Tag Archives: Nancy Pelosi

News

A closer look at the budget deal

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Here’s a good article in the Wall Street Journal about the budget deal struck by the House, Senate and White House on the weekend.

Excerpt:

The big picture is that the deal is a victory for the cause of smaller government, arguably the biggest since welfare reform in 1996. Most bipartisan budget deals trade tax increases that are immediate for spending cuts that turn out to be fictional. This one includes no immediate tax increases, despite President Obama’s demand as recently as last Monday. The immediate spending cuts are real, if smaller than we’d prefer, and the longer-term cuts could be real if Republicans hold Congress and continue to enforce the deal’s spending caps.

The framework (we haven’t seen all the details) calls for an initial step of some $900 billion in domestic discretionary cuts over 10 years from the Congressional Budget Office (CBO) baseline puffed up by recent spending. If the cuts hold, this would go some way to erasing the fiscal damage from the Obama-Nancy Pelosi stimulus.

[…]The second phase of the deal is less clear cut, though it also could turn out to shrink Leviathan. Party leaders in both houses of Congress will each appoint three Members to a special committee that will recommend another round of deficit reduction of between $1.2 trillion and $1.5 trillion, also over 10 years. Their mandate is broad, and we’re told very little is off the table, but at least seven of the 12 Members would have to agree on a package to force an up-or-down vote in Congress.

If the committee can’t agree on enough deficit reduction, then automatic spending cuts would ensue to make up the difference to reach the $1.2 trillion minimum deficit-reduction target. One key point is that the committee’s failure to agree would not automatically “trigger” (in Beltway parlance) revenue increases, as the White House was insisting on as recently as this weekend. That would have guaranteed that Democrats would never agree to enough cuts, and Republicans were right to resist.

Instead the automatic cuts would be divided equally between defense and nondefense. So, for example, if the committee agrees to deficit reduction of only $600 billion, then another $300 billion would be cut automatically from defense and domestic accounts (excluding Medicare beneficiaries) to reach at least $1.2 trillion.

One reason to think tax increases are unlikely, however, is that the 12-Member committee will operate from CBO’s baseline that assumes that the Bush tax rates expire in 2013. CBO assumes that taxes will rise by $3.5 trillion over the next decade, including huge increases for middle-class earners. Since any elimination of those tax increases would increase the deficit under CBO’s math, the strong incentive for the Members will be to avoid the tax issue. This increases the political incentive for deficit reduction to come from spending cuts.

Mr. Obama’s biggest gain in the deal is that he gets his highest priority of not having to repeat this debt-limit fight again before the 2012 election. The deal stipulates that the debt ceiling will rise automatically by $900 billion this year, and at least $1.2 trillion next year, unless two-thirds of Congress disapproves it. Congress will not do so.

I don’t like the deal because I wanted Obama to have to face this problem with this again in May of 2012, but it may be the best deal we could get with control of only the House.

News

Would the Republican “cut, cap and balance” plan solve the debt crisis?

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Let’s take a look at the Republican “Cut, Cap and Balance” plan, as reported by CBS News.

Excerpt:

The House next week will take a vote to raise the debt ceiling and pass a balanced budget amendment, House Republican leaders said today.

The plan is unlikely to go anywhere, since a balanced budget amendment would likely fail in the Democrat-led Senate, but GOP leaders nevertheless called it a serious plan to raise the debt ceiling. They said President Obama and Democrats have failed to come up with an equally serious plan.

“We asked the president to lead,” House Speaker John Boehner said in a press conference today. “We asked him to put forward a plan — not a speech, a real plan — and he hasn’t. We will.”

The “cut, cap and balance” proposal would make raising the debt ceiling contingent on Congress sending a balanced budget amendment to the states. It would also cap government spending at 18 percent of Gross Domestic Product over the next 10 years.

The plan would raise the debt ceiling by $2.4 trillion, since that is the increase requested by the president. However, the plan would actually make even more in spending cuts — as much as $111 billion in 2012 alone.

[…]Boehner said the House would vote on the “cut, cap and balance” plan and then decide how to proceed from there.”I don’t want to preclude any chance of coming to an agreement, but [Democrats have] been unwilling to put a real plan on the table,” Boehner said. “Without serious spending cuts or real reform to entitlement programs, this problem is not going to be solved.”

That’s what the Republicans would do if they were in control. The balanced budget amendment would cap spending at 18% of GDP, so that we would never have a debt crisis ever again. That’s the right solution, except that the Democrats cannot give up the idea of buying votes with the money they steal from job creators. They just can control their addiction to spending.

Now, let’s take a look at who caused the debt crisis, with this House Budget Committee article by fiscal hawk Paul Ryan. (H/T Washington Post)

Excerpt:

While President Obama has recently professed a newfound — and vague — desire to cut government spending, it’s useful to recall what the President has actually done since taking office in 2009. The President signed into law a massive spending spree that plunged us deeper into debt, and failed to deliver on its promise to create jobs.

  • 24% Increase in Base Spending. Non-defense discretionary spending grew by 24% for the first two years of the Obama Administration, adding $734 billion in spending over the next 10 years.
  • Record Government Spending. The Federal government will spend $3.6 trillion this year, 24% of gross domestic product (GDP) and the highest burden on the economy since World War II. Spending has historically averaged a little over 20% of GDP.
  • President’s Budget Makes Matter Worse. According to CBO, the President’s budget never spends less than 23% of GDP and by the end of the decade rises to 24% of GDP. His budget’s failure to address the drivers of our debt threatens the health and retirement security of America’s seniors, and the economic security of all Americans. The President’s budget seeks to spend $46 trillion in government spending over the next decade, and has subsequently fought against House Republican efforts to restrain his spending appetite down to $43.5 trillion.

During the four years when Nancy Pelosi was the Speaker of the House, and Harry Reid was in control of the Senate, the Democrats packed 5.34 trillion dollars onto the national debt.

News

John Boehner says no to Obama’s plan to raise taxes by 2 trillion

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Republican Speaker John Boehner
Republican House Speaker John Boehner

From the leftist Washington Post.

Excerpt:

Senate Democrats have drafted a sweeping debt-reduction plan that would slice $4 trillion from projected borrowing over the next decade without touching the expensive health and retirement programs targeted by President Obama.

Instead, Senate Democrats are proposing to stabilize borrowing through sharp cuts at the Pentagon and other government agencies, as well as $2 trillion in new taxes…

[…]Republicans dismissed the Democratic blueprint, saying higher taxes would be devastating to an economy already weighed down by a 9.2 percent unemployment rate. In their spending plan, House Republicans proposed to save $4 trillion entirely through spending cuts; they would also eliminate Medicare as an open-ended entitlement after 2021.

“If they’re calling for $2 trillion in tax hikes in the middle of a jobs crisis, it’s little wonder that it’s been 800 days since Senate Democrats passed a budget,” said McConnell spokesman Don Stewart.

Since early this year, Senate Democrats have struggled to draft a spending plan. Moderates refused to endorse any blueprint that included big annual budget deficits or big tax hikes. Liberals, meanwhile, opposed sharp cuts to social programs. Sen. Jeff Sessions (R-Ala.), the senior Budget Committee Republican, has relentlessly hammered Democrats for their failure to adopt a budget.

Although the new document is unlikely to be officially adopted, it was embraced by a majority of Senate Democrats when Conrad presented it at a closed-door luncheon earlier this week, aides said.

Under the blueprint, the top income tax rate would rise to 39.6 percent for individuals earning more than $500,000 a year and families earning more than $1 million. That group, which constitutes the nation’s richest 1 percent of households, would also pay a 20 percent rate on capital gains and dividends, rather than the 15 percent rate now in effect.

John Boehner says no way.

Excerpt:

Speaker John A. Boehner told President Obama on Saturday night he will not agree to the president’s most ambitious plan for deficit reduction, citing the administration’s pursuit of tax increases as one of the main hurdles.

The Democrats want to tax investors and job creators. Is it any wonder that this administration has been unable to create jobs? They keep taxing and regulating the small businesses and investors who enable the creation of the majority of new private sector jobs, then are shocked to find that no new jobs are being created. When will they learn that “taxing the rich” just means “taxing the job creators”?

Why are companies not hiring?

Companies are not hiring because the Democrats spent too much, and now they want to raise taxes. Higher taxes makes companies not hire workers.

Look at this diagram:

Republican control of House = low unemployment

Compare the unemployment rates when Republican Newt Gingrich was in charge of the House, to when Nancy Pelosi was in charge:

Gingrich versus Pelosi unemployment graph
Unemployment: Gingrich ('95-'99) vs Pelosi ('07-'10)

Nancy Pelosi added 5.34 trillion to the national debt in 4 years! If you are running a business, then you STOP hiring when you see that the government is spending so much that new taxes are inevitable. You cannot argue with these facts – more spending means higher unemployment, BECAUSE more spending raises fears of higher taxes on job creators. And that’s exactly what Obama is now threatening, and why the unemployment rate is going UP not DOWN. Newt Gingrich added only ONE TRILLION to the national debt between 1994 and 1999. ONE TRILLION. That’s bad, but it’s not FIVE TRILLION as under Pelosi.

Prior to January 2007, George W. Bush’s unemployment rate was down below 5%. Job creators knew that he wasn’t going to come after them with tax hikes and burdensome regulations. You can’t create jobs by punishing job creators. The trade-off of low tax rates for the wealthy is a low unemployment rate. Those are the facts, and we have to live with reality as it is.