Kevin Hassett from the American Enterprise Institute has an op-ed on Bloomberg.com entitled, “How to Cut $100 Billion Without Really Crying.”

BA

Two news items out today discuss coming key tests of the Members-elect:

This morning’s Politico looks at major spending tests Republicans will face in the 112^th Congress. Among these are three infrastructure bills (farm, water, and highways), which have a combined, estimated cost of more than $500 billion. These bills, all up for reauthorization in the next two years, are traditionally magnets for earmarks and “pork barrel” spending. Politico says, “The inherent contradiction between spending billions of dollars and cutting the budget already has conservatives equivocating.”

In his analysis of the Administration’s “Fiscal Commission,” economist Martin Feldstein says the executive branch itself has work to do. In this morning’s Wall Street Journal, Feldstein writes that in addition to the changes and cuts Commission co-chairs Erskine Bowles and Alan Simpson have recommended, President Obama should look at cutting his own long-term budget outline. Feldstein writes, “Surprisingly, the chairmen overlooked the easiest route to reducing the deficits over the next decade: scaling back the costly budget that President Obama presented earlier this year. Much of the projected doubling of the national debt between 2010 and 2020 reflects the spending and tax proposals in that budget…. As President Obama considers the bipartisan Commission’s proposals and plans his next budget, he should begin by removing some of the $3.8 trillion of increased deficits that he proposed earlier this year.”

Ultimately, it’s not up to one person, party, or branch of government to solve our fiscal crisis. Just as it has been a problem deepened by both parties, it will take a comprehensive effort to fix it.

BA