August 30, 2014

Washington Budget Report: Oct. 18, 2011

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The AARP's Irresponsible Ad Campaign

The AARP has launched a misleading and divisive ad campaign aimed at excluding Social Security and Medicare from any deficit-reduction proposals that might be developed by the new congressional “super committee.”

This could have a dramatic negative impact on other government priorities, including federal programs for younger Americans and unemployed workers. It is also contrary to the notion of shared sacrifice that that has been advocated by the president’s bipartisan fiscal commission, the Bipartisan Policy Center’s Debt Reduction Task Force, the Senate’s Gang of Six and many other responsible groups.

The AARP, which says it advocates for older Americans, urges them to tell their members of Congress that Medicare and Social Security cuts must be “off the table” in the super committee’s deliberations. The AARP is also championing the mistaken notion that our fiscal challenges can be met by simply cutting “waste and loopholes.” No serious budget analyst believes that would suffice, and there is often little political consensus over what constitutes “waste.”

“This is the kind of tactic and rhetoric AARP has condemned in the past,” said former U.S. Senator Bob Kerrey, co-chairman of The Concord Coalition’s Board of Directors. He said the AARP’s ad campaign was fostering “generational warfare” and had “put at risk the strong inter-generational support for Social Security and Medicare.”

Concord Executive Director Robert L. Bixby added: “With its size and influence, AARP could be a powerful voice for reasonable reforms to establish a more sustainable fiscal path. Instead, it has chosen to be part of the problem by insisting that all sacrifices must be borne by someone else.”

Others in Congress Offer Advice to Super Committee

The Joint Select Committee on Deficit Reduction is receiving an earful of advice as congressional committees and individual lawmakers offered a wide variety of recommendations, many of them at odds with each other.

Congressional committees were asked to submit their suggestions to the committee by last Friday although some recommendations are still coming in. While some committees offer constructive suggestions and made commitments to find savings, many committees unfortunately focused more on what to keep rather than what to cut.

In releasing proposals from ranking members of House committees, however, Democratic Leader Nancy Pelosi insisted that House Democrats wanted a deficit reduction plan that is “big, bold, and balanced.” She also urged the super committee to focus on job creation and “thoroughly consider” the President’s American Jobs Act although it had already been blocked by a Senate vote earlier in the week.

Some Republicans, meanwhile, reiterated their opposition to last year’s health care legislation, many regulations on business, and the idea of raising additional government revenue. Senate Finance Committee Republicans, for example, said they supported “fundamental tax reform” but said it should be revenue-neutral.

The super committee, composed of six Democrats and six Republicans, is tasked with making recommendations to Congress by late November to reduce projected deficits by $1.5 trillion over the next 10 years. The Concord Coalition has urged the committee to exceed that target,  giving careful consideration to recommendations from the President’s fiscal commission and other bipartisan groups.

Obama Seeking Piecemeal Approval of ‘Jobs Bill’

President Obama said Monday he would seek congressional approval of “bite-sized pieces” of his $447 billion plan to bolster the economy after a Senate vote last week blocked the package as a whole, along with a provision Democrats had added for a surtax on incomes of more than $1 million.

Most of the President’s “jobs bill” consists of tax cuts for businesses and individuals, including an extension and expansion of this year’s reduction in the Social Security payroll taxes paid by workers. The plan also calls for $175 billion in infrastructure spending, assistance to states and an extension of unemployment benefits.

Obama complained that Republicans were opposing proposals they had supported in the past. Senate Republican Leader Mitch McConnell said Democrats had “designed their own bill to fail” in an effort to score political points against the GOP.

Short-term deficit-financed measures to support a weak economy can be compatible with long-term deficit-reduction planning.  But it is critical for elected officials to make sure the country gets the most “bang for the buck” in trying to give the economy a boost.

While the House is in recess this week, the Senate is expected to return to Fiscal Year 2012 appropriations. The Senate is scheduled to consider an amendment which combines three separate appropriations bills: Agriculture; Transportation, HUD; and Commerce, Justice, Science.

The new fiscal year began this month but Congress has yet to enact any of the twelve appropriations bills for FY 2012.  Government agencies are currently being funded with a continuing resolution that expires on Nov. 18.

Treasury Reports a $1.3 Trillion Deficit for FY 2011

The Department of the Treasury has released final budget numbers for Fiscal Year 2011, which show that it ended with a deficit of $1.3 trillion -- about the same as the previous year.

This marked the third fiscal year in a row in which deficits have exceeded a trillion dollars. The deficit for FY 2011, which ended Sept. 30, was 8.7 percent of the Gross Domestic Product (GDP) -- down slightly from 9.0 percent of GDP in FY 2010.

Revenues in FY 2011 totaled $2.3 trillion, which was $141 billion or 6.5 percent higher than the previous year. Outlays in FY 2011 were $3.6 trillion, which is $145 billion or 4.2 percent higher than in FY 2010.

Debits & Credits

A Lesson Learned: The administration acknowledged last week that a poorly designed long-term care insurance program – the Community Living Assistance Services and Supports (CLASS) program -- was unworkable. Kathleen Sebelius, secretary of health and human services, said careful analysis indicated few healthy people would pay the high premiums that would be required for the program to provide the benefits it promised.

California Dreamin’: Rep Maxine Waters has introduced legislation to abolish the new congressional  committee on deficit reduction, which resulted from this summer’s compromise between Democrats and Republicans to raise the debt limit. Even as members of Congress were flooding that panel with recommendations, she complained last week that it would be making its decisions “with little or no input from Congress.”