Posts Tagged ‘PAYGO’
Friday, July 23rd, 2010
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CARTOON: Government Money Tree
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The Onion’s American Voices: Senate Approves Jobless Benefits Extension
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CARTOON: PAYGO Leaky Cap
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The Onion: Budget Cuts Force British Government To Shut Down Mysterious Seaside Village
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“According to a study by the Brookings institution, Washington D.C. has the highest concentration of smart people in the United States. Lets see; we have a mess in the Gulf, we have a dysfunctional Homeland Security, and we are $13 trillion in debt. Imagine how bad it would be if these people weren’t geniuses.” — Jay Leno
Tags: debt, friday funnies, Government Spending, Jay Leno, PAYGO, political cartoons, political jokes, The Onion
Posted in Blog, Government Spending | No Comments »
Monday, June 21st, 2010
More than two months after Congress’ annual budget was due, House leadership believe they are finally close to producing something they could, at least euphemistically, call a “budget” — but without any of the tough decisions or politically undesirable votes necessary for a real budget resolution:
Key points on the “budget” plan, according to today’s The Hill:
Democrats have expressed concern about voting for a document showing lots of red ink in an election year.
House Democrats are readying an alternative budget measure that would set next year’s spending levels without requiring a vote on deficits.
House Budget Committee Chairman John Spratt (D-S.C.) said the alternative would be the “functional equivalent” of a full-fledged budget. But because it won’t be a traditional budget resolution, it will be silent on future deficits, which are expected to average nearly $1 trillion for the next decade.
In addition to setting spending levels for 2011, the alternative budget may have other provisions, such as squaring the pay-as-you-go law signed by President Barack Obama with the similar pay-as-you-go House rule, Spratt said. Both PAYGO measures require new tax cuts or entitlement programs be paid for with tax increases or spending cuts, but the House PAYGO rule, in place since before the law was enacted, can be more easily bypassed than the PAYGO law.
Clearly, no honest family or business would consider a document that ignores both the current and future consequences of its debt a serious fiscal plan. It’s just as unlikely they’ll buy this “budget” charade from Congress.
Tags: budget, budget deficit, budget resolution, Government Spending, house budget committee, John Spratt, PAYGO
Posted in Blog, Government Spending, Latest News | No Comments »
Friday, June 18th, 2010
Today, Vice President Biden and Office of Management and Budget Director Peter Orszag made a joint announcement touting “new initiatives for identifying and eliminating government waste, fraud, and abuse”. The announcement, following a memorandum issued by the President, focused primarily on establishing a “Do Not Pay List” to cut down on improper payments by the government. Explained in a statement released by Orszag, the list will be a “single source through which all agencies can check the status of a potential contractor or individual. “ It continues, “Too often, an agency does not check all the different databases the government has or finds it difficult to do so. In fact, over the past three years, federal auditors have reported that the government paid out benefits totaling more than $180 million to approximately 20,000 Americans who were dead; and more $230 million in benefits to approximately 14,000 fugitive felons or those in jail and who are not eligible for benefits.”
Too often does Washington only talk-the-talk when it comes to fiscal responsibility, rarely does it actually walk-the-walk. The most recent and egregious example is pay-as-you-go, or PAYGO. PAYGO rules are regularly avoided by identifying new expenditures as “emergency” spending. “Emergency” spending, not being subject to PAYGO rules, simply adds to our already ballooning budget deficit.
We applaud the administration for recognizing this serious problem and hope they take substantive steps to reduce wasteful spending. With a projected $1.6 trillion dollar deficit for 2010, it is past time to get serious about fiscal responsibility.
Tags: budget deficit, Do Not Pay List, emergency spending bill, fiscal responsibility, Joe Biden, OMB, PAYGO, peter orszag, wasteful spending
Posted in Blog, Government Spending, Latest News | No Comments »
Tuesday, June 8th, 2010
The Senate will take up H.R. 4213, the tax extenders bill today. The cost of the bill has seesawed as lawmakers feel pressure from increasing deficits. However, that may not be enough – Politico reports this morning that lawmakers are looking to restore spending, including $24 billion in Medicaid funding, cut from the bill by the House.
Before the House acted, the Congressional Budget Office (CBO) estimated this piece of legislation will increase budget deficits by about $84 billion for fiscal years 2010 and 2011. Between 2010 and 2020, the bill increases federal spending by $102 billion. Some of this spending is offset with tax increases,
As the CBO points out, a good portion of this bill would be designated “emergency” spending and so would not be subject to pay-go rules. We’ve written about this issue in the past. The emergency designation applies to three provisions in the bill, including the extension of unemployment benefits and COBRA (health care benefits for Americans who’ve lost their jobs). For lawmakers who claim we’re in a recovery, this seems like a questionable use of the emergency designation considering that all of these programs had already been financed (and declared “emergencies”) under previous legislation.
Tags: CBO, deficits, emergency spending bill, Government Spending, jobs bill, overspending, PAYGO, politico, Senate, tax extenders
Posted in Blog, Government Spending | No Comments »
Friday, May 28th, 2010
Back in March, Bankrupting America warned in an opinion-editorial that the Pay-as-you-go (or PAYGO) rules currently in effect in Congress, and frequently referred to as evidence of fiscal discipline, would be broken regularly in the name of “emergency.” Well, it looks as though that prediction is coming true.
Earlier this week, the Wall Street Journal reported that in the last three years, PAYGO has been violated by $1 trillion.
The Hill, a newspaper that covers Capitol Hill, reported Tuesday that Democrats plan to add $50 billion in domestic spending to an appropriations bill meant to fund the wars in Iraq and Afghanistan. Included in that $50 billion is $5.7 billion for Pell Grants to college students and $9 billion in loans for renewable energy projects. According to an editorial this week in USA Today, much of this spending would be exempt from the PAYGO rules because it would fall into the “emergency” category. As the article helpfully reminds us, “the dictionary defines emergency as ‘a sudden, generally unexpected occurrence.’”
It’d be hard to argue that anything in this bill can be categorized as a “generally unexpected occurrence.” After all, the President submitted his budget request just three months ago and none of this funding was included.
Though we disagree with USA Today’s approval of tax increases to pay for this new spending (those could kill any recovery that may be underway), if really an “emergency,” the package should be paid for through cuts to other non-essential programs.
Tags: bankrupting america, Congress, emergency spending bill, Government Spending, overspending, pay as you go, PAYGO, wasteful spending
Posted in Blog, Government Spending, Issues | No Comments »
Friday, May 14th, 2010
The Senate has been debating a financial reform bill that is supposed to help prevent another crisis in the financial sector. The extent to which it will help or hinder financial markets is being debated right now. The measure includes one new entity, the “Financial Stability Oversight Council,” that is specifically charged with looking out for practices and problems that pose a systemic risk to the financial system and broader economy. If the bill becomes law, it will entail reams of new regulation and rules requiring greater transparency in an attempt to head off future economic crises.
We think it’s worth asking: if Congress is going to create an entity focusing on identifying systemic risks to our economy, shouldn’t that body begin with examining Congress’s spending habits? Certainly, Washington’s reckless overspending and the exploding national debt threatens to undermine our global competitiveness and potential to grow.
Ironically, in the process of creating this very legislation, Congress is demonstrating that it shouldn’t be giving financial planning advice to anyone. This legislation is estimated to cost $17 billion, and should be subjected to PAYGO rules, but bill sponsors are looking for ways to avoid making changes to comply with PAYGO.
It was just two months ago that Congress passed PAYGO — legislation that requires that that Congress offset new spending by reducing other outlays or raising revenue. It was heralded as evidence that Washington is fully committed to fiscal responsibility. As the President put it: “It’s pretty simple. It [PAYGO] says to Congress … You can’t spend a dollar unless you cut a dollar elsewhere. This is how a responsible family or business manages a budget. And this is how a responsible government manages a budget, as well.”
Yet since that time, Congress has regularly blown off PAYGO, and the same politicians that championed PAYGO have demonized those who have tried to enforce it.
Today, many warn that the U.S. is on the road to economic disaster as our debt explodes to unprecedented levels. What’s happening in Greece could happen here. If Congress is really worried about “systemic threats” to our economic system, it should reduce spending to levels that facilitate growth.
?
Tags: bankrupting america, Congress, debt, deficit, financial reform, Financial Stability Oversight Council, Government Spending, Greece, PAYGO
Posted in Blog, Government Spending, Latest News | No Comments »
Monday, April 12th, 2010
Unemployment benefits expired this week for an estimated 212,000 unemployed workers. That’s a small fraction of the 11.4 million currently receiving benefits, but represents significant hardship for those who depend on those checks to stay afloat.
Congress is set to discuss extending unemployment benefits again this week when the Senate returns from its recess. Media coverage has centered on Republican efforts to require the Senate to follow PAYGO rules so the cost of extending benefits is offset by cuts to other spending. Senator Bunning made a similar stand last month, and now it’s Senator Tom Coburn who is pushing for PAYGO.
We’ve written before that if PAYGO is worth its name, it should be followed in instances like this. This unemployment extension clearly isn’t an “emergency” in the traditional sense: Congress has been considering another extension for more than a month.
With more than 5 million Americans who’ve been out of work for 6 months or more, unemployment insurance Is now paying benefits much longer than it has in the past. Congress has enacted multiple extensions so that payments can be received for as long as 99 weeks in some states.
The availability of nearly two years of unemployment benefits may have unintended consequences that contribute to our high unemployment rate. The extended benefits may discourage active job searches, the acceptance of lower-paying jobs, or the decision to retrain and pursue a new line of work. Larry Summers, the President’s top economic advisor, has written about how unemployment benefits can contribute to higher unemployment in the past:
The second way government assistance programs contribute to long-term unemployment is by providing an incentive, and the means, not to work. Each unemployed person has a “reservation wage”—the minimum wage he or she insists on getting before accepting a job. Unemployment insurance and other social assistance programs increase that reservation wage, causing an unemployed person to remain unemployed longer.
The Congressional Budget Office, while supporting extended unemployment benefits as part of an economic stimulus, acknowledged that such programs “dampen people’s efforts to look for work”. The CBO notes that this potential effect is “ less of a factor when employment opportunities are expected to be limited for some time,” as is the case in the current economic climate.
We all want to help the unemployed during this protracted downturn. But policymakers need to consider if they should continue to embrace costly policies (the 30-day extension would add another $9 billion to our debt) that could make our unemployment problem worse.
Tags: CBO, pay as you go, PAYGO, unemployment, unemployment benefits
Posted in Blog, Issues, Latest News | No Comments »
Wednesday, March 17th, 2010
The Senate has passed the $17.6 “jobs bill,” clearing the way for it to be signed by the President. Given that policy attention is devoted almost entirely to health care, this legislation will probably not receive much scrutiny. This is a shame.
This bill will increase the deficit, as it was able to get around PAYGO rules using legislative trickery that only offsets $2 billion of its $17.6 billion cost.
The bill’s centerpiece is a year-long $1,000 tax credit for any qualifying employee that remains employed for an entire year. The hope is that lowering the cost of hiring a worker will encourage employers to hire more.
Yet these tax credits are too temporary and too limited to stimulate employment and economic activity. The Brookings/Urban Institute Tax Policy Center explains:
The problem with subsidies such as this is that they are exceedingly sloppy. A lot of money goes to those firms that would have hired anyway. This, in fact, was the experience with the homebuyers’ credit. It set off a flurry of new home sales last fall as buyers rushed to beat the deadline for getting the subsidy. Once the tax-generated boomlet ended, the market fell off the table in December.
The best long-term jobs policy is to create an economic environment conducive to sustainable growth. Certainly that should include lowering the costs employers face by lowering business taxes to levels that are internationally competitive – not for some business owners and temporarily but for all and permanently.
Tags: corporate tax rate, jobs bill, PAYGO, Senate, tax credit, unempoyment
Posted in Blog, Government Overspending, Government Spending | No Comments »
Monday, March 8th, 2010
Gretchen Hamel, executive director of Public Notice, wrote an OpEd for US News and World Reports on PAYGO (a budget rule that is meant to ensure new spending is paid for). Among Hamel’s warnings of PAYGO’s limitations, she points out that any spending deemed an “emergency” by lawmakers exempts them from offsetting the new spending with savings elsewhere.
The ink barely dried before Washington lawmakers passed an “emergency” $10 billion piece of legislation, exempt from the newly created PAYGO rules.
In her piece, Hamel also notes that PAYGO does not apply to spending through entitlement programs (which are programs like Social Security and Medicare with past authorization to spend on ) and plenty of room for work-around gimmicks. If you likened the pay-as-you-go rules to a family managing its budget, Hamel says it might look something like this:
They could ignore spending that they had scheduled years before: items like their mortgage and health insurance. When planning their food budget they could front load all the spending to the first six months of the year, and then budget nothing for food for the rest of the year. When something unexpected came up–whether that’s a broken window or just a desire for a new pair of shoes–they could declare it necessary because of an “emergency,” and then not bother with pinching pennies elsewhere.
Tags: entitlement programs, Gretchen Hamel, jobs bill, pay as you go, PAYGO, Public Notice
Posted in Government Spending, Rules and Regulations | No Comments »
Thursday, March 4th, 2010
When PAYGO (a budget rule that is meant to ensure new spending is paid for) passed recently, we cautioned that it was a weak tool for fighting fiscal irresponsibility. Congress can avoid following PAYGO anytime it wants. In a blog post and OpEd, we said that one of PAYGO’s glaring limitations was politicians’ ability to skirt around it by declaring any spending bill an “emergency.”
Unfortunately, our prediction immediately came true.
Congress has passed a $10 billion “emergency” bill to extend unemployment benefits and provide more funding for infrastructure projects, thereby excluding it from PAYGO rules. This bill has been developing for months.
To no avail and receiving significant criticism, retiring Senator Jim Bunning (R-KY) insisted that the Senate follow the brand new PAYGO rules. Senator Bunning wasn’t even saying the money shouldn’t be spent, he was asking for it to be redirected from other parts of the budget.
In exchange for ending his filibuster, Senator Bunning was allowed to offer an amendment to cover the cost of the $10 billion bill by closing a tax loophole benefiting the paper industry. In other words, the spending would come out of the existing budget. That amendment failed.
Why wasn’t a majority of Senators willing to close a loophole or divert an amount equal to .2% of this year’s spending in the name of the PAYGO law they just passed?
Less than one month ago on the Senate floor, Majority Leader Harry Reid declared:
The road back to economic recovery is a long one. If we are to travel it successfully and prudently – if we are to create jobs and govern responsibly – pay-as-you-go must be one of the rules of that road.
How quickly reality can deviate from politicians’ rhetoric.
Tags: bankrupting america, Congress, debt, deficit, overspending, pay as you go, pay-go, PAYGO, spending
Posted in Blog, Government Overspending, Government Spending, Rules and Regulations | No Comments »
