Archive for the ‘Budgets’ Category
On Wednesday, President Barack Obama released his long awaited and dreaded budget proposal. He claims that it will help lead to a deficit reduction of over $1 trillion over the next 10 years, which breaks down to only a reduction of $200 billion a year. He also claims that his proposal will help lead efforts towards a balanced budget in the near future. Lastly, he also claims that his math is sound.
The moment his budget proposal was released, hundreds of people and organizations immediately began analyzing it to see if it lived up to Obama’s claims. Among those is the Heritage Foundation, whose first analysis indicate that Obama’s budget proposal is not what he says it is, which is pretty much his track record on every other major proposal of his, including Obamacare and the Stimulus packages.
Here are some of the things that the Heritage Foundation discovered in Obama’s proposal:
1. $1.1 trillion tax hike that would hurt every income class of Americans and businesses. He is calling for caps on deductions, including how much one can donate to a charitable organization, and place more caps on exemptions. Taxes would be raised on the wealthy even more than what was increased on January 1, 2013, which would further hurt wage and job growth. After signing the new death tax increase three months ago, Obama proposes to increase it even more and lower the exemption from $5 million estate to $3.5 million. He is also proposing a cap on the tax-deferred retirement accounts at $3 million. Any amount over that will not be tax deferred. Another tax that will hit many middle and lower income Americans is an increase in the federal cigarette tax.
2. Insufficient defense funding that would result in a weaker and smaller military defense. His budget proposal does not provide for any modern weaponry or equipment, reduces the amount of training and maintenance, which may not matter anyway, since he calls for further reduction in personnel and general military structure.
3. Obamacare swings into action starting January 1, 2014 and Obama’s new budget is fattening up the coffers for Obamacare. The budget calls for a one year postponement of the Medicaid Disproportionate Share Hospital (DSH), a program that helps fund hospitals who care for greater numbers of low income and uninsured patients. He also proposes to increase funding for the exchange programs with the states concerning Medicaid and Medicare. Perhaps the most damaging aspect of the proposed budget with concerns of Obamacare is a mandatory drug rebate for low-income seniors using Medicare Part D. The drug rebate would be paid by the drug manufactures which amounts to a tax that they will certainly pass on to seniors in the form of increased Part D premiums. There is also an increased surcharge for Plan B seniors and increased premiums for Part B and D upper income participants. There are a number of other healthcare provisions in Obama’s budget proposal that will cost all of us even more for healthcare in the form of premium increases as well as increased costs on drugs, doctors and hospitals.
4. Although Obama claims that his budget proposal will lead to a balanced budget, it won’t. According to Heritage’s Patrick Louis Knudsen:
“Because the budget never balances—it doesn’t even try—debt remains at dangerously elevated levels.”
5. Obama’s proposed budget is a moot point at this time. Because Obama failed to provide a budget over two months ago when he was supposed to, both the House and Senate proposed and passed their own budgets. The trick now is to get the House and Senate to amicably mesh their two proposals together into one workable and acceptable package. Obama’s proposal not only won’t work, but it’s completely irrelevant at this point in time. The only purpose it could possible serve is to cloud and muddy up the political waters, making it even more unlikely that a single agreed upon budget will emerge out of Washington.
The bottom line is that Obama’s budget proposal contains a number of hidden evils in the form of more taxes and increased costs for every income level in the nation. People, especially seniors living on fixed incomes will see their cost of living increase, placing many of them in financial jeopardy. His budget also feeds the already gluttonous Obamacare, making it fatter and more costly. Hitting the wealthy with even higher taxes after they just took a substantial hit in January, will only leave them with less money to invest in their businesses, which ultimately results in fewer jobs and fewer pay increases. His budget also further weakens our military defense which causes me to question his loyalty to America and ask if he is purposely setting us up to be taken over by a stronger military force.
Like everything else Obama touches, his budget is pure poison to the American people and future of our nation. Every one of you needs to tell your Representatives and Senators to block Obama’s budget proposal for everyone’s sake.
President Obama’s budget, to be released next week, will limit how much wealthy individuals – like Mitt Romney – can keep in IRAs and other retirement accounts.
The proposal would save around $9 billion over a decade, a senior administration official said, while also bringing more fairness to the tax code.
The senior administration official said that wealthy taxpayers can currently “accumulate many millions of dollars in these accounts, substantially more than is needed to fund reasonable levels of retirement saving.”
Under the plan, a taxpayer’s tax-preferred retirement account, like an IRA, could not finance more than $205,000 per year of retirement – or right around $3 million this year.
Romney, Obama’s 2012 opponent, had an IRA several to many times that amount, leading to questions about how the former Massachusetts governor was able to squirrel away so much money in that sort of retirement account.
The president’s budget, expected Wednesday, has several revenue-raising proposals that come as Democrats and Republicans continue to spar over whether more tax increases are needed to reduce deficits.
Obama’s framework also includes higher taxes on cigarettes, as a way to pay for expanded access to pre-kindergarten. Congressional tax writers in both parties and both chambers are currently examining the code in hopes of a broad tax-reform package.
Read more: http://thehill.com/blogs/on-the-money/domestic-taxes/292071-obama-budget-to-target-wealthy-iras#ixzz2QBR3l5PB
Follow us: @thehill on Twitter | TheHill on Facebook
President Obama belatedly sent his 2014 budget proposal up to Capitol Hill today, containing $3.77 trillion in spending for next year and tax hikes that will affect both rich and poor alike. All told, deficits would still total over $700 billion next year under President Obama’s budget proposal.
In his press conference, President Obama claimed that his spending increases will be “targeted investments in areas that will create jobs right now.” The President rejected the choice between jobs investment and falling deficits, saying that “our deficits are already falling” and that “my budget will reduce deficits by another $2 trillion… in a balanced and responsible way.”
Before Obama is proclaimed a deficit-cutter, it’s important to remember that standard Keynesian economics – that the President subscribes to – would prescribe falling deficits as an economy comes out of a recession. Keynesians like President Obama would be expected to advocate shrinking deficits in an economic recovery. What’s important is to examine how President Obama treats the federal ledger in out years.
It doesn’t look good, either. President Obama’s budget would see deficits shrink from 2014-2018 before starting to grow again. But of course, the next decade is going to be pivotal for deficit reduction. Entitlement reform that focuses on shrinking mandatory spending in the out years is of paramount importance, and President Obama’s response to that is basically to fiddle around the edges, then wait and see how Obamacare works. What’s more, the Office of Management and Budget – the office that calculates some of the projections – is historically kinder to the President than the more highly-regarded Congressional Budget Office. THe CBO will have their own score out on the President’s budget in the next few weeks.
Beyond that, here are a few of the highlights from President Obama’s budget:
Tax hikes for the rich: President Obama wants to use two different measures to increase taxes paid by upper income-earners. The first would be to instate the “Buffett Rule,” which would force taxpayers in upper brackets to pay a mandatory minimum perecentage of their income, no matter what deductions they might have. The second would be to cap total deductions at 28 percent of income. Both these would be ways of raising the effective federal tax rate paid by high income-earners.
Tax hikes for the poor: President Obama also has two ways to hike taxes on the poor. He’s proposing a cigarette tax that would fund more federal spending “investments” on what he calls universal pre-K. Cigarette taxes are obviously paid by everyone, but they constitute a much larger percentage of income for the poor – and, by the numbers, the poor tend to be heavier smokers. President Obama is also proposing to move federal inflation measurements to “chained CPI,” which would be a more accurate measure of inflation and constitute a fair amount of deficit reduction – but is also an across-the-board tax hike that would affect the poor as well as the rich.
Overall spending increase: Next year, the Obama budget will spend $3.77 trillion. This is even more than the left-wing dream that is the Senate Democratic budget – which spends $3.71 trillion. Over the next ten years, President Obama will spend less than the Senate Democrats’ proposal, but in the short-term, he’s asking for more money than Patty Murray.
Corporate tax reform: Here we’ll offer tentative praise. President Obama wants to close loopholes and lower the top overall corporate tax rate. He wants to make it revenue-neutral, which shouldn’t be the goal, but even a revenue-neutral reform would be a mild improvement over the status quo.
Decreased funding for defense: Nearly every federal executive agency is receiving increased funding, but notable exceptions are the Department of Defense and the Department of Homeland Security. Combined, those departments will receive over $4 billion less than they did in 2012. That’s in addition to cost-cutting at the State Department, which is receiving less funding mainly due to the wind-downs of wars in Afghanistan and Iraq. The Departments of Commerce, Education, Energy, Health and Human Services, Housing and Urban Development and Labor are all receiving substantial increases.
Surprising spending cuts: The Obama Administration proposes to cut almost $300 million dollars from the Environmental Protection Agency’s budget and cuts $200 million from the Treasury Department.
Those are the top takeaways from the President’s budget. On the whole, it’s less radical than the Senate’s budget and at least head-fakes towards deficit reduction in the next few years. This, however, is a status quo budget at exactly the time that fighting for the status quo is the wrong thing to do.
By outward appearances, Stockton, a city of nearly 300,000 on the Sacramento-San Joaquin River Delta, seemed in the mid-2000s to be emerging from decades of struggle.
Next to its gleaming downtown waterfront — a window to the West’s largest fresh-water estuary — a beautiful new $46 million glass hockey arena rose in 2005. That same year, an Oakland A’s minor league baseball team began play in a new taxpayer-financed stadium, amenities sought by elected officials catering to a wave of new residents fleeing Bay Area congestion and soaring home prices.
High salaries and lucrative benefits were supposed to attract and retain the brightest city workforce to improve the quality of life for its residents. “We spent like the good times would go on forever,” said Stockton spokeswoman Connie Cochrane.
But then the recession hit, and the good times went bust. On Monday, California’s 13th-largest city begins federal court proceedings that could end with it becoming the most populous city in the U.S. to successfully enter bankruptcy, a move opposed by those who lent the money to keep it flush.
On its journey to this point, the Central Valley city has become emblematic of both government excess and the financial calamity that resulted when the nation’s housing bubble burst. Its salaries, benefits and borrowing were based on anticipated long-term developer fees and increasing property tax revenue. But those were lost in a flurry of foreclosures.
After the city’s population grew by nearly 20 percent between 2000 and 2005 and real estate tripled in value, home prices plummeted 40 percent the following year before bottoming out at 70 percent.
Within two years, Stockton had accumulated nearly $1 billion in debt on civic improvements, money owed to pay pension contributions and the most generous health care benefits in the state — coverage for life for all retirees plus a dependent no matter how long they had worked for the city.
“It’s not realistic to think that something like that could be sustained indefinitely,” Cochrane said.
Today, its largest creditors are the companies that in 2007, after the economy began to contract, insured the bonds that funded the city’s over-extended pension obligations.
The city’s deal was risky from the start, said Jeffrey Michael, who as director of the business forecasting center at University of the Pacific has studied the city’s struggles.
“It was like refinancing your house and dumping the proceeds into the Wall Street market and hoping your earnings go up faster than the interest rate on your loan,” he said.
By 2009, the city began slashing its budget to stay afloat. The police department lost 25 percent of its 441 sworn officers and the fire department was cut by 30 percent. City staff was cut by 40 percent. The city general fund budget, now $155 million, has been cut by $90 million over three years.
The impacts were felt everywhere. Wells Fargo bank seized three parking garages when the city defaulted on the $32 million in bonds that financed them. Bond holders also seized the $40 million downtown high rise that was to become City Hall.
Stockton recorded its highest-ever number of murders in 2011 and 2012, and had three just last Sunday. Last year, an FBI analysis of violent crime made it the 10th most dangerous city in the U.S. Its unemployment rate is 17.5 percent, and it has the third-highest illiteracy rate in the country.
“We are fiscally insolvent, but service insolvent as well and that threatens our ability to attract new business, which we need to recover,” Cochrane said.
Last summer, the city began negotiating with creditors, a requirement before entering bankruptcy. Ten employee unions agreed to temporary wage and benefits cuts.
Retired employees have also been asked to pick up a larger share of health care premiums, closing a $540 million retiree health care cost liability.
But the holders of the biggest share of the debt were the companies that in 2007 insured nearly $165 million in pension bond obligations to allow the city a lower interest rate and make them stable for investors. They were unable to negotiate a deal and want the city to avoid bankruptcy, which would likely allow Stockton to avoid repaying the debts in full.
Officials for the largest creditor, Assured Guaranty, said the city offered them 17 to 18 cents on the dollar for bonds that run through 2048, a deal they plan to argue in court is unacceptable. They say the city should further cut costs and raise taxes and point to city subsidies for the arena and $7 million in uncollected parking tickets.
City politicians also lack the political fortitude to cut contributions to CalPERS, the public employee pension program, Assured officials say. Employees who shared in the wealth when times were flush ought to sacrifice when they are not, they say.
Stockton wants to cut its repayment of the pension bonds without reducing the liability itself, the attorneys wrote.
Those opposing bankruptcy say the city needs long-term wage concessions from public employees, not the one- and two-year deals that were negotiated. The pain must be shared among all debt holders, they argue.
“Stockton has budgeted itself into insolvency. It is now trying to cram down a plan on those it did not favor, instead of focusing on creating a fair, equitable and long-term plan for all stakeholders,” said Robert Tucker, managing director of Assured Guaranty.
Few people doubt the city will be successful at a four-day trial and enter bankruptcy, but that won’t be the end of litigation. If bankruptcy protection is approved, a federal bankruptcy judge would still have to decide whether Stockton’s bankruptcy plan is fair, or whether it singles out some groups to bear more of the financial burden than others.
“All of us have a stake in ensuring Stockton gets back on its feet,” said Tucker.
Read more: http://www.foxnews.com/politics/2013/03/24/large-california-city-heads-to-bankruptcy-court/#ixzz2P7Lvxph3
WASHINGTON — Even the federal government turns to private shippers rather than the Postal Service when it wants to send packages.
A report from the agency’s inspector general said that since 2001, private companies like FedEx and United Parcel Service consistently had captured 98 percent of the revenue from long-term shipping contracts with the government because the financially troubled Postal Service did not have a sales staff or a strategy to focus on the federal sector until 2009.
The report said the Postal Service lost out on about $34 million in potential revenue over the past two years, a relatively small amount for an agency that reported $65 billion in revenue last year.However, officials at the inspector general’s office said the Postal Service, which had a net loss of $15.9 billion last year, could not afford to pass up opportunities to generate revenue and profit no matter how small.
“Every little bit helps,” said Agapi Doulaveris, a spokeswoman for the inspector general’s office. “The purpose of our audits (is) to help them identify ways to do things better. Every opportunity we identify helps add to their bottom line.”
The report, released on Friday, examined two years of shipping contracts made through the General Services Administration, which buys goods and services for the federal government.
While federal shipping contracts totaled an estimated $336.9 million last year, the Postal Service earned only $4.8 million of that — less than 2 percent of the overall amount, the report found.
The post office’s ability to compete in the federal shipping market is hampered by several factors besides it late entry, the report found, including an inability to guarantee two- to three-day delivery service and to be as flexible in setting prices as its competitors.
Because of federal law, “the Postal Service cannot sell products below cost and make up the loss with other products or services to penetrate a market, attract new customers or match competitors’ prices,” the report found.
Postal officials, who did not address why the agency entered the federal shipping market years after their private competitors, said they were addressing the problems raised in the report. But the findings underscored the challenges the agency faces as it tries to find new ways to increase revenue to offset a long-term decline in mail volume.
Wisconsin Rep. Paul Ryan, chairman of the House Budget Committee, said Sunday that his new budget includes the repeal of President Obama’s health-care reform law known as ObamaCare.
Ryan told “Fox News Sunday” that the new proposal will make enough cuts to balance the federal budget in 10 years, compared to his previous one that tried to achieve that goal in 25 years.
“We think we owe the American people a balanced budget,” the Republican congressman said.
Ryan said the focus of the ObamaCare repeal would be to stop the expansion of Medicaid, the federal program that provides medical services to low-income U.S. families.
“Our budget does promote repealing ObamaCare,” said Ryan, who was not clear whether his 2014 budget is based on a full repeal.
Ryan, the Republican 2012 vice presidential nominee, said he wants states to run Medicaid through federal block grants.
Ryan said his proposal attempts to reach a balanced budget, in part, by slowing the rate of federal spending from 4.9 percent to 3.4 percent. Other parts include consolidating federal job-training programs and reforming the federal Food Stamp program to ensure only qualified applicants receive the benefits.
“I’ve very confident this is the way to go,” said Ryan, whose budget would have a better chance of passing the Republican-controlled House than the Democrat-controlled Senate.