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Posts Tagged ‘debt’
December 17th, 2013 at 6:53 pm
GOP to Strike Back on Debt Limit?

If you’re disappointed by Paul Ryan’s budget deal to avoid another government shutdown, the House Budget Chairman has a message for you.

Wait till February.

That’s when the debt limit will be reached and, according to Ryan, when Republicans in Congress will try to extract some meaningful concessions from Democrats.

Of course, Ryan didn’t divulge any specifics about what kind of concessions would qualify, likely because he’s waiting for the results from a GOP confab in the New Year to settle on a strategy.

I’m skeptical. Ryan’s budget deal takes most of the obvious targets off the table until 2015 – that is, after the midterm elections – making it hard to see what leverage he and other Republicans in Congress can exert on Democrats and President Barack Obama to curb their spending habits.

If recent history is any guide, the most likely scenario is that Republicans continue to fracture over fiscal issues while the Democrats get an assist from the mainstream media in raising the debt limit.

The bitter pill for conservatives to swallow is that House Republicans have almost no ability to make substantive changes in law or policy unless and until the party regains control of the Senate. If the upper chamber flips next year then the silver lining to Ryan’s budget deal and the likely debt ceiling capitulation it’s that they might be the last time the GOP negotiates from a position of weakness.

November 25th, 2013 at 5:52 pm
After Obamacare, Cities Want Pension Bailout Too

After decades of kicking the financial can down the road, some of America’s biggest cities now want to try throwing it up the ladder.

Starting January 1, Detroit will move its retirees to Michigan’s federally-run Obamacare exchange. Instead of the previous full coverage paid for by taxpayers, each retiree will get a $125 monthly stipend. The move is projected to save the city roughly $120 million.

Chicago and other cash-strapped cities are considering similar options.

But the move to offload state and local obligations onto federal taxpayers is just getting started. Writing for City Journal, Steven Malanga explains that municipal debt related to unfunded pensions far outweighs the amount owed to retiree health benefits.

To big city mayors the solutions, of course, are identical – Ask Uncle Sam for a bailout.

At some point, America’s entitlement culture – up and down the socio-economic ladder – has to take a back seat to fiscal reality. We’ll see if enough people are ready to have such a debate when the 2016 presidential election rolls around.

October 17th, 2013 at 11:19 am
Gov’t Before the Shutdown vs. Gov’t After the Shutdown
Posted by CFIF Staff Print

Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.

September 27th, 2013 at 3:03 pm
Top 10 Biggest Civic Pension Liabilities in America

“Most of the 50 local governments with the largest pension debt have worker retirement liabilities that are greater than their annual tax revenue, according to a new report from the credit-rating firm Moody’s,” says the lead in a Washington Post story.

The emerging leader in the deepening pension saga is Chicago, whose “pension liabilities were equal to 678 percent of its revenues as of 2011,” notes US News & World Report.

Here are the others in the top (or is it bottom?) ten:

Rank Debt Issuer Pension Liabilities as Percentage of Revenue

1. Chicago 678.2 percent

2. Cook County (Ill.) 381.6

3. Denver County School District 1 341.6

4. Jacksonville, Fl. 326.9

5. Los Angeles 324.5

6. Metro. Water Reclamation District of Chicago 323.4

7. Houston 312.4

8. Dallas 292.5

9. Clark County (Nev.) School District 259.1

10. Phoenix 240.2

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April 25th, 2013 at 4:37 pm
Video: Obama’s Make-Believe Budget
Posted by CFIF Staff Print

In this week’s Freedom Minute, CFIF’s Renee Giachino discusses the president’s budget proposal and how its calls for even higher taxes, higher spending, bigger government and more empty promises will do nothing to get us out of the Obama recession.

February 19th, 2013 at 12:31 pm
More Local Govt. Corruption in California

An investigative report from the Orange County Register deserves to be read in its entirety, but here’s my executive summary.

Hundreds of schools in California enlisted the services of a bank to underwrite school construction bonds, known on Wall Street as “capital appreciation” bonds.  The key attraction: no payments on principal or interest for 35 years.

Of course, that kind of delay isn’t free.  One school district in Orange County is estimated to owe $13 for every $1 borrowed when the bills come due.  This means that for one $22 million bond issue in 2011, the Placentia-Yorba Linda school district will eventually owe $280 million – 13 times the original amount.

It gets worse.  In 2008, thanks to arguably illegal politicking by the bank underwriter, district voters approved up to $200 million in bond issuances.  But while not all of the total are capital appreciation bonds, those that are could very well bankrupt the district for a generation or more.

The failures on display here are all too familiar.  Public officials opting to mortgage the future to look like a hero in the present saddle taxpayers with huge financial burdens.  Financial whizzes with no ethical scruples abuse the system for big profits.  And money wasted on concrete eye-candy – a football stadium and 600 seat performing arts center – while funding for classroom instruction gets reduced.

While there is no silver lining to the Register piece, it’s worth reading as a reminder of how much American government at all levels needs a deep renewal of ethics, thrift, and a commitment to the common good.

January 23rd, 2013 at 8:01 pm
Senate Dems to Pass First Budget in Four Years

The Hill posted a jaw-dropping lead to describe just how broken is the federal budget process:

Senate Democrats on Wednesday said they will move a budget resolution through the Budget Committee and onto the Senate floor for the first time in four years.

Despite protests to the contrary, the move is in response to a House-approved measure to move the nation’s debt ceiling back from late February to early May.

It’s hard to applaud a group of adults for finally getting the regular budget process going in the Senate.  Still, it’s a sign of progress that a budget may actually be produced in accordance with federal law.

November 5th, 2012 at 4:45 pm
Want to Reduce Public Spending? Make Government More Efficient
Posted by Troy Senik Print

There’s a certain strain of thinking on the right that scoffs at the notion of “efficient government.” The skepticism of what seems to be an unobjectionable goal has a few sources.

First, many pundits point out that the nation’s constitutional design is predicated on checks and balances that make government anything but efficient — the explicit goal, after all, is to slow the lawmaking process in an attempt to ensure some measure of deliberation. They’re right about that, of course, but that’s an observation on the lawmaking process, not on implementing or enforcing the law.

Second, conservatives note (also rightly) that government by its very nature (i.e., the lack of market incentives present in the private sector) has a built-in bias towards sclerosis and waste. That’s true as far as it goes, but arguing that government can’t be administered perfectly is not the same as arguing that it can’t be done better.

For a good example of the potential of reformist public administration, one need look no further than the example that Indiana Governor Mitch Daniels set with that most hated of bureaucracies, the DMV (though in Indiana it’s the BMV — The Bureau of Motor Vehicles). Consider this excerpt from Andrew Ferguson’s fabulous profile of Daniels in a 2010 issue of the Weekly Standard:

The state Bureau of Motor Vehicles, another patronage sump that was routinely ranked one of the worst in the country, was drastically reorganized. “[Daniels] likes metrics,” [Director of the Indiana OMB Ryan] Kitchell said. “He likes to measure outcomes.” Every line item in the state budget has at least one objective formula attached to it to indicate how well each service is being delivered. Regulatory agencies track the speed with which permits and variances are granted. The economic development agency has to compare the hourly wage of each new job brought to the state with the average hourly wage of existing jobs. In the case of the BMV, the two most important metrics were wait times and customer satisfaction. Now each receipt is stamped with the time the customer arrives and the time his transaction is completed. Wait times have dropped from over 40 minutes to under 10 minutes. Surveys put customer satisfaction at 97 percent.

So it can be done. And by the way, it’s also a cracker jack method for keeping government outlays under control. From Walter Russell Mead, writing at his Via Meadia blog:

… By 2025, fully 34 percent of US GDP will be eaten up by the cost of providing public services. Throw in little items [like] interest on the burgeoning national debt and pension and other liabilities, and we are looking at basic governance costs and obligations close to 40 percent of GDP—and heading inexorably higher…

There are two basic drivers behind these numbers: the first is the well known demographic problem that comes from the combination of increased longevity and falling birth rates. Programs like Medicare cost more as people live longer, and reduced population growth means that the workforce grows more slowly than the number of old people drawing on government services and transfer programs.

But the second driving force, which [an] Accenture [study] highlights very usefully, is less well understood: the catastrophically slow growth of productivity in the government workforce. Think of this as “bureaucracy drag;” while productivity in the workforce as a whole is rising by 1.7 percent per year, and in private sector service industries it is rising by 1.5 percent each year, in government productivity is rising by a miserable 0.3 percent per year.

Bureaucrats aren’t getting the job done. And the rest of us are paying the price. It’s time for public sector executives around the country to take a page out of Mitch Daniels’ playbook.

October 16th, 2012 at 6:01 pm
5 Points Romney Should Make in Tonight’s Debate

The Heritage Foundation tees up five issues that so far haven’t been mentioned in the Romney-Obama or Ryan-Biden matchups:

1)      Welfare Reform

2)      Trade

3)      Medicaid

4)      Federal Spending and Debt

5)      American-Produced Energy

Each of these is not only critical to American prosperity, but also conveniently is attached to a disastrous policy decision by the Obama Administration.

This summer Obama’s HHS gutted the work requirement for receiving welfare checks that was the hallmark of the mid-1990’s reform.

The President and his fellow liberals in Congress held hostage free trade agreements negotiated by the Bush Administration as a favor to labor unions, and in the process damaged our international standing.

Obamacare is scheduled to hit Medicaid doctors with a 19 percent pay cut starting in 2014.

This is the fourth consecutive year of $1 trillion budget deficits presided over by President Obama, and there is no indication the incumbent will do anything differently if reelected.

As for domestic energy production, Obama’s rejection of the Keystone XL pipeline angered not only consumers paying high gasoline prices, but also the unionized labor that stood to benefit from short- and long-term job creation.

Mitt Romney should look for ways to insert these failures of leadership into his answers during tonight’s townhall debate with Barack Obama.  People need to be reminded that the President’s kneejerk liberalism is bankrupting the country.

August 18th, 2012 at 9:33 pm
Moody’s Warns It May Downgrade California Municipal Debt

The Huffington Post summarizes a new Moody’s Investor Service report that could significantly alter municipal California’s fiscal future:

Moody’s reports that some cities are turning bankruptcy as a new strategy to take on budget deficits and avoid obligations to bondholders, an emerging dynamic that could have ripple effects throughout the investment community.

The municipal bond market has long been characterized by low default rates and relatively stable finances, Moody’s said, but that outlook is beginning to change as bankruptcy becomes a tool for cash-strapped cities.

Already three California cities – Stockton, San Bernardino, and Mammoth Lakes – have filed for bankruptcy.  HuffPo quotes Moody’s as saying that of California’s 482 cities, more than 10 percent have declared a fiscal crisis.

Historically, municipal bonds have been some of the safest investments on the market because cities are presumed by analysts to want to pay back their debt in order to maintain access to public bonds.  (Bonds pay for things like school buildings, roads, sewage systems, etc.)

Since California is responsible for 20 percent of the nationwide muni bonds in circulation, a downgrade by a ratings agency like Moody’s would have a significant negative effect on the value of heretofore safe investments.  If investors see California as an unsafe bet – and why wouldn’t they – expect to see the muni bond market dry up and even more cities opting for bankruptcy.

In other words, this is very bad.

April 18th, 2012 at 9:10 am
A Federal Budget That Ignores the Constitution
Posted by Troy Senik Print

Writing in the Washington Times, Richard Rahn — Senior Fellow at the Cato Institute and Chairman of the Institute for Global Economic Growth — puts the current state of federal spending in rather horrid relief:

The federal government is spending about 24 percent of gross domestic product (GDP). Most of it goes for Social Security, Medicare, Medicaid and other entitlement programs. The “discretionary” portion of the budget equals about 9 percent of GDP, with about half going for defense. Until 1930, the federal government normally spent less than 4 percent of GDP, except for the periods during World War I and the Civil War. The Constitution gives the federal government very few tasks for which it is required to spend money — the big item being the “common defense.” Again, up until 1930, the courts forced the federal government to live largely within the confines of the Constitution. Deducting defense spending from the federal budgets before 1930 shows that the federal government lived perfectly well on 2 percent to 3 percent of GDP for the first 140 years of the republic.

What all of this means is that approximately three-quarters of all federal government spending is not required by — and often is contrary to — the Constitution.

Conventional wisdom in Washington increasingly holds that those who wish to see the federal government pare back its expenditures rather than increase the tax burden on the American people are delusional, if not antediluvian. Yet for the majority of American history, the federal government was only a fraction of what it is today — and the Republic did quite well for itself.

Are we really to believe today that spending cuts that would still leave the federal government’s share of GDP several multiples higher than it was less than a century ago mark some civilizational rot? Because by all indicators (Europe comes to mind), the failure to prune seems to be the more perilous course.

March 24th, 2012 at 11:06 am
Mark Steyn: America About to Go Broke

Mark Steyn puts the federal government’s spending spree in a global perspective:

When you’re spending on the scale Washington does, what matters is the hard dollar numbers. Greece’s total debt is a few rinky-dink billions, a rounding error in the average Obama budget. Only America is spending trillions. The 2011 budget deficit, for example, is about the size of the entire Russian economy. By 2010, the Obama administration was issuing about a hundred billion dollars of Treasury bonds every month – or, to put it another way, Washington is dependent on the bond markets being willing to absorb an increase of U.S. debt equivalent to the GDP of Canada or India – every year. And those numbers don’t take into account the huge levels of personal debt run up by Americans. College debt alone is over a trillion dollars, or the equivalent of the entire South Korean economy – tied up just in one small boutique niche market of debt which barely exists in most other developed nations.

March 8th, 2012 at 4:57 pm
February 2012: Largest Monthly Deficit in History
Posted by Timothy Lee Print

Last month, we recalled Barack Obama’s false promise in February 2009 “to cut the deficit we inherited by half by the end of my first term in office.”  Instead, the nation’s deficit went from $455 billion in 2008 to $1.4 trillion in 2009, $1.3 trillion in 2010, $1.3 trillion in 2011, and now another projected $1.3 trillion for 2012.   Today, the Congressional Budget Office (CBO) just announced that the February 2012 deficit of $229 billion is the single largest monthly budget deficit in American history.

A $229 billion deficit would probably be close enough to make good on Obama’s promise to cut the $455 billion 2008 deficit in half as he approaches the end of his “first” term.  Except that it turned out to be for one month, not one year.

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February 13th, 2012 at 8:55 am
Ramirez Cartoon – Senate Dems: Budget? We Don’t Need No Stinkin’ Budget
Posted by CFIF Staff Print

Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.

January 23rd, 2012 at 4:35 pm
1,000 Days Without a Budget
Posted by Troy Senik Print

Believe it or not, that’s the remarkable reality we’ll be facing when Barack Obama takes to the podium to deliver his State of the Union address tomorrow night: nearly three years wherein the federal government — the largest distributor of funds on the planet — has operated without a budget. That’s a failure that deserves widespread public attention. Happily, the GOP — which usually can be counted on to bobble these kinds of communications opportunities — is doing a serviceable job of highlighting this ignominious milestone:

January 9th, 2012 at 7:17 pm
Chevy Volt: Catches Fire, Burns Taxpayers

Environmentalists’ dreams of highways filled with electric cars continue to crash and burn.  Literally.

Fresh off news that the Chevy Volt will undergo an internal redesign to make the car less susceptible to catching fire up to three weeks after it is impacted in an accident, William La Jeunesse of Fox News reports how taxpayers are getting burned even if they never purchase the car.

“Politicans love to get in front of something they think is the future, the problem is they do it poorly, they waste money and they just don’t have an impact on the overall economy,” says economist James Hohman of the Mackinac Center for Public Policy.

When all the federal and state subsidies to General Motors and its Volt suppliers are totaled, Hohman estimates each Volt sold costs taxpayers as much as $250,000.

Here’s the most outrageous numbers:

According to the CEO of General Motors, the average annual income of buyers of the Chevy Volt is $170,000. Those who buy the luxury electric Fisker Karma or Tesla roadster earn more than $250,000 a year. Yet every wealthy buyer receives a hefty handout from Uncle Sam, adding more than $8,500 to the federal debt for every car sold.

Once upon a time limousine liberals could be counted on to at least foot the charge for their gas bill.  Now, the rest of us are stuck paying for their environmental guilt trips.

August 30th, 2011 at 5:10 pm
Obama Returns to the “Blame Bush” Game
Posted by Timothy Lee Print

Even for Barack Obama’s supporters, this has to be getting old.

Today, responding to a question about an American economy still struggling after almost three years of deficit-driven Obama “stimulation,” he went back to the “Bush Card” with radio host Tom Joyner:

George Bush left us with a $1 trillion deficit, so it’s a lot harder to climb out of this hole when we don’t have a lot of money in the federal coffers.”

There are several problems with President Alibi’s rationalization.  Among other things, (1) the recession officially ended all the way back in June 2009, (2) the money in those “federal coffers” to which he refers actually reached an all-time high under Bush in 2007 (several years after the Bush tax cuts and well into the Iraq and Afghan wars that Obama now scapegoats) and (3) nothing seems to have stopped him so far from spending trillions of dollars that we don’t have.

But forget about those realities for a moment.  On a more basic moral level, what does it say about Obama as a man that this is what he continues to offer the nation to justify his performance and his request for a job extension?

August 4th, 2011 at 1:00 pm
California Democrats Trying to Weaken Initiative System

Dan Walters, the dean of California political journalists, is sounding the alarm over a series of moves by the state’s Democratic machine to restrict conservative access to statewide ballot initiatives.

As California Democrats see it, conservatives are poised to unleash a torrent of ballot measures to rein in government spending and regulations, as the state continues to suffer double-digit unemployment and annual budget deficits.  With Democrats controlling all levers of government, there’s only one area where their tax-and-spend liberalism could be challenged: at the ballot box.

To eliminate that threat, Democrats in and outside government are pushing to criminalize paying signature gatherers per name collected, and issuing radio ads linking petition-signing with identity theft.  Last week, Democratic Governor Jerry Brown vetoed the criminalization measure, but others are waiting the wings.

The motivation behind the Democrats’ ploy is protecting the public employee union members who live off legislative largesse, be it sweetheart pension deals, deferred compensation, or over-generous overtime pay.

With Californians waking up to the fact that economic growth isn’t possible without serious reforms, it’s becoming clearer by the day that the liberal Democrats running the state are not governing in the taxpayer’s best interest.  So to the statist’s mind, it’s far better to cut off debate than face reality.

August 4th, 2011 at 12:20 pm
Clinton Advisor Backs Mack Penny Plan

Lanny Davis, former special counsel to President Bill Clinton, writes in TheHill that the “Penny Plan” by Rep. Connie Mack (R-FL) is a “simple and creative” way to balance the budget.

…since the “balanced” solution of both increased revenues and spending cuts is supported in virtually every poll by substantial majorities of all voters, including large numbers of Republicans, Democrats need to find a spending cut formula that they can live with. The Mack Penny Plan seems a good place to start — it is simple, it makes common sense, and with some adjustments protecting the poor and the unemployed, it could be seen as fair even to many of the most liberal Democrats.

Ignoring Davis’ call to undermine the elegance of Mack’s Penny Plan by creating vague exceptions for the poor and unemployed – as I wrote recently, the attraction of Mack’s plan is its uniform treatment of all budget items – it’s welcome news that a high-ranking Clintonista can sense good policy when he sees it.

Earlier in his column Davis warned his fellow liberals that it would be “a moral stain on our generation if we leave this red-ink legacy for generations to come to deal with.”

Davis is right.  Let’s hope he urges his fellow Democrats to back Mack’s Penny Plan so we can get on the road to fiscal solvency as soon as possible.

August 3rd, 2011 at 7:50 pm
Ryan, Republicans Debating an Empty Oval Office

There are few things more annoying than trying to compete against someone who won’t play the game.

In today’s Wall Street Journal, House Budget Chairman Paul Ryan (R-WI) expresses the frustration of many conservatives who want a real debate about the purposes of government and our ability as a nation to fund them.  Ryan rightly chides President Obama for failing to engage in specifics about how to focus policymakers’ attention on the debt, not just its ceiling.

It is mystifying to me that the president continues to shut out Ryan’s “Path to Prosperity” proposal as a middle ground between bankrupting Medicare and Medicaid and eliminating them altogether.

One would think The One could see a Clintonian moment when presented.  But rather than see Ryan’s willingness to preserve the social safety net for what it is – a path to a long-term bipartisan solution – the president can’t see past his own partisan nose.

Yet instead of laying out his own vision, President Obama continues to offer speeches instead of specifics.  Lots of us want a debate about the ends of government, and how we structure our economy to pay for it.  If the leader of the Democratic Party won’t engage in a serious debate about it, maybe the Democrats should get someone who will.