The country is facing yet another debt ceiling increase. This time around when the debt ceiling is increased by $1.2 trillion there won’t be any 24 hour news coverage and there won’t be any last minute negotiations to trick taxpayers thinking that serious spending cuts will be offered (see previous post here). Debt ceiling negotiations last August set up a scenario that requires another debt ceiling increase before the 2012 elections. But, according to The Hill, “Under the terms of the August debt-ceiling deal, the debt will increase unless the Senate and Obama go along with the House disapproval, and that is never going to happen.” This increase should not be an exercise in futility; it should be an opportunity for taxpayers (and all Americans) to show their displeasure and frustration with current government spending.
The 1970’s sitcom “Welcome Back Kotter” depicts a dysfunctional classroom of trouble making students. When Americans “Welcome Back Congress” next week from their Christmas break, a group of dysfunctional and trouble making members of Congress will begin work on reducing the national deficit and debt. With a work week of only 2 days next week, there won’t be much time to get anything done so the following week is when the legislative process will begin to heat up when Congress returns for a full work week (by congressional standards) and the President gives his State of the Union address. Since last year’s State of the Union, the national debt has increased by $1 trillion despite numerous spending fights with threatened government shut downs, a debt ceiling crisis averted with sham spending cuts, and a Super Committee that failed to come up with $1 trillion in spending cuts over ten years. The first order of business when Congress returns is to cut spending and taxes to put the country back on the proper fiscal path.
When the 112th Congress took over in January, 2011, there was quite a bit of excitement and anticipation that the newly elected members (including dozens of tea party members) would be aggressive in demanding real spending cuts and accountability. With a near-miss government shutdown in April, a debt ceiling scare in August and the failure of the super committee in November, last year was filled with missed opportunities to institute real spending cuts. With the federal debt eclipsing $15 trillion in 2011, Congress has quite a bit of work to do in 2012. In addition to the annual budget fiascos that are typical of Washington, D.C., there are seven key areas (Agriculture, Defense, Energy, the Food and Drug Administration/Centers for Disease Control and Prevention, Tax Reform, Telecommunications/Technology, and Transportation) that will determine if Congress and the President are serious about bringing spending under control and having a more efficient government.
It is less than two weeks before Christmas and Congress has not finished work on fiscal year (FY) 2012 appropriations bills (they were supposed to be done by October 1). This failure to get their work done should come as no surprise since 2011 has been filled with un-kept promises and crisis politics as Congress has waited until the last minute to finish most of their budgetary work in 2011. The pseudo budget crisis in April when a government shutdown was threatened when Congress failed to pass a budget for FY 2011, the impending downgrade of the nation’s credit status in August with the raising of the debt ceiling (and the ensuing failure of the super committee in November), and the current looming government shutdown shows that when push comes to shove in Washington, D.C., the status quo pushes back and taxpayers get shoved.
During the next two weeks taxpayers will see some of the elements of the of the August debt ceiling agreement come together with a vote on a Balanced Budget Amendment (BBA) and the report from the Joint Select Committee on Deficit Reduction (aka the Super Committee). In typical Washington fashion, there are two potential outcomes for both the BBA and the Super Committee. A weak BBA and a discordant Super Committee could foreshadow a future filled with fake spending cuts and tax increases.
With a threatened government shutdown in April averted with a deal to cut spending and an agreement to cut spending as a requirement to raise the debt ceiling in August, budget hawks thought that there would be a decrease in government spending. A recent article in Investor’s Business Daily threw cold water on that notion when it reported on October 17 that “In fact, in the first nine months of this year, federal spending was $120 billion higher than in the same period in 2010, the data show. That's an increase of almost 5%. And deficits during this time were $23.5 billion higher.” Chris Edwards of the Cato Institute warned of fake spending cuts in the deal to raise the debt ceiling in an August 1, 2011 blog posting, “The ‘cuts’ in the deal are only cuts from the CBO ‘baseline,’ which is a Washington construct of ever-rising spending. And even these ‘cuts’ from the baseline include $156 billion of interest savings, which are imaginary because the underlying cuts are imaginary. No program or agency terminations are identified in the deal. None of the vast armada of federal subsidies are targeted for elimination.” This makes taxpayers even more frustrated as politicians try to take credit for non-existent victories and continue to use one budget gimmick after another to try and confuse taxpayers and increase spending. Above and beyond real spending cuts, taxpayers ultimately want honesty in budgeting (and all government). It’s easy to find a member of Congress who supports this but the tough task is finding somebody who will put legislation where their mouth is. Sen. Jeff Sessions (R-Ala.) has taken the first step in taking real action in trying to bring honesty in budgeting with his aptly named “Honest Budget Act.” This legislation will get rid of budget tricks and lay the foundation for real budget reform to take hold.
As part of the August 2, 2011 deal to raise the debt ceiling, the Joint Committee on Deficit Reduction (aka the “Super Committee”) was created to come up with an additional $1.5 trillion in deficit reduction. This is in addition to an initial $1 trillion in spending cuts that was instituted immediately after the deal was signed. Many believed that mid-November was the deadline to contact the Super Committee about specific ideas. It now appears that taxpayers have once again been misled. Multiple news reports indicate that October 14, 2011 is the real deadline to make formal recommendations to the Super Committee. Many groups have been offering advice on where to cut spending. In fact, the Taxpayers Protection Alliance (TPA) held a Defense briefing on October 3 with representatives from the Lexington Institute, National Taxpayers Union, and Americans for Tax Reform to discuss potential spending cuts in the Department of Defense that wouldn’t affect national security. The panelists recommended eliminating funding the Joint Strike Fighter alternate engine and the Medium Extended Air Defense System (read previous blog postings here and here). TPA has also recommended eliminating Community Transformation Grants funded through the Centers for Disease Control (read previous blog posting here). Even with all these superb ideas coming out of TPA, and other groups, Congress doesn’t have to look much further than the Congressional Budget Office, President Obama and the National Commission on Fiscal Reform and Integrity for ideas.
Congress left for recess on August 2, immediately after they raised the debt ceiling and promised to cut spending. With a month long vacation (they call it district time) and plenty of time on their hands, the Taxpayers Protection Alliance (TPA) wants to know if you see your member of Congress at an official town hall meeting or at the local grocery store. What is remarkable about their month-long absence is that they will have one month of “district time” and that they make $174,000 per year. With very generous benefits such as retirement, pension and health coverage, their total compensation is roughly $285,000 per year (read the report here). If you do run into your member of Congress we have a few questions you might want to ask.
Congress is preparing to vote on a new deal to raise the debt ceiling. The deal was negotiated over the weekend after intense negotiations between the White House and the leaders of the House and Senate. The deal would raise the debt ceiling by $2.4 trillion (which would be enough to last through the 2012 elections) and require immediate spending cuts. The first round of cuts would total $1 trillion over ten years. The second tranche would involve a “super committee” of 12 members of Congress and involve an additional $1.2 trillion to $1.5 trillion. The weakest part of the deal is that there is no requirement that a Balanced Budget Amendment (BBA) be passed. The Taxpayers Protection Alliance (TPA) does not believe there are enough provisions to protect the taxpayer and urges the House and Senate to vote “NO” on the deal.
On Tuesday July 19, the House of Representatives passed H.R. 2560, the Cut, Cap, & Balance Act of 2011 (click here, here, and here to read previous posts on CCB). On Friday, the Senate cut off debate on its version of cut, cap and balance, effectively killing the legislation. If it had been passed by the Senate and signed by the President, the legislation would have forced Congress and the President to cut spending, cap spending and pass a Balanced Budget Amendment. On the same day that the vote on H.R. 2560 took place, the Senate’s Gang of Six proposal was released. Named after the three Republican senators; Tom Coburn (Okla.), Saxby Chambliss (Georgia), and Michael Crapo (Idaho) and three Democratic senators; Kent Conrad (N.D.); Dick Durbin (Illinois) and Mark Warner (Virginia), the Gang of 6 plan is supposed to be THE bi-partisan answer to raising the debt ceiling and addressing future deficits and debt. In reality, the plan contains massive tax increases.