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deficit

I’ve been watching with a mixture of disdain and wonder the release and public flagellation of President Obama’s 2013 budget proposal. Disdain mostly because a Democratic President actually just proposed cutting benefits to current Social Security recipients (along with the rest of us, when we get there) through this Chained CPI bullpucky, and wonder because of what a brutally aggressive political gambit it represents.

Proposal. Not law. Copyright Reuters.

Proposal. Not law. Copyright Reuters.

 

I’ll explain. For one thing, Obama’s budget has zero chance of becoming law. We know this. He knows this. Mitch McConnell, John Boehner, Harry Reid, and Nancy Pelosi know this. None whatsoever. Perhaps this is an optimistic reading of the circumstances here, but I think that’s part of the point of this exercise. The things that President Obama proposed in this budget are the very things the Republican Party demanded in return for additional tax revenue to close the budget deficit (despite Social Security contributing exactly zero dollars to the deficit. I digress). At the same time, Obama knows that McConnell and Boehner will never, ever, ever agree to any compromise at all, let alone one that involves additional tax revenue on top of what Obama already achieved in December. So by offering them exactly what they wanted with the foreknowledge that they will never accept it in any real way, he’s forcing them once again (and again, and again) to own their right-wing, reactionary agenda in front of a public that, if memory serves, recently rejected that crap by a pretty huge margin.

 

Is this proposal a good thing? No, of course not. It doesn’t do enough to push renewable energy production or rapid transit options or a host of other priorities, especially in light of a still-fragile economy. But with divided government, we really have two options: publicly moan about how mean and nasty the other side is, or beat the other side over the head with their own intransigence until they either submit, or the voting public turns them out on their ear and demands progress. John Boehner and Mitch McConnell are stuck with the first option, whether they like it or not. President Obama has apparently chosen the second option. The progressive movement must keep up the fight to protect Social Security and Medicare, and make sure public opinion stays on our side. At the same time, we need to help keep the focus where it needs to be through the 2014 elections: on a right-wing political party that has effectively broken our national political discourse, and does not deserve to be anywhere near the levers of power.

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Forming the Catfood Commission was political genius. The Commission’s goal was to find ways to address the deficit. Conservatives and conservative Democrats ran the commission.

The Catfood Commission made it easier for Beltway Democrats to accept discussing drastic cuts to Medicare, Medicaid and Social Security. After all, these serious people on this serious commission had introduced it as the only way to address the issue.

Except it was entirely bullsh*t.

Rep. Keith Ellison (DFL-MN) sees this in a similar light (though he may not use the same words). He’s opposed to these drastic cuts and is in a position to protect our seniors, kids and the disabled. Here’s his press release:

WASHINGTON- Rep. Keith Ellison (D-MN), Co-Chair of the Congressional Progressive Caucus, released the following statement after Politico reported on the potential outlines of a deal, including $1.2 trillion in new tax revenue and $400 billion in changes to Medicare, Medicaid, and Social Security
“Any agreement to meet our end-of-the-year deadlines will need a large portion of the House Democratic Caucus to pass. Progressives will not support any deal that cuts benefits for families and seniors who rely on Medicare, Medicaid and Social Security to put food on the table or cover their health costs. Last year, over 80 members of the Progressive, Black, and Asian Pacific-Islander Caucuses stood united in opposing an agreement that cut benefits for these families, and 44 members have introduced a resolution demanding these cuts be off the table.                                                                    
“There are better options that protect seniors, children, and disabled Americans. We should allow Medicare Part D to negotiate lower drug prices for seniors and by requiring the wealthy to contribute  to Social Security on all of their wages, as middle class Americans do now. But cuts like raising the retirement age would cost seniors thousands of dollars, and increase the cost of health care by over $11 billion.”


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Minnesota Republicans covered massive budget shortfalls last spring by an accounting trick. They decided not to give schools the money they promised them. Of course, after all our schools had budgeted based upon the amounts they’d been promised. Republicans call this bit of Enron accounting a “shift.”

The brilliant minds amongst the Republican legislative leadership have come up with a solution to the crisis they’ve caused our education system: pay back schools out of the state’s reserve fund.

Republicans in the Minnesota House are proposing to tap two thirds of the state’s budget reserve to pay back a portion of a K12 school shift they used to balance the budget in 2011.

Rep. Pat Garofalo, R-Farmington, says the measure is part of a K12 bill that will be heard in committee tomorrow. He said paying back schools with $430 million from the state’s budget reserve is a better use of the money.

“If you look at accounting principles, it’s better to reduce your debt and reduce your liabilities than to have that cash sitting around,” Garofalo said.

What’s that you ask? Isn’t the reserve meant for rainy day or don’t we have to repay the the reserve fund or when are we going to repay the entire IOU?

Quit being so negative. Never you mind. Nothing to see here.

Republicans never fix problems they cause … they just kick the can down the road. Aren’t y’all used to it, yet? Don’t you all remember Gov. Tim Pawlenty papering over his massive holes in his budgets with accounting tricks and various gimmicks?

What bad things happened other than a bridge fell down and Minnesota now has a structural deficit that will only cause our deficits to expand indefinitely?

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On February 29th, State Economist Tom Stinson and Minnesota Management and Budget Commissioner Jim Schowalter reported an additional $323 million for our current two-year budget cycle. These added resources stem from better-than-expected general fund revenues for fiscal year 2012-13 in the amount of $93 million and $230 million less in anticipated spending from the previous forecast. Most of the spending reductions are the result of significantly lower than projected enrollees in the early expansion of Medical Assistance (MA) for adults without children.

While the overall economy is improving, and the Republican leadership in the House and Senate has been quick to take credit for solving all of the state’s fiscal issues, the rest of the story needs to be told. No doubt about it, an additional “$323 million surplus” makes for a great forecast headline. To put this in context, let’s try a little weather analogy. “While the afternoon weather forecast says clear and sunny. Come the end of the week; look out! A severe thunderstorm is headed your way!”

That is what our state is facing from a fiscal standpoint; a storm, once again, of epic proportions. First and foremost, how much of that “$323 million surplus” actually exists? Give up? Zero. Of the $323 million, $5 million has been added to our depleted budget reserve account (one of the accounts Governor Pawlenty had to spend down to zero in-order to unallot). Next, the remaining $318 million must be used to start repaying the funds that were taken from our schoolchildren. In order to balance the budget last year and end the government shutdown, instead of asking individuals earning more than one million dollars per year to pay a penny more in taxes, the Republicans in the legislature voted to withhold more than $2.7 billion from our schools. By law any surplus most go towards making our kids whole.

Going forward, our state faces a projected $1.1 billion deficit for the next biennium. At first glance, that may not sound half bad. However, when the remaining $2.4 billion owed to our schools is factored in, and the $1.5 billion cost of both interest and principle to repay the one-time money from the tobacco bonds is accounted for, our state is right back where it started. With a $5 billion deficit. The republicans have nothing to take credit for. No changes have been made. No structural reforms. Just more smoke and mirrors.

Real fiscal stability is going to require tough choices. It is going to require both cuts and revenue. I’ve voted for both in the past and continue to support a balanced approach going forward.

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You may not know this, but Rep. Michele Bachmann (R-MN) has a day job. She represents Minnesota’s Sixth Congressional District. You might have forgotten this fact as she’s been too busy running for President. She missed every single vote in Congress between August 1 and October 12, 2011.

Rep. Michele Bachmann, one of two members of the House of Representatives vying for the GOP presidential nomination, snapped her streak of consecutive votes missed at 88, ending a run that dated back to Aug. 1.

So I went to GovTrack and looked up her votes for 2011.  There have been 782 votes so far this year in the US House of Representatives.  Bachmann has voted in 58% this year.  However since July 15, 2011 Michele Bachmann has missed 94% of votes in the House.

Yet, in Des Moines yesterday, she accused President Obama of being AWOL on the budget.

In a short press availability held this afternoon at Hoyt Sherman Place in Des Moines, Republican presidential candidate Michele Bachmann unloaded on President Barack Obama’s handling of the budget.

“The president has for an [sic] intents and purposes been AWOL in any form of leadership in dealing with getting our budget together this year,” she said. “It’s really been something has been disgusting for a lot of Americans.”

The comments came amidst arguments in Congress today over an extension of the temporary payroll tax cut and a spending measure to keep the government funded beyond the end of the week.
[my emphasis]

The irony is, of course, that Bachmann isn’t in DC to participate in the budget negotiations, she’s in Iowa far too busy campaigning to be bothered.

I love her use of the phrase “for all intents and purposes.” Because, unlike her, Obama has been at least physically in Washington, DC during the second half of this year. Furthermore, I wouldn’t blame Obama for the GOP’s unwillingness to negotiate in good faith.

I wonder what my employer might do if I didn’t show up at work for two plus months?

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Let it fail and do nothing

by Eric Ferguson on November 22, 2011 · 0 comments

Update: Hurrah!

Good news: the deficit supercommittee looks set to fail. Yes, I see the stock market is down a bunch today. I don’t care. Failure is good. Sometimes, a bad deal is better than no deal. This isn’t one of those times.

Technically, the deadline is Wednesday, but in practical terms, they need a couple days for the CBO to score it. However, as we saw with that horrific debt ceiling negotiation, the practical deadline can get pushed back when a deal is close. That’s why I’m writing this, in hopes of encouraging congressional Democrats to see that not only is failure an option, it’s the best option. In fact, it’s not a bad option at all. Well, OK, a better option would be a deal where the Republicans accept that upper income taxes have to go up, but the odds of reality breaking through to Republicans are similar to fairies breaking through to reality.

And the “do nothing” part of the headline? Not only should the supercommittee be allowed to fail, but if all current policies are left in place, the deficit is close to gone. There are negative consequences to that certainly, but just taking the deficit by itself, inaction is the best action. With a hat tip to TPM, a chart to illustrate this (click to enlarge):

How can failure be good? The triggers that were part of the debt ceiling deal supposedly were so awful, both parties would have a huge incentive to compromise. Two things this misses. One, as reluctant as Democrats are to cut entitlements, a very justified reluctance in policy terms, the trigger is cuts to Medicare providers. Providers won’t like that, but one of the reasons US medicine is so expensive is we simply pay more to providers than other countries do. Every single-payer advocate can reel off the statistics, that we pay double per capita of anyone else for health care, and private insurance has about 25% overhead, while Medicare and foreign systems are in the low single digits. That always bugged me. Take out excessive insurance overhead, and we still have a lot of excess costs to explain. Can it all be a bad system? I always doubted it. I’m not looking to make life harder for doctors or hospitals — but they do get paid noticeably better than their foreign counterparts, and if we’re to get costs down, these sorts of cuts probably have to happen.

That’s one thing the belief the supercommittee would be bound to compromise misses. Number two was the assumption Republicans were so anxious to protect defense spending, that to protect it, they’d finally get over their taxophobia. Whoever thought that is still thinking in the Cold War, when fiscally conservative Republicans raised taxes and sometimes were even the ones who pushed for increases, but defense was sacrosanct. That’s not modern Republicans. That assumption failed to understand how taxophobia is so deep in Republican bones that it pushes aside the marrow.

From a Democratic point of view however, at least a liberal, non-Blue Dog Democrat point of view, defense is bloated, needs cutting, and is damn near impossible to cut. Cuts in defense are second only to upper income tax increases in terms of what has to be done to fix our fiscal problems. So from this point of view, failure means Medicare cuts that had to be made sometime with defense cuts we’ve been wanting a long time. And the bad part is? Actually, there’s another good part. Republicans have shown they prefer to protect the pockets of the richest people even at the cost of making defense cuts they have always claimed would endanger the safety of the nation. Think we can do anything with that in a campaign?

Republicans on the supercommittee have been unwilling to make tax increases, but were open to closing loopholes — if the Bush tax cuts were made permanent. They agreed to save about $300 billion in loophole closing in exchange for more than double that in tax cuts for the top. “You agree to drink this poison, and I’ll agree not to close the toilet lid while you’re vomiting. I prefer closed lids, so that’s quite a sacrifice on my part.” Which gets back to the chart above.

The Bush tax cuts expire at the end of next year. The wars are scheduled to wind down. Stimulus spending will end soon. Those things pretty much are the deficit. There’s not much left as those things come to an end. No non-stimulus domestic spending need be cut.

The downside is people in the middle and bottom will be hurt too. It’s not just the 1% paying more taxes and defense getting cut. Unemployment insurance extensions end this year and unemployed people will be seriously hurt if they aren’t continued. I supported the extension of the Bush tax cuts last year, despite bewilderment that the administration kept justifying it on the grounds of saving the middle class tax cuts, because ending extensions would cause terrible hardship for long term unemployed. I consider it paying the ransom to get back the hostage. Maybe Republicans will make the same demand. I hate to say we let them metaphorically shoot the hostage instead of giving in, because we’re talking about real people.

There are also the Obama tax cuts, not just the middle class Bush tax cuts Democrats are willing to continue. Those were targeted toward the middle and bottom, and their end will hurt. On the other hand, other than the payroll tax holiday, they’re about the least effective form of stimulus, only upper income tax cuts being less so. On a macro level at least, I’m not convinced their expiration will hurt other than, again, the payroll tax holiday. Actual stimulus spending, as opposed to tax expenditures and tax cuts, has pretty much ended already, and the odds of getting more, much as we need it, about the same as Herman Cain’s odds of becoming ambassador to Libya. “Hasn’t the new ambassador to Libya arrived yet?” “He’s trying to find the embassy — we heard he’s in South America somewhere.”

So other than the unemployment insurance extensions, and to a degree the payroll tax holiday, what do we lose by letting everything that’s winding down or expiring run its course? So far as I can tell, all we lose is our deficit. So let the supercommittee fail, let the extension of the Bush tax cuts fail, let it all fail. If Republicans won’t see sense about the need to create jobs, then do nothing.

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Rep. Pat Garofalo (R-Farmington) has been campaigning to prevent school districts from winning their school levy campaigns.  One-third of all Minnesota school districts have levies on the ballot to pay for operating expenses because Garofalo and the Republicans in the legislature balance the state’s budget on our schools backs.

The MN GOP used the accounting trick of shifting payments to schools.  This “shift” basically means that MN isn’t going to pay schools the money it promised.  Yet, Republicans are lying that they inreased per education spending and that its the schools not spending their money wisely.

Garofalo’s campaign isn’t going over well even amongst Republicans.  Sen. Sondra Erickson (R-Princeton), infamous for her Gestapo Tactics quip, doesn’t like it and she’s Chair of the Education Committee in the House:

State Rep. Sondra Erickson, R-Princeton, said she typically votes in favor of local school referendums. But Erickson, chairwoman of chair of the House Education Reform Committee said she won’t tell anyone else what to do.

“I don’t involve myself in local issues when it comes to the property taxes of my constituents,” Erickson. “What I say to them is I can probably afford an increase in taxes, or continue to maintain this levy, but you have to decide because that’s your money, not mine.”
(MPR)


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Sen. Carla Nelson (R-Rochester) is also pushing the same lies that Rep. Pat Garofalo (R-Farmington) is.  She is conveniently forgetting that the MN GOP used a budget shift to make it appear that they balanced our state’s budget and increased funding for our schools.  The accounting trick was to not pay our school districts the money they promised them.  

Republicans are trying to undermine the school districts that have levies on the 2011 ballot.  One-third of the state’s school districts have levies asking for voters to increase their property taxes to pay for basic expenses which the MN GOP refuses to fund.

Nelson wrote an op-ed on September 9, 2011.  In it she referenced specific numbers for her school district.  Several superintendents for local school districts wrote an op-ed in today’s Rochester Post Bulletin pointing out her lie of omission:

… we are now seeing some legislators come forward with a misinterpretation of a spreadsheet from the Minnesota Dept. of Education (MDE) that is misleading our public. In some cases, the purpose has been to oppose districts’ efforts to renew or increase an Operating Levy referendum this fall. (To be clear, Sen. Nelson did not express such opposition in her article and has stated that she does not believe it is her place to publicly raise such opposition.)

The problem with the numbers provided in Sen. Nelson’s article is that the document from which her information is taken is intended to indicate an individual district’s maximum potential revenue in various educational programs, rather than the actual revenues to schools. This fact has been verified by the MDE financial staff but has not been recognized by those who have publicized the numbers. Additionally, in some cases more than half of the touted increased revenues to schools come with required increased spending. In other words, if an individual school wants a good portion of the money being offered, they would need to increase spending in state-specific categories to get it. As such, schools have no flexibility in using these dollars to pay the operating expenses of the school district.

And note how the Republicans are limiting the ability of school districts to control their own spending?  What happened to the local control?

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Today President Obama will unveil a plan to take long-term action on the deficit and national debt. The plan will reportedly outline about $3 trillion in long-term savings, including about $1.5 trillion in new taxes focused on top earners.

Excuse me, let me correct the White House’s impending press package. New taxes focused on the rich.

Ultimately, that’s what this debate over taxes is about. The Republican Party would have our nation believe that it’s a choice between taxing fairly and not taxing at all, when the choice — the debate itself — needs to be about how to best tax fairly and properly. And since the beginning of the Bush administration, the rich have been living high off the hog while the rest of us take it in the pants on infrastructure, public education, health services, and a host of other critical services.

The House GOP’s golden boy, Paul Ryan, criticized the President’s plan as a tax increase on job creators. His argument was that many small businesses file taxes as individuals, and would thus be affected by this proposal. Of course, there are at least two problems with Ryan’s argument: first, that small businesses are filing taxes as individuals instead of businesses in such large numbers as to provide a counterargument to an eminently fair tax proposal. Second, if a small business owner is pulling down more than a million dollars a year, and would still be pulling down more than a million thanks to the wonders of marginal tax rates, is Congressman Ryan really telling the working and middle classes of America that we should have sympathy for that business owner’s plight? Poor millionaire! Please may I have a job despite there being no demand in the marketplace? Thank you sir, may I have another?

If the Congressman is really concerned about class warfare, perhaps he should take a long look at what he and his own ilk have been doing for the past twenty years. As the bumper sticker says, after all, it’s “only” class warfare when the middle class fights back. Apparently.

/rant

There’s still time to examine the other half of the President’s proposal. It could go one way or the other — he’s shown a willingness to engage in some very bad policy with regard to the Medicare eligibility age and other gimmicks that don’t help anyone live better lives. But he’s also showing a willingness to combine good politics with good public policy on taxes, so that’s a hopeful sign. Of course, since the President’s tax proposal is dead on arrival in the GOP-led House, we need to make sure the White House and the Dem-led Senate don’t get rolled on the rest of the plan as they let happen during the debt ceiling debate.

Forget crossing fingers. Let’s get busy talking to our Congresscritters.

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Many school districts in this state are in trouble.  A third of all districts are asking voters for a levy for basic operating expenses.  They are in trouble because the Republicans at the state legislature balanced their budget at their expense.

But if you ask a Republican, they’ll say otherwise:

State Rep. Pat Garofalo, R-Farmington, chairman of the House Education Finance Committee, said he doesn’t like what he’s been hearing lately about school district finances. The latest tally from the Minnesota School Boards Association shows about one in three districts are planning to ask voters in November to provide additional operating revenue through local property taxes.

Garofalo is reminding those districts that they just received a significant increase in funding from the state, including a $50 boost in the per-pupil formula.

“When you’re making these additional expenditures at the statewide level, the property tax is not to be used to go back for a second bite of the apple,” he said.

Garofalo said he plans to be very vocal about the districts he believes are “abusing the process” when it comes to levy votes.

The truth is that Garofalo is lying.

The MN GOP used a budget shift to make it appear that they balanced our state’s budget.  The accounting trick was to not pay our school districts the money they promised them.  Hence the levies for operating expenses.

And that $50 per pupil increase, that’s something Gov. Dayton forced the Republicans to accept.  It would be even worse if it wasn’t for Dayton.

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