In a joint statement with Rules Chairman David Dreier (Calif.), the Ohio Republican sought to cast the decision as part of his pledge for a more open environment in the House.

“Republicans pledged to pass bills in a more transparent manner and reverse the era of quickly moving massive bills across the floor without proper examination. Accordingly, the energy/infrastructure jobs plan will be considered on the floor in the same manner in which it was written and voted upon in committee — in separate pieces,” Boehner and Dreier said.

Such a process will allow “each major component of the plan to be debated and amended more openly, rather than as a single ‘comprehensive’ bill with limited debate and limited opportunity for amendment,” they added.

This is great news.  But here’s the catch (via CQ subscription):

The idea is that lawmakers would be able to vote their conscience on pieces of the bill, without requiring them to vote on the entire thing — for instance, lawmakers could vote for the authorizing portions of the surface transportation title, but vote down the changes to federal employee pensions.

Then, once the bills are passed separately, the House’s bill clerk would sew them back together and send them to the Senate as one bill.

Hence, any good will on the part of conservatives to vote for the good bills (pension reform and drilling) will be pocketed and rejoined with the unappealing highway bill.  The Rules Committee will meet tonight and write a structured rule to combine the bills upon passage, and have them shipped off to the Senate as one entity.  This will facilitate passage of the highway bill and allow a future conference committee to denude it of the offsets, leaving House members with a plain deficit-inducing highway bill.

Republican leaders employed the same subterfuge with passage of the omnibus bill last December.  They proposed an omnibus bill that, when coupled with $10 billion in emergency spending, would set spending levels for FY 2012 ($1.053.9 trillion) higher than those of FY 2011 ($1.047 trillion).  So they broke up the proposal into three separate bills; an omnibus with spending levels slightly below FY 2011 ($1.043 trillion), an emergency disaster relief bill ($10.6 billion), and a bill to offset the disaster spending, which they knew would be jettisoned by Democrats in the Senate. This allowed members who voted for the omnibus to go on record as saying that they voted to offset the extraneous spending, thereby keeping their pledge to spend less than the previous year.  It also enabled Senate Democrats to pass the underlying omnibus bill, along with the emergency spending, but easily vote down the offsets in the third bill.  And that is exactly what they did today.

What’s that saying about “fool me once etc.?”  Don’t fall into the trap.  Don’t get distracted by the ANWR provisions.  Keep your sights on the highway bill.  The end result will be a top-down federal highway bill that requires an immediate $40 billion bailout for a new mass transit account and future bailouts down the road.  Either way, there will be no pension reform or expanded oil drilling from the final version of the bill.  This is yet another example of the shenanigans that are so endemic of Washington politics.

Cross-posted from The Madison Project

As conservatives, we have been frustrated by the fact that there is such a dearth of intellectual firepower among our elected Republicans.  Very few Republicans have the ability to articulate conservatism from a position of strength.  Unfortunately, this shows in their voting record.  Someone who fails to articulate conservatism as a candidate is bound to vote along with GOP leadership as an elected member of Congress.  This is why we need more candidates like Clark Durant in the Senate.

Clark Durant has been articulating conservatism long before he decided to run for public office.  During the 1970s, Durant worked at Hillsdale College and helped start Imprimis, one of the best conservative publications.  In the ‘90s, he helped found a network of charter schools that have had a positive impact on education in inner city Detroit.  While many Republicans struggle with the issues of education, Durant will be able to clearly articulate the superiority of private enterprise over government control in the education system.

Durant is a comprehensive conservative who possesses the requisite knowledge of history, policy, and the Constitution to properly articulate conservative principles in this Democrat-leaning state.  His campaign has already excited Tea Partiers in Michigan.  He has raised $1.3 million in just four months against a better-known opponent.

Durant’s main opponent for the Republican nomination, scheduled for August 7, is former Congressman Peter Hoekstra.  While Hoekstra served with distinction as Chairman of the House Intelligence Committee, he has a terrible voting record on fiscal issues.  He voted for TARP, raising the debt ceiling, and every bailout under the sun.  At a time when we are trying to preclude the next highway trust fund bailout, we need not support the man who voted for the original bailout in 2008.

Undoubtedly, it is an uphill battle to win a Senate seat in Michigan.  But we certainly won’t gain any traction by running retreads that embody the very vices we rail against on a daily basis.  It’s time to make some bold “out-of-the-box” choices, which is why we’re going with Clark Durant in Michigan.  We need someone who will stand up to Big Labor in Michigan and Big Government in Washington.  Our guys need reinforcements – big time.  Clark Durant will join our small group of stars in the Senate.

Earlier this week, Senator Mike Lee endorsed Durant for Senate.  At the Madison Project, we are proud to announce our support for Clark Durant and our contribution to his campaign.  Please join us in nominating an unvarnished conservative to take on Debbie Stabenow in November.

Cross-posted from The Madison Project

For far too long, the extension of the payroll tax cut was coupled with more entitlement spending, in the form of 99 weeks of unemployment benefits and extension of Medicare ‘doc fix.’  We have long advocated that Republicans should decouple the tax cut from the spending in order to preclude a situation where conservatives, who oppose more entitlement spending, would be forced to vote against a tax cut.  Today, House Republicans announced that they will decouple the two issues and pass a clean payroll tax cut extension until the end of the year.  They are leaving out the entitlement spending extensions and daring Senate Democrats to oppose their clean tax cut – one that they have “championed” for the past few months.

Going forward, Republicans must stand strong against pressure to slip the entitlement spending into the payroll tax cut deal.  Once they are free from the burden of shooting the hostage (the tax cut), they should negotiate hard for the rest of the package.  They should be guided by the following principles:

• No extension of UI benefits unless UI is permanently reformed to reflect a real insurance program, not a European-style social welfare program.
• No extension of doc fix until Medicare is permanently reformed with free-market solutions to bring down the broader costs and preempt the need for doc fix or any payment formula.
• Both extensions must be paid for with real offsetting cuts during the period of the extension, not over 10 years.
• We should be working on a long-term solution for the payroll tax now, so we won’t fall into the same trap next December when we will be forced into another ineffectual short-term stimulus type of tax cut.

It is much easier for Republicans to join in a unifying message against entitlement spending then a battle against any tax cut – no matter how inane it is.

Now it’s up to Senate Republicans to stand strong.  If they block Harry Reid’s counter proposal, House Republicans will have superior leverage as the only body that can pass a clean extension.  We had that leverage last time, but it was obviated when Senate Republicans agreed to pass a two-month extension of everything, thereby pulling the rug from under House Republicans.  It’s rare that we get second chances in these situations, but with the failure of the conference committee, we will get a second chance.  Let’s not squander it.

Cross-posted from The Madison Project

Here are the inviolable facts.  This 5-year (2012-2016) surface transportation reauthorization bill, H.R. 7, will commit $262.8 billion in spending through 2016, even though the revenue from the user-pay taxes (gas tax and other highway related taxes and fees) will only reach $193.2 billion over the same period.  Even working with CBO’s numbers, which don’t account for FY 2012, there will still be a $55.2 billion deficit over 4 years ($210.3 billion in contract authority vs. $155.1 billion in revenue).

Boehner can propagate his protestations from now until tomorrow, but the fact is that, under this bill, contract authority for transportation will outpace its funding source by roughly $55 billion from FY2013 through FY 2016.  That is their solemn commitment to the Democrats; that spending will definitely be authorized at those levels.  Any “offsets” discussed henceforth are notional, phantom, temporary, and/or stridently opposed by Democrats.

Back in November, Boehner announced that he would agree to spend roughly $52.5 billion per year on transportation, instead of $38 billion (projected annual revenues from gas tax) as originally proposed by the House.  But fear not, he promised to offset the deficits with royalties from new drilling in ANWR, the Outer Continental Shelf, and from shale fracking in the western states.  We all agree that these are laudable proposals that should get passed as standalone measures.  But the idea of using non-existent royalties to pay off an immediate 5-year deficit was always inane.

Last week, CBO confirmed this by scoring the total offsetting revenues from all the drilling bills as just $4.3 billion over 10 years (just $2 billion through 2016, the relevant budgetary frame).  What a joke!  Besides, using offsetting revenues for deficits violates the GOP CUTGO rule that requires all increases in spending to be offset by other spending cuts.

In order to rectify this, Boehner concocted a new stratagem.  Under the new bill, they plan to remove the $40 billion from the transportation bill that would go towards mass transit, and open up a new fund, called the “Alternative Transportation Account.”  Hence, the gas tax revenue will no longer cover mass transit; it will exclusively purvey highway spending.  They will fill the remaining deficit in the highway trust fund with some “unspent” trust fund monies.  The problem is that those funds don’t really exist.

Much like the phantom $2.6 trillion in the Social Security Trust Fund, the existing balance in the highway trust fund (HTF) is not representative of a tangible resource.  The dollar figure that members of Congress are banking on represents internal liabilities between other government accounts and the HTF.  These are merely IOUs from the treasury to the HTF.  In other words, we are just spreading the same funds and the same deficits from one account to another.

Putting that aside for a moment, how do they plan to pay for the $40 billion newly-created “Alternative Transportation Account” to fund mass transit?  They will bail it out with an immediate $40 billion transfer from the general fund.  Again, this is their immediate guarantee.  That money will be spent instantly.

Now, they are claiming it will be offset with royalties from drilling and a new plan to reform federal workers’ pensions…..over 10 years!  CBO scores the pension reform provision, which would increase the amount that federal workers contribute to their pensions, as a savings of $42 billion.  However, according to my calculations, we would only actualize just under $11 billion in savings through 2016, the relevant budget frame.  In other words, we will be offsetting an immediate $40 billion bailout with $13 billion in offsets ($11 billion from pension reform and $2 billion from energy bills) during the course of the authorization period.  This is no better than TARP accounting.

Moreover, we all know that Democrats will never ever agree to federal pension reform or drilling in ANWR.  Heck, they almost fought a civil war in Wisconsin over similar pension reforms.  Now that Boehner has already committed to the Democrat idea of outspending the gas tax revenue, what will he do when the clock strikes midnight on April 1?  Why start off negotiations with a solemn commitment to the Democrat spending levels when Democrats are vociferously opposing the offsetting revenues?  This is all a ploy to get conservatives to send the bill off to conference, where the final product will be dramatically different from its current composition.  The final product will consummate the higher spending levels and strip out the ‘house-of-cards’ patchwork of offsets.

Senate Republicans have already agreed to an even worse bill – one which also raises taxes.  What incentives do Democrats have to cooperate with the House bill, once we commit to the higher spending levels?  In fact, they will invariably strip the bill of other good reforms, such as the elimination of the 10% “transportation enhancements” mandate on the states.  Don’t fall for the trap, House Republicans.  We’ve seen this rodeo before.

Boehner’s spokesman noted in his piece at Red State that his bill will “make sure the plan won’t add a dime – ever – to our deficit.”  Where’s Joe Wilson when we need him?

Cross-posted to The Madison Project

President Barack Obama’s budget request to Congress on Monday will forecast a deficit of $1.33 trillion in fiscal year 2012 and will include hundreds of billions of dollars of proposed infrastructure spending, according to draft documents viewed by Dow Jones Newswires and The Wall Street Journal.

The projected deficit is higher than the $1.296 trillion deficit in 2011 and also slightly higher than a roughly $1.15 trillion projection released by the Congressional Budget Office last week.

Hence, even though revenues are projected to go up by $220 billion this year, the deficit will still tick up another $37 billion.  Using CBO’s baseline, that would mean spending will rise $257 billion this year under Obama.  And that’s during an election year.  You can imagine what he would pull out of the hat if he wins a second term.

The specifics aren’t published yet, but we have these nuggets from the article:

The budget includes more than $350 billion in short-term measures for job growth; a six-year, $476 billion proposal for roads and other surface-transportation projects; and more than $360 billion in savings in health programs such as Medicare and Medicaid. [...]

The budget also calls for a 5% increase in nondefense research-and-development spending over the previous year and proposes $2.2 billion for advanced manufacturing research and development—a 19% increase over 2012.

Surprise! More stimulus spending, plus more top-down federally-managed transportation, not unlike the Republican proposal in the House (yeah, we’re looking at you), and almost identical to the Senate proposal, which raises taxes (supported by all Republicans except for 9).  So how does Obama plan to reduce his $1.6 trillion deficit from last year?  We’ll wait and see, but undoubtedly, it will come out of the military.

Regarding the healthcare cuts, until we reform the entire healthcare system to reflect the free-market, these cuts are either notional or will squeeze Medicare patients even further.

Finally, what would an Obama budget be without tax increases:

The draft documents don’t include all the details of the president’s budget but show similarities to the budget plan the White House laid out in September 2011. The budget proposal, for example, repeats a call for $1.5 trillion in new revenue, mostly from ending Bush-era tax cuts for families earning more than $250,000 a year.

Let’s pray with all our might that this will be Obama’s final budget.

Cross-posted to The Madison Project

On days like today we should begin to wonder if there really would be much of a difference when there are 51 senators with an R next to their name as opposed to just 47.  In another terrible day on the Hill, Senate Republicans caved on two issues; judicial nominations and the stimulus highway bill.

When Obama announced his illegal appointments to executive positions last month, Republicans shook their fists heavenward and pledged to vigorously challenge those nominations.  Well, instead of engaging in vapid rhetorical promises, Senator Mike Lee took action.  He pledged to block all of Obama’s judicial nominations until he agrees to rescind his illegal appointees and resubmit them for confirmation before the full Senate.

Unfortunately, Senator Lee is like a general without an army.  The Senate voted on a nomination for a federal district court, yet only 5 others joined him.  They were Senators DeMint, Crapo, Paul, Risch, and Shelby.  I’m sure that will send a powerful message to Obama and serve as a strong deterrent against future illegal appointments.

Regarding the highway bill, I know this sounds naive, but I’m stupefied by the number of Republicans who voted for it.  As bad as the House version is, the Senate bill makes it look conservative.  The Senate bill is a brainchild of Barbara Boxer supported by Obama.  It will radically bust the budget, continue to place officious mandates on the states, and fund mass transit at prodigal levels.

Now we know that most Republicans are insincere about cutting spending, limiting government, and devolving power to the states, but one would expect them to at least hold the line against tax increases.  This bill contains $7 billion in tax increases to partially fund a small portion of the deficit generated by the higher levels of transportation spending.  Yet, just 9 Republicans (along with 2 Democrats) voted against cloture.  Here are the Republicans who voted no DeMint, Hatch, Johanns, Johnson, Lee, Murkowski, Paul, Risch, Rubio.

It has become abundantly clear that we will get nowhere in terms of limiting government unless we elect Republicans like Jim DeMint and Mike Lee.

Cross-posted from The Madison Project

Well, once upon a time, it wasn’t just conservative outsiders who supported the notion that we peg transportation spending to the level of gas tax revenue.  In fact, just last July, members of the T and I Committee, led by Chairman John Mica, introduced a bill that would do just that.  They drafted a plan for a 6-year reauthorization bill that would cost $230 billion, roughly commensurate to the gas tax revenue over that same period.  At the time, we heaped accolades upon that bill.  On July 18, I wrote the following in these pages:

“As a new spirit of fiscal discipline slowly seeps into Washington, John Mica, Chairman of the House Transportation Committee, has drafted the framework for a new highway bill that will cap the funding for highway and transportation projects to the amount of revenue supplied by the gas tax and other highway user fees.”

In fact, it wasn’t just conservative outsiders who stressed the importance of maintaining the integrity of the highway trust fund as a pay-as-you-go system.  The draft proposal from the T and I Committee made that the selling point of their legislation.  It appears that the document has been removed from the committee’s website (the link in the aforementioned quote is defunct), but I still have the pdf from the time I wrote the article.  It reads like this:

“This proposal puts the “trust” back into the Trust Fund by ensuring that the nation is not spending money it does not have and aligning transportation expenditures with revenues. It authorizes approximately $230 billion over six years from the Highway Trust Fund — funding levels consistent with the amount of revenue being collected — and allows the Trust Fund to stay solvent well into the future.

Other options simply are not fiscally responsible or realistic.”

So here’s the $260 billion question: how do we get from a 6-year $230 billion bill, which would be in line with the gas tax revenue, to a $262.8 billion 5-year bill in just a few months?  This new bill (H.R. 7) will overspend the gas tax revenue by almost $70 billion. It will rely on an assortment of random pay-fors over ten years (which will never pass), accounting gimmicks in the trust fund, a “one-time” $40 billion general fund bailout of mass transit, and it will expose us to new taxes and bailouts when the pay-fors inevitably fail.  Wasn’t this exactly what the very authors of the bill deemed “not fiscally irresponsible or realistic” last year?

Why are Republicans eschewing their own principles regarding a self-sustaining trust fund?

The obvious answer is that, as with every other issue, they are terrified to stand by their bill when the expiration deadline approaches (March 31, in this case).

So if they are terrified of standing up to Democrats over the lower spending figures, how in the world are they going to find the courage to hold the line on the drilling revenue bills and cuts to federal workers’ pensions, after they have already agreed to the Democrats’ spending levels?

The answer is that they won’t hold the line.  They will denude the bill of all the drilling provisions and cuts to pensions, while Democrats will agree to remove the tax increases form the Senate bill.  As always, we will be left with more deficit spending, and enshrine the highway trust fund, along with the postal service, as the new bailout enterprise of the federal government.  That is the inscrutable destination of any and all Republican capitulations.

The Senate bill will spawn even larger deficits in the long-run.  Even for the two-year authorization period of the bill, there will be a $35 billion deficit between trust fund outlays and gas tax revenue.  Both the House and Senate versions rely on drawing down all existing funds in the trust fund to cover some of the gap ( to the extent that those funds really exist outside of an accounting gimmick).  However, there will still be a $13 billion shortfall over the next two years (and much more in the long-term).  The House bill relies on new royalties from oil exploration (that will never be approved by Democrats), but the Senate bill relies on phantom savings (from revenues that are already used to offset other expenditures) plus…you guessed it; tax increases.

After the EPW committee approved the underlying provisions of the bill, the Senate Finance Committee voted last night to approve $7 billion in sundry tax increases to fund this terrible bill.  One of those provisions includes a tax hike on inherited “stretched” IRAs and 401(k)s.

Here are the details from the horse’s mouth (Baucus Chairman’s Mark).

Require Distributions of Inherited IRAs within 5 years.  Under current law, holders of IRAs and 401(k)-type accounts are required to begin taking taxable distributions from those accounts once they reach age 70-1/2.  However, they can stretch those distributions over many years if they leave their account to a very young beneficiary.  When the account holder dies, the taxation of the account is then spread over the life of the beneficiary.  The Chairman’s Modification would require the retirement savings accounts to be treated, for tax purposes, as distributed within five years of the death of the account holder, unless the beneficiary is the account holder’s age, a child with special needs or older than 70.  This provision is estimated to raise $4.648 billion over ten years.

Hence, if someone bequeaths a retirement savings account to his grandchild, the beneficiary will have to liquidate the fund within 5 years and pay full taxes on the distributions.  This applies irrespective of how young the grandchild would be at the time of the grandparent’s death.

This ridiculous bill also transfers some revenue on tariffs from imported cars to plug the hole in the trust fund.  The problem is that this revenue is already accounted for and is used for other purposes.  This bill merely spread the same money around and uses the savings for multiple expenditures; not unlike the effort to use “war savings” as pay-fors.

The committee report passed with 17 ayes, 6 nays, and 1 present vote.  Here is the breakdown of the vote:

Ayes: Baucus, Rockefeller, Conrad (proxy), Bingaman, Kerry (proxy), Wyden, Schumer,

Stabenow, Cantwell, Nelson, Menendez, Carper, Cardin, Snowe, Crapo (proxy), Roberts (proxy), Thune

Nays: Hatch, Grassley (proxy), Enzi, Cornyn (proxy), Coburn (proxy), Burr (proxy)

Present: Kyl (proxy)

Snowe, Crap, Roberts, and Thune were the 4 Republicans who voted for this travesty.

The full Senate will vote for cloture on the tax hiking, deficit-spending highway bill on Thursday afternoon.  We must defeat both bills, especially the Senate version.  Nevertheless, the House bill is almost as offensive.  Once we agree to the premise that we must overspend the level of gas tax revenue purveying the trust fund, we will always be exposed to future tax increases and bailouts to bridge the gap.

Call your Senators and tell them to vote no on cloture for S.1813 – the highway bill with tax increases.

Cross-posted from The Madison Project  [Follow @RMConservative]

There are a number of GSEs (government sponsored enterprises) that are considered off budget.  Politicians use off-budget entities like Fannie Mae, Freddie Mac, and the Postal Service to obfuscate the true cost of government.  Additionally, the government runs a number of credit programs, in which taxpayers are on the hook for loan guarantees.  These guarantees include loans for college students and for energy programs, such as the one that purveyed failed green energy programs like Solyndra.

Under current law, Congress only factors in the cost of the loan itself when formulating the annual budget.  Perforce, if the money is paid back with interest, there is no cost to the government.  However, as we have learned so painfully, the loans are, all too often, never paid back.  Taxpayers have been called on to bailout a modicum of failed loan guarantees.  In the private sector, they use “fair value” accounting in calculating the costs of credit programs.  Fair value accounts for the costs of the market risk the lender incurs by issuing a loan, in addition to the actual borrowing costs.

Yesterday, the House passed H.R. 3581 – The Budget and Accounting Transparency Act (Scott Garrett).  This legislation brings Freddie and Fannie back on budget so taxpayers can see the true cost of these officious and destructive enterprises.  In addition, the bill will subject all loan guarantees to the “fair value” accounting method that is used in the private sector.

Astoundingly, almost every Democrat voted no on this commonsense bill.  Remember that this bill doesn’t mandate any changes to these programs or enterprises; it is not an ideologically charged bill.  This legislation merely forces Congress to reflect the true cost of government in the annual budget, not unlike what every family does with their household budget.  Sadly, even this moderate reform was too bold for Democrats.

We will be forced to clash with members of the House leadership over the next few weeks, but we should commend them when they bring legislation from conservatives, such as this budget reform bill, to the floor.  As for the Senate, we need to get them to agree to pass any budget, much less use prudent accounting methods.

Cross-posted from The Madison Project

After three years, Obama’s mark on the federal courts is beginning to become quite potent.  The Fourth Circuit appellate court used to be filled with a majority of strict constructionist judges.  Now, following Obama’s appointment of five new radicals, the court has totally shifted.  This once conservative court ruled in favor of the administration in upholding the constitutionality of Obamacare last year.  Obama’s indelible stain on the judicial system will reverberate for years to come.

While Republicans have successfully blocked some of Obama’s most extreme nominees, they have voted to confirm the vast majority of them.  Many Republicans have insisted for years that anyone who is “qualified” to serve as a judge deserves to be confirmed, irrespective of their judicial philosophy or ideology.  This school of thought suggests that as long as the nominee has the requisite resume and is clean of ethical violations, he/she should sail through the nomination process.  That is the grim consequence of elections, they contend.

Last week, in an interview with an Egyptian television station, Ruth Bader Ginsburg showed why ideology matters and why perverted judicial philosophy should indeed be a disqualifying factor for a judgeship.  She told the audience –one that lives under tyranny – that the U.S. Constitution should not serve as a role model for a modern draft:

“I would not look to the US constitution, if I were drafting a constitution in the year 2012. I might look at the constitution of South Africa. That was a deliberate attempt to have a fundamental instrument of government that embraced basic human rights, had an independent judiciary… It really is, I think, a great piece of work that was done. Much more recent than the US constitution – Canada has a Charter of Rights and Freedoms. It dates from 1982. You would almost certainly look at the European Convention on Human Rights. Yes, why not take advantage of what there is elsewhere in the world?”

At the time of her nomination to the Supreme Court, Ginsburg had a stellar resume and excellent ratings from the American Bar Association.  With that criteria in mind, every Republican except for three; Don Nickles, Bob Smith, and Jesse Helms, voted to confirm Ginsburg, a woman who has nothing but contempt for the very document that she is charged with upholding.

Make no mistake about it; someone who believes that our constitution is outdated; someone who regards our constitution as a living and breathing document; someone who views the constitution of a violent third world country with higher reverence than the U.S. Constitution is indeed disqualified from serving on any court.

No matter what happens in November, Obama will have another year to pack the courts.  At present, there are 86 vacancies on district and appellate courts, 39 of which already have pending nominees before the Senate.  We must work harder to ensure that not a single person with contempt for our Constitution is confirmed by the Senate.  Republicans must understand that disrespect for the Constitution is an automatic disqualification for a judicial nominee.

Perhaps, Justice Ginsburg had it right when she asserted at the end of that TV interview, “if the people don’t care, the best constitution in the world won’t make any difference.”  If we continue to blithely confirm nominees who share Ginsburg’s judicial philosophy, our Constitution – which is the best in the world – certainly won’t make any difference.

Cross-posted from The Madison Project

Nevertheless, let’s disregard the policy concerns for a moment and focus on the political argument.  Just as they did with the budget battles of 2011, GOP leadership is selling this bill as the best alternative, a virtuous improvement of past policies.  And undoubtedly, on paper, the version that will be presented to conservative House members (as opposed to the final version after they cave) contains many good provisions:

• It eliminates the mandate requiring states spend 10% of their transportation funds on transportation enhancements and bike lanes.
• No earmarks. Dozens of old and/or redundant programs are eliminated.
• While it continues to fund Mass Transit to the tune of $8.4 billion annually, this legislation bars gas tax revenue from being diverted in order to support public transportation. [Although, in fine print, the legislation will still fund public transportation projects with a one-time $40 billion appropriation transfer from an unknown source (general fund?) into a renamed account called the “Alternative Transportation Account.”]
• The deficit between the trust fund outlays and the gas tax revenue (anywhere from $30-60 billion over 5 years) will be offset, in part, with royalties from opening lands in Alaska, parts of the continental US, and offshore to oil and gas exploration.
• Yet again, there is a provision slipped into the bill that grants a permit to TransCanada Corp. for construction of the Keystone pipeline.

Republican leaders are using the aforementioned “sweeteners” to entice conservatives into supporting this “best we can do” legislation.  Putting the federalism arguments aside, does anyone believe that Republican leaders will stick with their own bill when the going gets rough?  All of these reforms are vociferously opposed by the Democrats.  Not a single Democrat voted for the bill on a committee level.  They regard the GOP leadership’s bill with as much contempt as they do the conservative bills – those that devolve transportation responsibilities to the states.  They are simply not going to play ball, especially when they can terrify credulous Republicans with a shutdown deadline.

As the March 31 expiration date inches closer, and Democrats continue to balk at the GOP bill, does anyone really think Boehner and McConnell will stick with the bill and allow a shutdown?  Of course not!  Instead, they will cave on the offsetting revenue from ANWR (which is a non-starter with Democrats) and the cuts to mass transit and enhancement projects, leaving us with the higher levels of spending, but no offsetting revenues.  There will be no Keystone pipeline.  We will be left with the excrement sans the honey.

All House Republicans will accomplish by supporting this bill is legitimizing the premise of outspending the gas tax revenue.  Once we agree that more federal spending – instead of efficient execution of federalism – is the best way to deal with our infrastructure challenges, we will be on the hook for more deficit spending once Democrats inevitably oppose the offsets.  Sound a lot like the cycle of capitulation with the budget battles and extenders package?  Well, it is.

Here is the ultimate riddle of the 112^th Congress: why do GOP leaders jettison conservative legislation under the guise of political feasibility, yet push their own watered-down legislation that is, nonetheless, almost as offensive to the Democrats?  Answer: because they never intend to stick with their ephemeral proposal; they intend to cave once they pocket the support from conservatives.

House Republicans must not fall for the honey trap of the highway bill reforms.  It is a road to cave city, paved with the gravel of unprincipled Republicanism.

Cross-posted from The Madison Project

Yesterday, Iowa Gov. Terry Branstad and Kansas Gov. Sam Brownback sent a letter to the 20 members of the payroll tax cut conference committee imploring them to extend the Production Tax Cut (PTC) for Big Wind, set to expire at the end of the year.  They warned that “wind development will grind to [a] halt due to the uncertainty of a PTC extension.”

The PTC is among 51 ‘tax extenders’ that have either expired last December or are slated to expire this December.  It grants a 2.2 cent/per kilowatt-hour refundable credit for wind, solar, or geothermal.  Believe it or not, that is a large sum of money.  According to the Heritage Foundation, if the oil industry received a commensurate subsidy, they would get a $30 check for every barrel produced.  The PTC is tantamount to an Earned Income Tax Credit for corporations.

As such, the governors are probably correct to assume that Big Wind will grind to a halt without the credit.  And that’s how it should be in our free-market economy.  Why is this any different than Obama’s attempt to pick winners and losers?  Actually, in this instance, we would be picking losers as winners.  While ending the tax credit will probably bring down Big Wind, it’s not like the subsidy actually helped Wind become prosperous.  In 2010, wind accounted for 0.9% of our energy supply, geothermal 0.2%, and solar 0.1%.  Many states offered their own tax credits to the wind industry, and lost money.  In Texas, the property tax break alone cost the state $1.6 million per job created.

What we really need to do is to let all targeted tax breaks expire, especially to those industries that have no tax liability to begin with.  Last year, Congressman Mike Pompeo (R-KS) introduced legislation (HR 3308) to sunset all non-universal energy tax credits and grants, including those for fossil fuels and nuclear power.  The bill would use the savings from the repeal of these credits (roughly $90 billion over ten years) to lower the corporate tax rate on everyone, including green energy companies (to the extent that they pay taxes at all). HR 3308 has 18 co-sponsors, including Paul Ryan.  It should garner the support of the entire caucus.

Yesterday, Senators DeMint and Lee introduced the bill in the Senate.  We should urge everyone to cosponsor the bill.

When we’re trying to draw bold contrasts to Obama on the issue of venture socialism, the last thing we need is members from our party muddling the distinction by offering their constituents an echo, instead of a choice.

Cross-posted From The Madison Project

On March 31, authorization for transportation spending, along with its accompanying revenue source – the federal gasoline tax – is set to expire.  Republicans in the House and a bipartisan group in the Senate have introduced dueling proposals to fund long-term transportation projects, in lieu of the short-term bills that have been enacted since 2007.  Unfortunately, the Republican House bill is not much better than the Senate bill.

One need not be a staunch conservative to appreciate how inane it is to collect gasoline taxes from all 50 states into one pool, only to be doled out randomly for every state’s personal transportation project.  Ever since the Interstate Highway System was completed almost 20 years ago, there has been no rational purpose for the current top-down federal control over transportation.  Successive congresses have diverted as much as 38% of the gas tax revenue to mass transit projects and wasteful endeavors for specific states.  The net result is that some states are donors (contribute more), while other states are recipients (receive more in funding than they contribute).

We need to abolish the federal gas tax, and devolve all responsibility and taxes for transportation projects to the states.  The two bills percolating through Congress will double down on failed policies, add to the debt, perpetuate inefficiencies in highway construction, continue to encumber traffic, and preclude any devolution of responsibility to the states.

The Senate bill, S. 1813, funds transportation at $109 billion over two-years, $54.5 billion per year.  The House bill, despite accolades from Republican leadership, is only slightly smaller than the Senate version.  The House bill, HR 7, will authorize $260 billion over 5 years, $52 billion per year.  Both bills continue to divert about 20% of the gas tax revenue to fund liberal mass transit projects.  But here’s the kicker: according to CBO, the Highway Trust Fund will only take in $187 billion in revenue over 5 years.  Both bills rely on using all unspent funds in the trust fund, totaling about $20 billion.  We will still incur a $30-50 billion deficit over 5 years, and at least $136 billion over 10 years.  Remember we already bailout out the trust fund in 2008 with general fund revenues to the tune of $35 billion.

But, fear not, Republicans plan to attach three bills authorizing drilling in ANWR, offshore, and in the western states.  They pledge to use the revenue from the royalties to offset the deficit engendered by general fund transfers to the Highway Trust Fund.  The problem is that these proposals are dead on arrival with the Democrats.  Once we agree to the premise of higher transportation spending, and the Democrats jettison the drilling royalties, we will be left with a deficit once again.

This position mirrors the cycle of capitulation with the budget bills.  Democrats propose some profligate legislative budget bill.  Conservatives advocate that we uproot the entire premise by drawing a line in the sand on the principles that got us elected.  Republican leaders eschew conservative principles and acquiesce to the premise that the Democrat budget is a priority too big to fail.  They telegraph the message to Democrats that they will never let the budget bill fail, but promise to make them pay for it with reforms or other spending offsets.  Democrats balk at the offsets. Finally, we are left agreeing to the spending without the offsets.

Moreover, if we run a perennial deficit in the trust fund, we will be permanently exposed to future hikes in the gas tax.  The Chamber of Commerce and Big Labor are already joining in an unholy alliance to support a gas tax hike.

We must defeat the 847-page highway bill, and call upon Congress to devolve transportation authority to the states.  At the very least, they should stick with the original House proposal to peg the cost of transportation spending to revenues from the gas tax.  Why are we negotiating with ourselves again?

Cross-posted from The Madison Project

“I’m not concerned about the very poor. We have a safety net there. If it needs a repair, I’ll fix it. I’m not concerned about the very rich…. I’m concerned about the very heart of America, the 90-95 percent of Americans who right now are struggling.”

Following this comment, CNN anchor Soledad O’Brien prodded Romney to clarify his remarks.

“We will hear from the Democrat party, the plight of the poor…. You can focus on the very poor, that’s not my focus…. The middle income Americans, they’re the folks that are really struggling right now and they need someone that can help get this economy going for them.”

The media, Democrats, and many Republicans are painting him as out-of-touch, while expressing their concern that he is apathetic to the plight of the poor.  However, they are missing the point.  The real outrage is not that he doesn’t want to do more for the poor; it’s that he thinks they are taken care of with the welfare state.  Worse, he believes that the welfare state is, more or less, functioning properly.  Fear not, ‘any minor glitches would be repaired by Mr. Fix It.

It is precisely this sentiment that makes Romney disqualified for the Republican nomination.  Romney doesn’t believe that the welfare system is fundamentally flawed; that the welfare state is the consummate enemy of the poor; that unlimited welfare is what perpetuates and exacerbates poverty.  He thinks it is working relatively fine, albeit in need of some minor tweaks here and there.

As Senator DeMint noted, this could have been a teachable moment – a moment for Romney to shine.  He could have gone on offense by explaining how it is these very welfare programs that have failed to deracinate poverty, even though they have been in place for decades.  He could have shown how the only thing that is stimulated by these programs is the dependency of the program itself.  $30 billion spent on food stamps gives rise to $60 billion, which now gives rise to $80 billion.  He could have defended the inherent compassion of conservative free-market policies in weaning people off these programs and creating upward mobility.

As conservatives, we care deeply about the poor.  Then again, we care for everyone equally.  We don’t recognize a class system – one that Romney has propagated incessantly throughout the campaign.  It is that conviction that burns in the heart of every conservative who desires to fundamentally overhaul the welfare state and the cycle of dependency and poverty.

We care immensely about the millions of poor who are condemned to a life of failure because they are trapped in the public education system perpetuated by teachers’ unions and the Democrats.  We cry out for those who cannot afford healthcare because the liberals have destroyed the free market.  We empathize with those who can no longer afford food, gas, and utilities because liberals have artificially inflated the prices with government interventions.  We sympathize with those who can’t find jobs that fit their skill set because liberal environmentalists have eliminated their jobs.

As conservatives, we are not happy to merely be efficient stewards of Medicaid, LIHEAP, Food Stamps, Unemployment, and TANF to deal with the aforementioned problems.  We seek to solve those problems by offering an equal opportunity for everyone to earn a living with dignity; not by offering capricious politicians the opportunity to grow dependency, and by extension, their own power.

Only one who is insouciant towards the plight of the poor – whether Republican or Democrat – can feel content with the core structure of the current welfare/entitlement state.   Such a person is satisfied with trite incremental tinkering of the system.  Mitt Romney personifies that caricature.  That is why his solution to poverty it to manage the welfare state…and raise the minimum wage requirement.

Is this the man we want as our spokesperson during an election over the economy?

Cross-posted from The Madison Project

Without much fanfare, the Department of Transportation (DOT) enacted a rule which requires airlines to ensconce all government taxes and fees in a single total advertised price with the fare.  For example, if you purchase a $350 plane ticket with $50 of taxes and fees, the DOT is demanding that the airline advertise the price as $400.  Airline passengers pay over a dozen taxes and fees on any given airplane ticket, but the government doesn’t want us to know that.  The rule was finalized last April, but only took effect last week.

The timing of this rule is very fortuitous.  This week, Congress will finalize negotiations for a long-term FAA funding bill.  This bill authorizes the collection of all taxes – including taxes on aviation fuel, domestic and international ticket taxes, and cargo –directed to the Airport and Airway Trust Fund, which provides the bulk of FAA funding.  As usual, Democrats want to spend more money on wasteful projects, and are all too hungry to increase aviation taxes.  What better way to leverage tax increases than by forcing airlines to hide their cost and to shoulder the blame for the perceived higher price tag at the top!

This is yet another insidious plan to raise taxes and place unconstitutional mandates on private enterprise – all by administrative fiat.  It must be stopped in its tracks.  Today, conservative Rep. Tom Graves (R-GA) is introducing a bill, the Travel Transparency Act, which will void the DOT rule, and demand that passengers have the right to view all the aviation taxes in separate line items for each ticket purchased.  Graves asserted that “the federal government should not be inserting itself in the private sector to limit consumers’ ability to see how much they’re getting taxed. If the American people can’t see these costs clearly, I fear it will be easier these fees and taxes to be raised without their knowledge.”

Secretary of Transportation Ray LaHood, who used to be a Republican, defended the rule as a necessary means to ensure that passengers are treated with “dignity and respect.”  The only thing this rule will accomplish is ensuring that passengers retain their “respect” for government, while blaming the airlines for perceived increases in ticket prices.

At present, airline passengers are on the hook for at least 16 different taxes and fees on the average airline ticket.  Additionally, they must incur the most harmful backdoor tax; the high cost of jet fuel resulting from decades of anti-energy growth policies.  We must ensure that the existing taxes remain transparent so that Congress will have a harder time sneaking through new tax increases.  Please ask your member of Congress to cosponsor Tom Graves’s Travel Transparency Act.

Cross-posted to The Madison Project

As always, there are those who argue that earmarks are just inconsequential “drop in the bucket” expenditures; that we must focus on more impactful issues.  This from Senator Cornyn:

He continued, “I wish we would focus on what the American people are most concerned about rather than some of these other issues that have their importance but are tangential to the main issues we ought to be focused on.”

“I think we ought to [instead] be looking at other ways to … address people’s concerns about jobs and the debt,” Cornyn said.

Yes, there are more pressing issues, but we can walk and chew gum at the same time.  We can spend a half hour voting on one amendment to scrub earmarks from the Senate once and for all.  Moreover, it is precisely because eliminating earmarks is such an easy, low-hanging fruit that we should deal with it immediately.  If senators are unwilling to relinquish millions in pork projects, how will they have the courage to cut billions from welfare programs and reform entitlements?

There are also the usual suspects who hold earmarks to be a moral and constitutional responsibility.

“It’s just stupid, it’s childish, it’s demagoguery,” Sen. James Inhofe (R-Okla.) said. “There is not a lot of courage in our conference [on the issue.] They all know better. They all know by banning earmarks … they are just giving the authority to the president. But they are afraid of it because people don’t understand the issue out there.”

“We have an obligation as Members of Congress to fulfill our Constitutional duty. One of those duties is to make sure that we do Congressionally directed spending. I object and do not believe that all these decisions should be made at the White House,” Reid said.

Then there’s this gem from the esteemed Majority Leader:

“I’ve done earmarks all my career, and I’m happy I’ve done earmarks all my career. They’ve helped my state and they’ve helped different projects around the country.”

Toomey’s amendment would permanently ban all earmarks, defined as any congressionally directed spending item, limited tax benefit, or limited tariff benefit.  It would also create a point of order against any legislation containing an earmark, requiring a two-thirds vote to waive the point of order.

If this is really such a small issue, then we should bury it this week – once and for all.  Find out if your senator is supporting the bipartisan amendment to ban earmarks.

Cross-posted from The Madison Project

The budget season has officially commenced today with CBO’s release of its annual budget and economic outlook.  Here are some of the major takeaways from the report:

FY 2012 Budget

The topline figure that the media will focus on is the projected $1.070 trillion budget deficit for FY 2012, down from $1.3 trillion last year.  However, as CBO notes several times throughout the report, the reduction in this year’s deficit is predicated on several assumptions.

1)      Revenues:  The entirety of this year’s deficit reduction comes from higher projected revenues, roughly $220 billion.  CBO is forced to score current law, which assumes that the payroll tax cut will expire at the end of February.  Another 10-month extension, which is almost a forgone conclusion, would cost over $100 billion.  Also, the CBO baseline does not include a likely AMT patch, and extension of many annual “tax extenders,” such as the credit for research and development.  It’s very likely that the extensions will wipe out the entire revenue gain from this year over 2011, thereby eliminating the reduction in the deficit.

2)      Outlays:  CBO is projecting $3.601 trillion in spending, up just $3 billion from last year.  Obviously, this projection does not account for a full-year extension of unemployment benefits and doc fix, which could add as much as $70 billion to this year’s spending total.

3)      Defense:  Outlays for defense will be reduced by another $20 billion.

When these factors are accounted for, it is clear that non-defense discretionary spending will not decrease significantly, while mandatory spending will continue to rise.  If you assume the alternative scenario, in which most of the temporary tax and spending measures are extended, the deficit should be about the same as last year; around $1.3 trillion.  In other words, there will be slightly more revenue this year, but increased spending as well.

10-Year Budget Frame: 2013-2022:

Over the next 10 years, CBO is projecting $41.179 trillion in revenues and $44.251 trillion in spending, for a deficit of $3.072 trillion.  The $3 trillion figure is a real lowball estimate of our projected debt for several reasons.  Under that scenario, our annual deficits would dip to $450 billion in just two years, and stay below $400 billion indefinitely.  They are assuming rosy pictures of revenue increases, along with the expiration of the Bush tax cuts.  Furthermore, CBO notes, that Medicare and Medicaid spending have always increased above expectations, and with Obamacare taking effect, the real cost of healthcare spending will blow out the budget deficits – way beyond $3 trillion.

Another important long-term factor is interest on the debt.  At present, interest rates are at historic lows, but they will eventually revert back to their historic norms.  That could add several trillion more to the 10-year deficit.

The rosy predictions for revenues and reduced healthcare spending can come to fruition, but not with the current socialist policies as the baseline.

Economic Outlook

CBO is projecting more stagnation for the next few years.  For 2012, they are seeing 2% GDP growth and 8.9% unemployment.  For 2013, they are projecting a pullback to just 1.1% growth and a spike in unemployment to 9.2%.  With these bleak economic figures, it’s hard to envision a scenario in which revenues increase substantially and spending on welfare programs decline (as projected by the report).  How can revenues go from 16% of GDP to 20% in just two years, even without the extension of tax cut provisions?  Then again, it’s all a moot point.  Budget deficits tend to be much higher than the figures projected in CBO reports, in part, due to some of the aforementioned factors.

Debt

Using the unlikely “current policy baseline,” gross federal debt would rise to $21.7 trillion under CBO’s projections.  In the more likely “alternative fiscal scenario” gross federal debt rises to $29.4 trillion by 2022, 120% of GDP.  The public share of the debt would reach $23.2 trillion, or 94% of GDP.  Again, the GDP numbers, under current policies, are overly optimistic.

Social Security

Social Security is, by far, the largest expenditure for the foreseeable future.  This year, SS outlays will top $770 billion, accounting for 21.3% of the entire federal budget for FY 2012.  From 2013-2022, SS spending will top $10.5 trillion, almost 24% of the budget.  On the revenue side, Social Security taxes will only rise $627 billion this year and $8.9 trillion over 10 years.  Once again, this projection does not factor in any future payroll tax cuts.

Another noteworthy point is that the Social Security Disability Insurance trust fund will be exhausted in 2016.

Remember that the Social Security Trust Fund is a notional accounting gimmick and is nonexistent.  Consequently, every penny of SS benefits that is not covered from the payroll tax will augment our deficit.  The real question is why one quarter of the budget is consumed by a program that should be controlled by the individual.  Why are we bankrupting our future for a program that offers a worse rate of return than private accounts, which would not cost the government and future generations of Americans a penny?

Medicare

Gross Medicare spending, the second largest domestic spending program, will reach $560 billion this year and $7.8 trillion over 10 years.  Net Medicare spending (subtracting $1.2 trillion in offsetting revenues from premium payments from seniors) will be about $6.55 trillion.   This year’s outlays would have been higher if not for a shift in certain payments from fiscal year 2012 into fiscal year 2011 because the first scheduled date for payments to health plans in 2012 fell on a weekend.  Revenues from the Medicare payroll tax will only bring in roughly $2.8 trillion – and that is including the payroll tax increases under Obamacare.  As such, the Medicare hospital insurance trust fund, which is funded by payroll taxes, will be exhausted in 2022.

Now that it is incontrovertibly clear that government has failed at controlling healthcare and retirement costs, is it too much to ask that we allow personal ownership and the free-market to get a bite at the apple?

Liberals always complain that seniors will be left to their own devices under our policies.  Judging by the future debt figures, I think we would all rather be on our own, as opposed to shouldering the burden of crushing debt payments.

Cross-posted to The Madison Project

While it is clear that many federal workers (but not all) work hard for their money, it is also clear that they should not be earning more than those who pay their salaries.  It is simply unsustainable for government workers to be earning more than their counterparts in the private sector.

Yesterday, CBO published a report showing that on average, government workers are paid more than those in the private sector with similar jobs and qualifications.  Here are the pertinent findings of the report:

CBO, Jan. 2012

• Overall, federal civilian employees receive total compensation 16% higher than their private-sector counterparts;
• Federal civilian employees receive 2% more in cash wages than private-sector employees;
• The most significant advantage comes in the form of benefits, where federal civilian employees enjoy a 48% advantage over their private-sector counterparts.  Also, workers with no more than a high school education enjoyed the largest advantage over their private-sector counterparts.  The only workers who fare better in the private sector are those with post-graduate degrees.  Obviously, even with the generous benefits package for government workers, there is a limit to how much one can make.  That inherent limit affects the most educated workers.

This is something lost on those who opposed Wisconsin Governor Scott Walker’s public sector compensation reforms.  Walker’s major reforms included requiring teachers to contribute 5.8% into their pensions (instead of 0%) and all public employees to pay 12.6% of their health-care premiums.  The average private-sector worker with similar education, qualifications, experience, and salary, would walk over glass for those benefits.  Yet, the union goons blew up Madison for a month because their benefit package wasn’t 100% free.

The same thing holds true on a federal level.  Average benefits were 72% higher for federal employees with no more than a high school education than for their private-sector counterparts.  We are slated to spend over $1 trillion just on civilian federal workers’ pensions over the next 10 years.  It is these unlimited benefits for federal workers that are more costly and unpredictable than higher wages.  CBO notes that they are hard to quantify and predict in the long run.

How in the world can the taxpayers, many of whom receive no pension, support such a scheme?  The federal workforce needs to transition from a defined-benefit retirement system to a defined-contribution system.  The private-sector might serve as a good example for such reforms.

Cross-posted from The Madison Project

Those who won the jackpot on tax day benefited primarily from refundable tax credits; the Earned Income Tax Credit (EITC), Additional Child Tax Credit (ACTC, the refundable portion of child tax credit), and the now-expired Making Work Pay Credit.  In 2011, refundable credits cost the treasury about $94.4 billion.   Keep in mind that this is just one small portion of the burgeoning welfare empire, approaching $1 trillion in total federal, state, and local expenditures.   While it would be nice to get rid of these redistributive “tax expenditures” for everyone, we could start with illegal aliens.

Last July, the Treasury Inspector General for Tax Collection released a shocking report detailing how illegal aliens are able to utilize a filing loophole to obtain billions in ACTC funds.  While EITC appropriations are protected from illegals (those who don’t engage in identity theft) because they are only awarded to those who provide a valid Social Security number, the same cannot be said for the ACTC.  Illegals can receive the ACTC by merely providing an Individual Taxpayer Identification Number (ITIN) on their 1040 form, which is blithely issued by the IRS.  In 2010, according to the report, illegals received $4.2 billion in ACTC payouts.  That accounts for roughly 15% of all outlays for that refundable credit.

During the December imbroglio over the payroll tax cut, the House inserted a provision to require a valid Social Security number in order to collect the ACTC.  Republicans planned to use the savings as part of the offset package.  Now that the bill, HR 3630, is pending before the conference committee, we must ensure that the ACTC provision is part of a legitimate proposal to offset the cost of the extenders package.

Originally, the Joint Committee on Taxation scored the savings as $2.6 billion for 1 year and $9.4 billion over 10 years.  However, as Politico noted earlier this month, that estimate assumes the Bush tax cuts – along with the expansion of the child tax credit – will expire.  If you assume a baseline in which the tax cut is extended ($1,000 per child, instead of $500), the ten year savings can be as much as $24 billion.

Now, obviously $24 billion over 10 years is not enough to offset even the unemployment and doc fix components of the package for just 1 year (a cost of up to $70 billion for the Senate version).  Nonetheless, it is a legitimate offset, and should serve as part of a broader package of spending offsets for the bill.  If we can’t force the issue on refundable tax credits for illegals, we will never be able to cut one inch from the welfare empire for the broad populace.

Cross-posted from The Madison Project

Yesterday, the Senate voted against a measure to disapprove of Obama’s request for an additional $1.2 trillion of debt.  Every Democrat (except for Ben Nelson and Joe Manchin) voted against the resolution.  Consequently, pursuant to the Budget Control Act (the “debt ceiling deal”), Obama will automatically get his new credit card.  Our debt will increase by another $1.2 trillion, topping $16.4 trillion by the end of the year.

Here are the relevant numbers that should define Obama’s presidency, yet they will not be disseminated in the major media.  When Obama took office, the total federal debt stood at $10.6 trillion.  By the end of his first term, the debt will be at least $16.4 trillion, an increase of $5.8 trillion.  To put that in perspective, it took us until late 2001 (from our nation’s founding) to accrue $5.8 trillion in debt.  Even President Bush, who was a big-spending Republican, racked up “only” $4.9 trillion over 8 years.

Let’s now explicate the debt figures as a percentage of our economy.  Our total federal debt and our GDP stand at parity.  The debt is $15.281 trillion, while our GDP is 15.294 trillion.  It is unlikely that our economy will grow by more than a 2-2.5% annualized rate in the coming year.  On the other hand, with the additional $1.2 trillion of debt, our national debt will grow by 7.9%.  In other words, our GDP will remain below our gross debt indefinitely.

Unfortunately, the Republicans are not innocent from reproach in this debt crisis.  While every Republican except for Scott Brown voted for the resolution of disapproval, most of them supported the debt ceiling deal that engendered this disaster in the first place.  Only 19 of the 47 Senate Republicans opposed the debt deal, which gave Obama a defacto blank check to raise $2.1 trillion in debt without any transformational budget reforms.  We have already raised the debt ceiling by $900 billion since passage of the Budget Out of Control Act.  Today, by default, Obama was granted the rest.

This just underscores the need to focus on congressional races.  We might win back the Senate in November; however, if we continue to elect those who will vote for similar inane legislation, it will be worthless.

Cross-posted from The Madison Project