2. Fact Sheet: Party in the GSA!

1. Friday Funnies! 5 Jokes About the EconomyBA

4. Political Cartoon: GSA Scolding

3. ”The IRS is very into social media now. They have five different Twitter accounts. And while you may not be following them, they are definitely following you.” –Jimmy Kimmel

2. Political Cartoon: Another Conference

1.  ”In case you’re wondering where your tax dollars go, 21 percent goes to Medicare and Medicaid, 20 percent to social security, 20 percent to defense spending, and the other 39 percent they squander.” –Jimmy KimmelBA

This week, Spain released its latest budget proposal. Since Greece’s default, bond markets have been paying a lot more attention to Spain, who’s interest on bonds has reached 6% and been on a steady upward climb. The high interest rate means investors of bonds are demanding a high right of return because they see Spain’s bonds as a risk.

Last weekend, Treasury Secretary Geithner went on the record as stating that the US is at no risk of facing the same problems of Greece in years down the road. It is true there are many differences between Greece’s fiscal crisis and that of the United States, but to date Washington has failed to institute any long-term plan to reduce the deficit, and many in Washington claim this will be impossible to do with an election around the corner.  But before we face a serious crisis, it’s time for Washington to grow up and act.BA

In Los Angeles, Mayor Villarigosa is turning to voters to extend an increase in sales tax indefinitely. The Tax was added 4 years ago to raise capital for the Mayor’s vision of extending rail services for the traffic clogged city, but without an indefinite tax the city cannot borrow the $8 billion needed to fund an accelerated contraction plan for the project. To raise that money over time, the city would have to borrow against roughly 50 years of tax revenue says the Los Angles Times.

Following the adoption of a state sponsored fiscal board designed to bring the cities finances back to stable ground, Detroit seems to be losing more in revenue than anticipated. But, spending continues to increase as the city struggles to avoid bankruptcy reports The Detroit News. Across the board drops in revenue, with income taxes dropping as much as 18%, have made matters worse for the struggling economy. Fueling the drop is a mass exodus of residents from the city, 200,000 since the year 2000. To compensate this massive drop in population the city had previously passed unique revenue streams, such as a 5% utility tax, but now those revenue streams seem to not be enough. Facing tough fiscal decisions, Deputy Mayor Kirk Lewis says, “ The administration is focusing on reductions, consolidation and process improvements to generate savings.”BA

Spending

Though not scored by an independent source, both budgets claim spending cuts over the long term. While the RSC Budget proposes cuts in discretionary spending to 2008 levels, the CPC budget finds major spending cuts in defense spending.

The RSC Budget cites “duplicative… or harmful programs” to be cut, to save taxdollars. Along with these cuts, the moratorium on earmarks currently in Congress is placed into law with the proposals passage. Savings of note in the RSC Budget include the elimination of certain federal agencies and by adopting the House Republican strategy to reform Medicare, Medicaid and Social Security. Agencies on the chopping block are the Corporation for Public Broadcasting, Economic Development Administration, the Legal Services Corporation, the National Endowment for the Arts and the National Labor Relations Board.

CPC points to defense cuts for both immediate and long-term savings. The immediate savings come from timely withdraw of troops from Iraq and Afghanistan, while other reductions would be made by ending the emergency contingency operations emergency supplemental funds and reduction of strategic capabilities, conventional forces, procurement and research and development programs. The CPC claims ending of the emergency contingency operations emergency supplemental funds, approximately $170 billion for FY 2012, over 10 years would accrue $1.8 trillion dollars in savings compared to current spending levels.

Taxes

While the RSC budget proposes no new taxes, it does propose reforming the tax code to a “simpler, flatter and fairer” tax code. The proposal would adopt a freeze on any scheduled tax increases during FY 2012, plans to reduce the corporate tax rate to 25% while eliminating loopholes, and eliminates the death/estate tax, the alternative minimum tax and investment tax on inflation. The proposal also sets out a plan to reform the current tax codeinto just 2 income brackets, 15% for individuals making $50,000 in taxable income or 25% for those making more than $50,000. ($100,000 for joint filers) No projection on the amount of revenue was given.

The CPC proposes multiple new avenues to increase revenue over time. While individual rates are changed to add 5 new tax brackets, ranging from 45% to 49%, on those making more than $1 million dollars a year, the proposal also allows Bush-era tax cuts to expire in Dec. 2012. They do extend the marriage relief credits and incentives for children, families and education provisions of those same cuts. The budget would rescind the upper income tax cuts made in December and reduce the rate at which itemized deductions can reduce tax liability to 28%. The budget also reforms the US corporate tax rate to include income earned overseas, introduces a tax on banks with more than $50 billion in assets, a financial speculation tax, and reinstates the superfund tax. Lastly the proposal  reshapes the estate tax to include a maximum rate of 65% on estates worth over $500 million dollars and a minimum of 45% on estates totaling $50 million. Overall, the CPC projects a net increase of $3.9 trillion in tax revenue over 10 years when compared to current levels.

Deficit Reduction

Both the RSC and CPC budgets propose to bring the federal deficit to zero over a period of less than 10 years. According to the RSC budget, surpluses begin to take effect in 2017 and top $125 billion in 2021. The CPC projects surpluses beginning in year 2021 with $30.7 billion.

The budget proposals from these groups differ greatly, to say the least. However both budgets display recognition from both parties, the need to reduce deficits and bring our national debt under control, highlighting the fact that our growing fiscal problems are not based upon party lines, but instead are a growing concern for all Americans.BA

As we have seen with the most recent situation in Europe, debt can stagnate economies, skyrocket interest rates and cause high unemployment. While Greece wrestles with new austerity measures designed to bring their change in annual debt to near 0%, the United States currently is projected to have an annual debt change of 16.5%. By ending fiscal year 2011 with a deficit of $1.3 trillion dollars, we are not making much progress toward reducing the burden on our economy. (Take a look at our newest Infographic here to see where that money went.)

China in the mean time is adding debt at an annual rate of 13.2%. While the two rates are not drastically different, our % of GDP to Debt is 76.3% instead of China’s low 17.3%. With public debt added by governments each year, it is the citizen’s of those nations who end up paying the price later to stabilize their markets. With such a blatant example of what can happen when debt gets out of control taking place in Europe, we can only hope that our leaders will begin to reign in spending.

Right now the countries with the Highest Debt to GDP ratio are:

Japan : 204.9% of GDP – $11,059,346,575,343 dollars in debt

Greece : 141.0% of GDP – $349,915,616,348 dollars in debt

Lebanon : 131.4% of GDP – $57,990,410,959 dollars in debt

Iceland : 128.7% of GDP – $13,476,438,356 dollars in debt

Italy : 121.6% of GDP – $2,312,663,835,616 dollars in debtBA

The bailout is a result of the Senate barbershop going deep into red ink. Without the bailout the shop, which has been open for the last 110 years, would have been forced into bankruptcy. Many businesses, such as the House of Representatives’ barbershop, would cut wages, benefits, or hours for employees to make up for their shortfalls. Because the Senate barbershop is a subsidized group and its employees are members of public unions, those cuts weren’t made, running the shop in debt. Meanwhile, on the south side of the hill, Joe Quattrone has made House Cuts profitable.

How does a barbershop run $300,000 into debt though? Lets look at the differences between the two operations;

• Senate: 11 full time employees
• House: 3 employees, 1 of whom is part time

• Senate: Pays no rent for their space.
• House: Pays $2,000-$3,000 dollars per year for space.

• Senate: Employees are unionized and federal employees with benefits matching those of employees at similar GS levels. Salaries of the top 4 barbers are, $54,761; $70,349; $73,658; and $81,641.
• House: The top two barbers made $22,000 and $30,000 dollars last year with no benefits as they are self-employed.

The main difference between the two shops is privatization. In 1994 the House side barbershop was privatized and operation was handed over to Mr. Quattrone. Now instead of running into red ink, Quattrone is turningprofits, despite extra expenses in rent and lower prices. While the salaries and benefits for the House side’s shop are not as lavish, Mr. Quattrone reasons, “Money’s not everything. I love coming to work every day. Would you rather go to a job you hated for $50,000 or one you liked for $40,000?”

Fortunately, Terrance Gainer, Senate Sergeant at Arms, has decided to privatize Senate Hair Care Services, the official name of the barbershop. He says, “If you put aside [the employees’] livelihoods, it’s costing the government money, and that includes taxpayers like you and me. That’s the way it is,” he said. “I just have not pulled the trigger. That’s on me.”

With nearly 27,000 customers last year the Senate side barbershop isn’t going anywhere, but hopefully its bailouts are long gone. After all, all they need to do is look just across the hill for a business model that works.BA

I still believe there needs to be a farm bill and that it serves a purpose, but we have all seen first hand how some abuse a system designed to be a safety net for their own financial gain.  Justlook at the map below (http://www.usda.gov/documents/8907Manhattanmap.pdf) to see the payments that those in New York City receive.

I think we all know that Manhattan is an island and doesn’t have the vast farmland that Oklahoma does. Also, based on what the farm journals and others report, the farm bill is chalked full of goodies that lobbyists have worked hard to get included.  Remember how the cost of feed went up when ethanol started getting subsidized? We know how that biofuel experiment went.  The public rejected it. Think of how much it cost all of us, not just in tax dollars, but also in feed costs.  That’s just one example and there are plenty of others.

For the most part, back home in Tillman County, we are the descendants of pioneers.  We understand how important it is to have a long-term view and that short term struggles can benefit us in the end.  We are one of the top 7 countries in the world when it comes to debt.While we watch what is playing out in Europe, we know what our future will look like if we don’t do something today.  The point I was making in my allotted word count, was that we need to think about our tomorrow, think about the next generation and if there are ways we can scale back today to save tomorrow.  That’s what we are always fighting for – making it to the next harvest or the next sale of the feeder steers.  On the farm and ranch, we are always doing things today to reap rewards months and sometime years in the future.  We shouldn’t be treating the farm bill any differently.

The original NYT Blog post:

“I grew up on a farm and ranch in Southwest Oklahoma, so it’s not surprising that my first foray into Congressional politics was a letter I wrote in high school to encourage my representative, J.C. Watts, to vote for the farm bill. Back in 1996 I had a different idea about how policy affects our lives. Now, having served on Capitol Hill and in the White House, I see that programs like these have allowed Washington to create an unbalanced system, one that protects special interests rather than taxpayers.

Huge federal spending allows large and small businesses, farmers and ranchers, and others to game the system for financial gain at the expense of taxpayers. This system encourages greed and deceit by the players — and we, the taxpayers, are the losers.

The farm bill is evidence of this. It has gone way past the original intent of the bill to ensure there was a steady and affordable food supply, and in doing so, now encourages many in agribusiness to play a game, instead of focusing on creating value. What this farm bill is missing are the basics — and basic fiscal responsibility. Because it is so bloated, today’s farm bill may come at the expense of any future farm bill because, in a few years when these programs are again up for reauthorization, the federal government may be too broke to play the game anymore.”

BA

In last year’s report the GAO highlighted 81 duplicative programs in the federal government. The GAO recommended that Congress study these programs and determine if they were in fact needed, could be reduced, or eliminated all together. The reduction and elimination of duplicative programs in the 2011 report could save taxpayers billions in spending. To date agencies have fully addressed 4 of the 81 programs and partially addressed 60, leaving 17 untouched.

Today’s report details 32 different areas where the government can reduce waste and increase efficiency. Among those include:

• Letting a tax credit for ethanol expire because it duplicates other identical tax credits in place (savings of $5.7 billion annually)
• Reducing top-heavy management and overlapping positions in the State Department.
• Consolidating some of the 209 different science, technology, engineering and math(STEM) education programs. (173 of which overlap)
• Eliminating or consolidating some of the 15 major financial literacy programs, including 3 new programs created by the Dodd-Frank Reform

Overall today’s report holds the possibility of saving taxpayers billions in spending. Although without the GAO’s disclosure of this report, most of the agencies would never know of the duplicative programs. As a result Sen. Coburn filed the Taxpayer Right to Know Act, requiring each agency to compile a list of operating programs in their budget and reporting that list to Congress.

Kenneth Baer, spokesman for the Office of Management and Budget, says, “Wasteful duplication of programs and overlap of effort has been around for a long time, as programs keep getting added without realizing what is there already.” To those of us not on Capitol Hill, it makes sense that you won’t get better results, without actually accounting for the programs you have first.

Hopefully Congress will stop creating duplicative programs, act on the GAO’s recommendations and pass real oversight for government agencies. Otherwise we will continue to spend hundreds of billions on programs that as Sen. Coburn says, “are producing little or no value for taxpayers.”BA

The House and Senate were not in session last week. They are back this week, but before they begin, take a look below for a summary of the bills each chamber has passed so far this year that will cut spending. In addition to the legislation below, the House has passed a line item veto bill (see our fact sheet here).

What you paid

Last week taxpayers spent roughly $100 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 weekly budget for all House offices: ($1,446,009/52) x 435 = $2,096,421

Average weekly budget for all Senate offices: ($3,409,093/52) x 100 = $6,555,958

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

What you got

So far this year, the House voted to approve two bills that would cut spending:

• H.R. 3835, To extend the pay limitation for Members of Congress and Federal employees. SAVINGS: Unknown
• H.R. 1173, Fiscal Responsibility and Retirement Security Act. SAVINGS: $9 million over five years

The Senate has not passed any legislation to cut spending.

BA