Paul Ryan’s new budget, like the old, goes after Obama programs

By The Associated Press - Tuesday, March 12, 2013 at 10:57 PM - 0 Comments

WASHINGTON – House Republicans redoubled their efforts to roll back signature accomplishments of President Barack Obama on Tuesday, offering a slashing budget plan that would repeal new health care subsidies and cut spending across a wide swath of programs dear to Obama and his Democratic allies.

The GOP plan was immediately rejected by the White House as an approach that “just doesn’t add up” and would harm America’s middle class. Obama said the plan would “slash deeply” into programs such as Medicaid.

Obama has rebuffed similar GOP plans two years in a row and ran strongly against the ideas when winning re-election last year — when its chief author, Budget Committee Chairman Paul Ryan, R-Wis., was on the Republican ticket.

Ryan’s budget illustrates the stark differences in the visions of tea party-backed Republicans and Obama and his Democratic allies about the size and role of government — with no obvious avenues for compromise.

Obama, in an ABC-TV interview Tuesday, said he would not seek to balance the federal budget in 10 years, as Ryan’s plan attempts to do, when he submits his fiscal blueprint to Congress next month.

“My goal is not to chase a balanced budget just for the sake of balance,” he said. “My goal is how do we grow the economy, put people back to work, and if we do that we are going to be bringing in more revenue.”

Senate Democrats are responding with a plan that would repeal automatic spending cuts that began to take effect earlier this month while offering $100 billion in new spending for infrastructure and job training. The Democratic counter won’t be officially unveiled until Wednesday, but its rough outlines were described by aides. They spoke only on condition of anonymity because they weren’t authorized to describe it publicly.

That plan by Senate Budget Committee Chairwoman Patty Murray, D-Wash., would raise taxes by almost $1 trillion over a decade and cut spending by almost $1 trillion over the same period. But more than half of the combined deficit savings would be used to repeal the automatic, across-the-board spending cuts that began to hit the economy earlier this month and are slated to continue through the decade.

All this was in the works as Obama trekked to the Capitol to join Senate Democrats for their weekly closed-door policy luncheon as part of his bipartisan outreach efforts to lawmakers in both House and Senate on the budget. Obama is pressing for a “grand bargain” that would attract more moderate elements from both parties — even as this week’s competing budget presentations are tailored to appeal strictly along party lines.

Obama meets with House Republicans on Wednesday.

At issue is the arcane and partisan congressional budget process, which involves a unique, non-binding measure called a budget resolution. When the process works as designed — which is rarely — budget resolutions have the potential to stake out parameters for follow-up legislation specifying spending and rewriting the complex U.S. tax code.

But this year’s dueling GOP and Democratic budget proposals are more about defining political differences — as if last year’s elections didn’t do enough of that — than charting a path toward a solution.

“If you look at the two budgets, there’s not a lot of overlap,” said Rep. Chris Van Hollen of Maryland, top Democrat on the Budget Committee. He said the lack of “common ground” makes it necessary to make uncomfortable compromises.

One such compromise might be to adopt a stingier inflation adjustment for Social Security cost-of-living increases and the indexing of income tax brackets. House Speaker John Boehner, R-Ohio, pressed for the new inflation measure in both sets of his failed previous budget negotiations with Obama, and the idea was favourably discussed in the “supercommittee” negotiations chaired by Murray in the fall of 2010.

But this “chained CPI” idea is nowhere to be found in either the Ryan or Murray budgets. Obama did propose the idea in his meeting with Senate Democrats — but only as an element of a broader deficit-reduction pact in which Republicans would yield on approving new tax revenues.

“The president was pretty clear that there are pieces of the Social Security system he is willing to talk about. But he’s going to need some give from Republicans, as we all are,” said Sen. Chris Murphy, D-Conn.

Though White House officials say Obama would still propose the inflation measure as part of a big deal, on Tuesday they refused to say whether the president would include chained CPI in the fiscal blueprint he’s expected to deliver in April.

Driving the House GOP plan is a promise to pass a budget that would balance the government’s books, which the measure would achieve by cutting $756 billion over 10 years from the Medicaid health program for the poor and disabled, cutting deeply into the day-to-day budgets of domestic agencies and repealing new health coverage subsidies enacted two years ago with Obama’s signature health care bill.

In last year’s presidential campaign, Ryan ran against both Obama’s promise to raise tax rates on the wealthy and more than $700 billion worth of cuts to Medicare providers. But now, Ryan claims that money to help balance the budget — as well as about $1 trillion in taxes over a decade passed by Democrats as part of Obama’s health care overhaul.

“We’re not going to refight the past, because we know that that’s behind us,” Ryan told reporters on Tuesday.

Ryan is moving on to a new battle over the annual cap for the 12 spending bills that Congress is supposed to pass each year. His budget assumes that the $1 trillion in savings over the coming nine years from controversial automatic spending cuts, just now starting, much of the money coming from the day-to-day agency budgets for the Pentagon and domestic agencies, will stay in effect.

Ryan, however, would restore those cuts to the Pentagon and instead makes domestic agencies absorb them. This double-whammy means, for instance, that non-defence appropriations would be limited to $414 billion next year — which is $55 billion below the caps already mandated under the automatic cuts. That would likely mean gridlock when it comes time to advance appropriations bills this summer.

Ryan’s plan promises to cut the deficit from $845 billion this year to $528 billion in the 2014 budget year that starts in October. The deficit would drop to $125 billion in 2015 and hover pretty much near balance for several years before registering a $7 billion surplus in 2023.

The White House weighed in against the Ryan plan, saying it would turn Medicare into a voucher program and protect the wealthy from tax increases.

“While the House Republican budget aims to reduce the deficit, the math just doesn’t add up,” said White House Press Secretary Jay Carney. “Deficit reduction that asks nothing from the wealthiest Americans has serious consequences for the middle class.”

Ryan has also revived a controversial plan that would, starting in 2024 for workers born in 1959 or after, replace traditional Medicare with a voucher-like government subsidy for people to buy health insurance on the open market. Critics of the plan say the subsidies wouldn’t grow with inflation fast enough and would shove thousands of dollars in higher premiums onto seniors before very long.

Meanwhile, the Senate turned Tuesday to a bipartisan, almost 600-page measure for the ongoing fiscal year that serves as the legislative vehicle to fund the day-to-day operations of government through Sept. 30 — and prevent a government shutdown when current funding runs out March 27.

Sens. Tom Coburn, R-Okla., and John McCain, R-Ariz., held up the official start of debate on the measure, complaining that they hadn’t had enough time to scrutinize it. The two are longtime thorns in the side of senators on the powerful Appropriations Committee.

America’s magic unemployment number

By Erica Alini - Monday, January 7, 2013 at 1:15 PM - 0 Comments

Last month, the U.S. Federal Reserve announced it would keep borrowing costs at rock bottom until unemployment drops to 6.5 per cent, provided inflation doesn’t rise past 2.5 per cent. It was a revolutionary statement. America’s monetary policy is now explicitly tied to the jobless rate, rather than just price levels. The Fed was administering the U.S. economy the equivalent of “a new drug that is yet to go through clinical testing,” wrote Mohamed El-Erian, the CEO of PIMCO, which runs the world’s largest bond fund.

The move raises a tough question: how long will it take to reach 6.5 per cent unemployment? It could happen as early as next year or as late as 2018, according to Michael Greenstone and Adam Looney at the Brookings Institution, a think tank based in Washington. Some observers are asking what Fed chairman Ben Bernanke will do if the jobless rate falls simply because more Americans give up looking for jobs, thus taking themselves out of the unemployment head count. Continue…

Cuts, taxes highlight Obama’s deficit plan

By macleans.ca - Monday, September 19, 2011 at 11:01 AM - 0 Comments

U.S. President Barack Obama will announce a wide-ranging deficit reduction plan Monday that includes higher taxes for the rich, lower spending and more than US$1 trillion in savings from the drawdown of wars in Iraq and Afghanistan. Obama’s plan is the opening gambit in a new deficit fight with congressional Republicans. He has vowed to veto any legislation that tries to close the spending gap through spending cuts alone. House Speaker John Boehner, meanwhile, plans to oppose any plan that includes an increase in revenues.

New York Times 

U.S. hits $14.3 trillion debt ceiling

By macleans.ca - Monday, May 16, 2011 at 12:34 PM - 4 Comments

Treasury Secretary Timothy F. Geithner says the U.S. government will begin borrowing from the pension funds of federal workers on Monday in a bid to avoid defaulting on some of its obligations. The move comes as Washington is set to hit the $14.3 trillion debt ceiling, but it isn’t expected to buy the Obama administration more than a few months’ time. Geithner has repeatedly warned that Congress must agree to raise the debt limit before August 2 to avoid defaults that would send shockwaves through the global economy, but Congressional Republicans are demanding the increase be contingent on spending cuts. The White House has instead proposed a mix of spending cuts and tax increases to curb the federal debt.

Washington Post

The battle between Obama and Ryan

By John Parisella - Monday, April 18, 2011 at 4:18 PM - 28 Comments

Outside of the rhetoric and the partisanship, it is fair to say that the debate about the deficit and the debt is shaping up as a classic one over the role of government and the kind of country Americans want to build for their children. On the one side, Republican House Budget Committee Chairman Paul Ryan has been rightly commended for his audacity and courage to put his proposals forward at great risk. And, on the other, President Obama has finally made it clear where he stands and where he wants to take the country.

Both men acknowledge the need for important and drastic cuts in spending. They both recognize that the current path is unsustainable. The deficit is right now hovering at about 10 per cent of GDP and the debt is over 90% of GDP. Where Ryan and Obama differ is on the solutions. Ryan wants an overhaul of major entitlement programs such as Medicare and Medicaid, and wants to repeal Obama’s healthcare reform. The Bush tax cuts would become permanent under Ryan’s plan, which also calls for a reform of the tax code.

Obama’s approach keeps the major entitlement programs intact, but puts in place mechanisms to produce operational cuts. Elsewhere, Obama is promising to eliminate the Bush tax cuts on those earning over $250,000, calls for important cuts to defense spending, and also proposes to reform the tax code. Obama has made a compelling case for the kind of country he believes Americans want—compassionate and fair. In so doing, he may have re-energized his supporters who have found him far too compromising of late.

Meanwhile, a bipartisan group of six senators is working on a compromise solution. Its work will be inspired by the compromise spirit that prevented last week’s government shutdown, the contrasting Obama/Ryan visions, and the conclusions of the president’s debt and deficit commission led by former chief of staff Erskine Bowles and former senator Alan Simpson. This will all be added to the mix just as the Republican presidential nomination process kicks in.

The initial reactions seem to pit right against left, red against blue, small against big, and rich against less rich (i.e.the middle class). Media pundits reflect these assessments. It is highly likely that the battle lines are now drawn for the debt ceiling debate in the coming weeks, the 2011-2012 budget negotiations between the White House and the Republican-controlled House, and the 2012 presidential election.

As matters stand, Obama’s approach seems to have more potential with the electorate, which generally favours the longstanding entitlement programs. Ryan’s desire to make the Bush tax cuts on the rich permanent and to turn Medicare into a voucher program, opening the way for private insurers, makes it more daring but far more controversial and less voter-friendly.

The Republicans in the House have endorsed Ryan’s approach,  which will place an obligation on the GOP presidential challenger in 2012 ( not easy if your name is Mitt Romney and you passed a health care reform bill similar to Obama’s as Governor), Obama has succeeded in remotivating his base by what they have seen in last week’s speech as the line in the sand.The face of America is in for an historic confrontation. Let the battle begin.

Fiscal faceoff on Capitol Hill

By Luiza Ch. Savage - Saturday, April 16, 2011 at 12:10 PM - 1 Comment

Kevin Lamarque/Reuters

The weeks of threats of a government shutdown, and the late-night political brinkmanship between House Republicans, Senate Democrats and President Barack Obama, turns out to have been a mere warm-up. America’s grand fiscal drama is just getting started.

The standoff that kept the public on edge about national parks and tax-return processing only resolved spending for the rest of the fiscal year, which ends on Sept. 30. Leaders ultimately agreed on US$38.5 billion in budget cuts across a range of government departments. It’s a massive one-year cut not seen since the Reagan era, but in terms of the projected 2011 deficit of $1.6 trillion (all figures in U.S. dollars), a mere rounding error. Still, Republican House Speaker John Boehner claimed victory for wringing the concessions from the Democratic-led White House and Senate. But the Republican lawmakers—swept into office by Tea Party fury and a promise to cut $100 billion in spending the first year—pronounced themselves disappointed.

Democrats shielded spending for early childhood education, university grants for low-income students, and medical research grants, among others. And Republicans failed in their effort to use the funding deal to cut off government funding for Planned Parenthood, which provides contraception and abortion, and to roll back some environmental regulations. (Social conservatives did, though, extract a price for the final late-night compromise: a ban on government funding for abortions in Washington, which is overseen by the federal government. This led to the remarkable sight of the outraged Democratic mayor of the nation’s capital, Vincent Gray, arrested as he protested the deal in front of the Capitol building.)

Continue…

Budget bill passed by the U.S. House of Representatives

By macleans.ca - Thursday, April 14, 2011 at 3:55 PM - 0 Comments

The U.S. House of Representatives has passed legislation to maintain government funding and avert a shutdown. But though the legislation was based on a deal worked out between President Obama and the Republican Speaker of the House, John Boehner, Boehner was not able to round up enough members of his own party to pass the bill. Fifty-nine members of his caucus voted against the bill, and it passed only with the help of the 81 Democrats who voted for it. Boehner had come under heavy criticism from conservative publications like National Review, which claimed that the budget deal used accounting tricks to make it look like it had more drastic spending cuts than it actually did, and urged Republican Congressmen to vote against it. The bill is expected to pass the Senate, but the Republican defections may force Boehner to take an even harder line in future negotiations with Obama.

Talking Points Memo

U.S. Representatives vote on budget bill

By macleans.ca - Thursday, April 14, 2011 at 12:16 PM - 2 Comments

The U.S. House of Representatives will vote on about $40-billion worth of budget cuts on Thursday evening, after Republicans and Democrats reached a deal last week that prevented a government shutdown. The budget package includes a wide range of cuts to domestic programs and services, including high-speed rail, emergency first responders and the National Endowment for the Arts. On Wednesday, President Obama presented his deficit reduction plan, which involves a mix of spending reductions and tax hikes on the wealthy, which the White House claims would cut the federal deficit by $4-trillion over twelve years, without gutting Medicare and Medicaid. Republican House Budget Committee Chairman Paul Ryan also unveiled his contrasting plan, which calls for cutting the debt by $4.4-trillion over the next ten years, and would overhaul Medicare and Medicaid while reducing the corporate tax rate to 25 per cent. Democrats and Republicans still have to vote on raising the debt ceiling before the government reaches it’s borrowing limit of $14.29-trillion later this spring. If Thursday’s budget vote is passed in the House, it then must be passed by the Senate and be signed by Obama in 24 hours.

CNN

Obama and the confusion in the GOP

By John Parisella - Friday, March 27, 2009 at 6:27 PM - 9 Comments

One thing is apparent these days in Washington: The Republicans are lost and confused, and Obama is baiting them into making strategic mistakes. Rather than face off against a popular president coming off a decisive electoral victory, the GOP should be in a constructive mode. To oppose is a legitimate course, but it must be done on the basis of principle. Instead, the Republicans have come up with a document they tout as an alternative to the Obama budget. And they did this after the president used the oldest trick in the book—challenge your opponent to present an alternative. The GOP took the bait and the results have been disastrous.

John Boehner and Eric Cantor have to be the least-appealing spokespersons in recent memory for their party. Newt Gingrich may have been controversial, but at least he was thoughtful and smart. These two only add to the impression the Republican party is not playing its role as a loyal opposition. At the same time, Rush Limbaugh, Michael Steele, Sarah Palin, Mike Huckabee, Fred Thompson, Dick Cheney, and others are sending mixed signals, which will only ensure that Barack Obama gets his way. The Obama budget was an opportunity to debate the direction of the country. Such a debate is healthy for democracy. But the GOP failed to take a constructive and principled approach to it. Continue…

The Curious Case of Barack Obama

By John Parisella - Friday, February 27, 2009 at 6:53 PM - 29 Comments

What is it with this guy? Barack Obama’s first 100 days have to rank among the most active in over 70 years.

He promised a stimulus package and signed one two weeks ago; he promised mortgage relief and delivered; and while Secretary Geithner may have been short on details as far as relief for the financial sector is concerned, he still delivered the beginnings of a more comprehensive package. In the meantime, Obama announced the closing of Gitmo and, just today, he elaborated on his Iraq strategy. Obama’s visit to Canada clearly illustrated a new era in American diplomacy and his address to Congress this Tuesday further outlined his commitment to four major policy areas—energy, health care, climate change, and education. And he’s got a plan for all of it to boot. Still, the fight over the budget remains.

Continue…