Archive for the 'deficit' Category

Observations regarding S&P’s Downgrade of America’s AAA bond rating.

Saturday, August 6th, 2011

They say the worst news in Washington is dropped on Friday afternoon. Yesterday was no different as Standard and Poors’s decided to downgrade America’s AAA bond rating.

While many in the political establishment (that includes many of us activist) view what may be profitible for the next election, businesses look for stability and solvency to ensure a return on their investment.

As a result I believe the following observations are important to note going forward:

* Republicans offered not one (cut, cap and balance), but three plans which would cut in excess of the 4 trillion requested by S&P.  This included Paul Ryan’s plan (~7 trillion) and Senator Coburn’s 9 trillion dollar reduction plan.

* Gang of Six technically reaches the magic number, but includes trillions of dollars in tax increases which offers businesses zero incentive to bring jobs or investment back to the United States.

* Democrats still refuse to provide any sort of long term deficit reduction plan outside of repealing the Bush era tax rates.

* Brinksmanship was just as much as a determining factor as the deficit its self. For those who argue conservatives could twist arms better after the August 2nd date, S&P disagree and cites such gamesmanship as a core reason as to why AAA could not be retained:

The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy.

Taking the budget to the edge makes investors and business people nervous. It adds unpredictability and concerns those who might seek to or invest in our bonds.

To be clear, I am not advocating folding like a cheap suit and implementing tax increases as Democrats sought. That is wrong.

However, to intentially want to shut the government down and even appear to threaten the situation does more harm than good. This includes the United States Senate refusal to pass a budget for in excess of 800 days or President Obama’s refusal to propose any sort of plan.

*No real structural changes were made in the budget agreement proved very costly. While obvious for many of us, at the heart of the rational for the decision to downgrade, was the fact no real changes were made to ensure the solvency of entitlement programs.

Despite this year’s wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently. Republicans and Democrats have only been able to agree to relatively modest savings on discretionary spending while delegating to the Select Committee decisions on more comprehensive measures.

Any real reform, such at the Ryan plan or cut, cap and balance address these core concerns and provide sound fiscal policy which addresses such issues. Without reforming entitlement spending investors will continue to look at our bonds with doubt whether or not we can pay them back.

* Most importantly, poor economic growth matters greatly. While the report notes that Democrats desire to increase taxes on “upper income earners” would bring in 950 billion over ten years, it is equally important to note tax revenues are a full 3.5 percent below the Bush years and account for 300-400 billion a year.

The key element here is not just the recession, but the core cause of why businesses are not re-investing. With the passage of Obamacare and the Dodd-Frank act, the cost doing business increases greatly. Combined with Democrats current threats to increase taxes, it dramatically depresses any optimism or opportunity for investment.

While entitlement reform is key to any long term budget deal, the environment for businesses to be able to make money and invest here must be changed.

If elected officials truly seek to tackle debt or the deficit under any plan, the economy must grow. Businesses must feel comfortable investing in people and resources.

As I’ve noted before, businesses small and big need certainty and encouragement that the money they spend will return as a net positive.  If the government’s policy is counter to this basic need, then the economy will not grow and our yearly deficits will only grow larger.

Simply put, Marco Rubio is correct when he stated that the system needs more tax payers as a pose to more taxes.

Initial thoughts on possible debt ceiling compromise. (Update)

Saturday, July 30th, 2011

National Journal is reporting the outlines of what may be an interesting debt ceiling compromise.

While details are sketchy, if true, Republicans and conservatives should be happy with much of what Democrats and President Obama might agree to.

Of interesting notes:

  • There will be an extension of days to allow Congress to slow things down without threatening default. To me, this could be key so Congress will be able to read any such bill and stop back door provisions or tax hike sneak attacks.
  • 2.8 trillion in deficit reduction over 10 years. 1.8 trillion will come from the “super committee”.  If the super committee cannot find any such reductions by November, then across the board cuts kick in - which come from medicaid and defense. Too bad there isnt more than a 2.8 trillion goal, eh?
  • No net new tax revenue increases will be part of the committee’s discussion, reportedly. Of course what does that mean? Which base line is the committee working from? Would they be working from the basis that the Bush era tax rates go away meaning that there is a 3.5 trillion dollar tax increase over 10 years worked into the figures?

Worthy note not in the outline,

  • Vote on a BBA. While I am a huge BBA supporter, I do not believe passage of a BBA should be a prerequist to any deal. I would be open to changing my mind if someone could show me how one attracts 20 additional senators to the Lee-Hatch BBA proposal.
  • Congressional authority over the committee. Congress must vote on their recommendations. The committee should not be able to come up with proposals and pass it amongst its self and have the president sign it. To do so would mean Congress is ducking its Constitutional authority.
  • Who will be on the committee? Republicans would be smart to put who are interested in cutting budgets as well as cutting deals. This means people more like Coburn and less like Rep Upton.

Over all the potential deal has promise to stabilize the situation and allow for serious discussion on the budget deficit reforms in the future.

It also points to the fact that Americans are interested in real solutions.

We should not count this as any sort of grand win. It isnt. Then again, for me, the entire eppisode wasnt over who won or lost. It was over what is right for this country and how we can best move the ball forward.

The battle may be over, but until there is a President and Senate majority who are willing to pass a Balanced Budget Amendment and make real cuts, the fight to control spending will not be over.

UPDATE:

Following an ABC report, the deal may have serious flaws.

If such a deal allows the committee to implement taxes through a back door or gut defense spending while not touching entitlements as a pose to across the board cuts, then it is a bad deal.

Which report to believe? I do not know and wont know until more information comes to light.

Time to go to the mattress.

Sunday, July 10th, 2011

As reported all over the news is this morning, Speaker Boehner is abandoning the “grand deal” after it was made clear Democrats would demand roughly two trillion in tax increases over the next ten years in exchange for four trillion in estimated spending cuts.

I believe this move was smart for Speaker Boehner and he should be commended for holding the line on potentional tax increases, which would not only cripple the economy, but gaurantee a third party run in 2012 and President Obama a second term.

None of us should be fooled by the demand to increase the size of government as a prerequist for any such deal. There is a difference between closing honest to God loop holes which allow people to cheat the system and changing the tax code to give what President Obama and Democrats were seeking for the past decade - to roll back the Bush era tax cuts.

What is in our nation’s best interest is that any deal made would make dramatic cuts, as the GOP as proposed, in exchange for any increase in the national debt limit. Period.

We are in trouble today because of an out of control federal government who spent money while deciding they know better than the American people. To claim raising tax increases and growing the same government entity without any substational reform or balanced budget amendment in place is crazy.

Of course this is not the first time Democrats have used the ruse to lure Republicans into straying from their core beliefs and what the American people demanded they represent in Washington. Reagan and Bush 41 both agreed to tax increases in an effort to reduce the deficit under similar terms (dollars for cuts for dollars in tax increase).

In both cases there was no decrease of the federal deficit with poor election results to follow. In the case of Bush 41, the loss of office.

The very same could be said about today’s battle. Democrats are once again claiming significant deficit reduction numbers in exchange for tax increases and labeling those who believe other wise as radicals. History teaches us other wise.

However, we should not be so bold as to demand no increase in the debt ceiling under any conditions. To do so is both fool hardy and smacks of the extreme demands Democrats such as Nancy Pelosi are making.

There is absolutely no difference in what Pelosi is asking for, no changes in entitlement spending, and the demand that the debt limit not be raised under any circumstance. Both do harm to the republic and fail to serve the nation’s best interest.

If there was a time to go to the mattress for this nation, it is now. It must be done without bravado; with seriousness and a real goal in mind and a desire to find a solution and not to posture alone.

Do this. Do the will of the people and the rest will fall into place.

Dear Democrats and President Obama. What part of broke do you not understand?

Tuesday, June 28th, 2011

Dear Democrats and President Obama,

I know you guys seem to believe its all cool to demand some sort of new tone in politics while calling your opponent’s policy as immoral or try to humulate them to their faces in front of the national press.

Guess what.

Because of your absolute insistance on increasing spending, instead of reigning in and cutting an already out of control budget, the dollar may be sunk as a reserve currency.

The impact would lead our country’s economy to the point where it would be crippled for generations to come. Is that what you want?

While I suppose I should leave the conspiracy theories to  Glenn Beck, one wonders if he is accurately describing your  “lead from behind” philosophy and attitude toward this great nation. Dare I ask if you understand what last November was about?

In the end I suppose it matters not. After all, every proposal being floated in the media demands more spending and greater expense to those of us who flip the bill - both from experiencing higher prices and more money taken out of our take home pay.

I would ask for any of you still reading this article to follow this single piece of advice: Try to run a business which does not recieve a penny from the government. Doesnt matter whether it is a good or a service. Just do it.

Once you experience the successes and failures, and more importantly how to run on a balanced budget, then lets come back and talk.

Until then I expect you to understand so very little of what we, the people are demanding. This is unfortunate and it only hurts our country.

I pray this changes before its too late.

Cantor should be applauded.

Thursday, June 23rd, 2011

We are facing a serious problem with the national deficit with the perverbial credit card limit due to expire some time in Agust. Everyone knows this. Even Democrats.

Enter stage right a deficit “committee” headed by Vice President Biden, tasked with the goal of finding a way to reach a deal that would allow for the debt limit to be raised while making substantial cuts to the budget. The catch: Democrats, banking Republicans will blink and are clinging bitterly to the notion that any debt reduction deal must include tax increases. Tax increases which are a nonstarter for Republicans, especially in the House of Representatives.

With this strategy in play, Majority Leader Eric Cantor walk out on the talks noting that any discussion is at an impass without President Obama personally engaging with Speaker of the House John Boehner on the matter.

For that courage, Cantor should be commended.

Democrats must understand that the core of the problem doesnt come from the current tax rate, which existed a decade ago. The problem is out of control government spending.

Whats more, the talked about 200 a billion a year “cuts” in programs amount to nearly nothing when the deficit is adding nearly 1.5 trillion a year.

To give example of how out of hand the number is, we spent roughly one third ($500 billion) in Afghanistan over the past decade. That means we could fund the war in Afghanistan for 30 years and it would just then equal a single year of deficit spending under what is now “base line” spending in Congress.

This is not sustainable. Something has to be done. It is time to roll up our sleaves and make cuts to the budget where they are needed and reform entitlement spending.

Democrats need to understand that Republicans and the American people are serious.

For that exact reason Eric Cantor should be applauded for his decision today.

Then there are the rest of us.

Thursday, April 14th, 2011

I am not a happy camper. No sir, not one bit.

This last week reminded me once again what burned me out during the 2009 and most of 2010 political news cycle.

The conflict between those seeking to position themselves politically and those who are seemingly tone deaf to the desires of the American people is gut wrenching and dispiriting. Neither is playing smart or seemingly interested in doing the will of the voter - to reduce federal spending and cut the deficit.

How we get there is debatable. We do not need to achieve our goals “in a single swing of the bat”, but we do need to arrive there.

(more…)

What are we to do now? Really.

Wednesday, April 13th, 2011

Let me make this as brief and to the point as possible. In a high stakes policy show down which our nation cannot afford us to fail we are playing dumb. Real dumb.

Its as if there is some insationable desire to do precisely the wrong things at the wrong time as if maximize the advantge of those who seek to keep our nation shackled in debt and restrained by the bondage of big government.

Let me be clear: begging for a government shut down is akin to hand the keys of the House of Representatives back to Democrats. I know it is tempting to just pull the plug on government,  but our troops and the families of the people who work for the federal government deserve better. Our nation deserves better.

Similarly it is morally irresponsible to default on our debt. Period.

We all want to limit how much the government spends, and if you are like me, feel that there isnt a blessed thing that can be done at the moment. Defaulting on our national loans by telling the world that our country has no intention to pay for its programs will do nothing more than turn us into another Greece - and finish off what Democrats started five years ago when they took over Congress.

Like a bug attracted to an electric zapper, we conservatives seemingly without thought charge into this policy with the best intentions.

The results, however, seem to do nothing more than play into the hands of Democrats and President Obama.

What was a win and positive move in the budget process now looks to be nothing more than a charade put on to try and cripple the GOP in the public eye. We, unfortunately, are all too happy to oblige. Its as if we want our leaders to fail - for what ever reason. No good can come of this, no matter how one wishes to spin such incidents

So what now? Make Democrats pay in reforms every step of the way. No matter how small or big until we make headway.

We, the citizens of this great nation spoke last fall, and made it clear that government should be smaller. This means starving the beast; not fattening it up by raising taxes and giving it a larger percentage of GDP to live on. The money is no longer there.

However, the two biggest policy battles in my life time are about to take place and instead of strengthening our side, it seems our side elected to discredit its self. This is troubling.

At a time when our attention should be focused on how to defeat the forth coming proposal from President Obama, we are focused on how bad a deal our leaders got in the last confrontation. In effect we are weaking our hand.

Yes, we should hold all of our elected officials into account and we should not hide from the truth of policy. We must know all the facts and details if we are to make better decisions in the future.

Similarly we must also acknowledge that Democrats retain control of the Presidency, Senate and media. If we are to be honest with our selves, we know Democrats still hold the keys to power in many ways. Last November simply put the breaks on the runaway train.

It is now time to work to move the ball forward, together, smart.

Digesting the new budget deal.

Saturday, April 9th, 2011

Let us be up front shall we? The continuing resolution and rest of the year budget deal passed last night was not all we hoped for - but it was a mild success.

After months of hard grass roots level work and pushing for serious cuts to put some sort of, at very least symbolic, dent the agreement on the surface seems to fall flat. After all, instead of defunding the EPA, Planned Parenthood and a host of other big government entitles and making serious cuts the GOP came away empty handed. Right? Not quite.

I must admit after hearing the Planned Parenthood and EPA riders were gone and read reports of the dollar amount being only 33 billion I asked my self how on earth will we ever get true entitlement reform. However, once I examined the actual content of the continuing resolution and the associated riders which did pass I felt quite a bit better. As Reagan once said, “I would rather have 80% than go over the cliff with my flag flying”.

Without repeating Steven Foley’s detailed post, I would like to highlight a few elements which in fact give us that 80%.

  • The amount of debt reduced adds up. The 38.5 billion plus 10 billion cut earlier adds up to 48.5 billion out of the targeted 61 billion. Add in unspent money and we arrive at a 88.5 billion number. No, it is not the 100 billion number - but its darned close. I will take it in a heartbeat. Remember this is last years budget which Democrats refused to even bring to the floor for a vote.
  • Money is not one time expenditures. It. will. Add. Up. According to the Wall Street Journal savings from equate to hundreds of billions of dollars over the next decade. That is real money folks.
  • There will be a vote on repealing Obamacare and defunding Planned Parenthood. While neither may pass because Democrats control the United States Presidency and Senate, there will be an up or down vote. Regardless of the results it will be a major step forward to both put elected officials on record and push the ball forward toward repeat.
  • The use of tax payer dollars to fund abortions in the District of Columbia is re-instated. Contrary to some media outlets comments, in 2009 Democrats passed and signed legislation which allowed tax dollars to pay for abortions in the Washington, DC area. Under the new CR and budget this can no longer happen.
  • IRS additions defunded. Remember all those additional request sought by the Obama administration which would be enforced through a bigger IRS? While the provisions may still be intact, the money to enforce the associated increases are gone.
  • Last but not least, the government will become more accountable to citizens. Additional tools were provided within the legislation which would keep a check on elements of Obamacare and Bureaucracies created by the Dodd-Frank financial reform act passed last year.

Is it a list of 100% winning items? No.

Did Democrats get away with more corporate cronyism with Planned Parenthood and NPR retaining funding? You betcha.

Am I concerned about the fortitude of our leaders and what it will take to get entitlement reform done on the scale necessary to keep this nation from collapsing financially? Absolutely.

However, credit should be given to Boehner and the Republican leadership for getting us 80% of the way for our first goal and picking up some very important reforms along the way.

If the government shut down and troops, who were clearly being used as pawns, would end up going without pay the political ramifications would be potentially crippling for any shot at winning 2012 and putting honest to God reforms into action.

Most importantly the CR and budget agreement swings momentum toward cutting instead of spending. This change in mind set cannot be under estimated. While it took a literal 11th hour agreement to cut two percent of the budget, the moment is clearly on the side of those seeking to reform and eliminate unnecessary spending.

Perhaps that is the most important element, given that there are forth coming battles for both an increase in debt ceiling and next years budget.

Updated 4/9/2011 with new figures provided sources confirmed on Capital Hill.

Senator Lee gets it right on debt ceiling.

Thursday, January 27th, 2011

Back on January 5th I posted an idea regarding raising the debt ceiling. Some might have thought it to be radical, but in my mind it is necessary given the grave situation we are with regards to the federal budget.

I proposed then that we should, in fact, compromise with Democrats who want to raise the debt ceiling. The catch: it must be attached to a balanced budget amendment (or law).

Senator Mike Lee is poised to present such a proposal; taking it a step further and threatening to filibuster any other piece of legislation which does not contain the language.

I always believed the fight over earmarks was frivilous when given the 800 pound gorilla in the room, and that the budget as a whole is what we should as a nation fight to the end over. Senator Lee exemplifies this.

Washington must understand that we, the people, are demanding accountability with what is spent.

To that end I believe since Washington cannot be trusted to use common sense in one of the most basic functions of government, that we excercise our rights as the governed and demand spending limitations.

That is why Senator Lee is correct in taking what will be an unpopular, but necessary risk. He understands the consequence for raising the deficit limit and the importances of throwing government spending in shackles.

It is also why we must support him.

Compromising with Dems on debt ceiling.

Wednesday, January 5th, 2011

So Obama, Democrats and the media want Republicans to compromise and raise the ceiling on our national debt while screaming the newly minted Congress is no more fiscally conservative than the last session, eh?

I say give them what they want. Sorta.

In leu of any agreement to make outright budget cuts, a balanced budget amendment must be the center piece to any piece of legislation which increases the ceiling to our national debt.

Earlier I wrote that the budget is a core, if not the absolute issue which we should go to the matress on during this session of Congress. I meant it.

Some claim that not increasing the debt ceiling would cause us to default on our debt ala Greece, this is a real possibility and should be considered when debating such matters. However, to simply authorize an increase the ceiling on its own glosses over the core problem of rampant government over spending.

Attaching a balanced budget amendment to any such provision to increase the ceiling on our debt would tackle that issue head on and do something which most Americans demand. It would be a huge step in the right direction which our nation desperately needs.

To not do so would be aken to sitting on our hands while the financial fabric of our nation is torn to shred in a near perfect execution of the Cloward-Piven strategy.

Compromise isnt a bad thing if done right. If Congress is to increase how much this country can owe, then lets put that monster in chains so that it may never see light of day again.

Rush said a while ago that the pressure should be on Democrats to prove that the extra spending is needed, not on Republicans and conservatives to explain why they are cutting programs. I believe that with all my heart.