Last week, John Boehner’s spokesman, Brendan Buck, falsely asserted that the highway bill is “completely paid for –without raising the gas tax,” and will not engender further bailouts.  The reality is that this bill will impel an immediate $40 billion bailout from the general fund, while relying on phantom offsets to pay for it over 10 years.  Moreover, these offsets will never pass and will never come to fruition, while the deficit-producing bailout will occur immediately.

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.

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Last week, John Boehner’s spokesman, Brendan Buck, falsely asserted that the highway bill is “completely paid for –without raising the gas tax,” and will not engender further bailouts.  The reality is that this bill will impel an immediate $40 billion bailout from the general fund, while relying on phantom offsets to pay for it over 10 years.  Moreover, these offsets will never pass and will never come to fruition, while the deficit-producing bailout will occur immediately.

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.

Read More →

Anne Boleyn was queen for 1000 days then her head rolled off her shoulders thanks to a Frenchman’s sword. We’re seeing the Anne Boleyn of budgets making its way to Capitol Hill now — after 1000 days the President is finally presenting his budget. But like the last one that got rejected 97-0 in the Senate, this one too, it seems, will get rejected by a bipartisan group lamenting big spending.

Along the way, the White House Chief of Staff is getting his facts wrong.

As President Obama prepares to unveil his FY2013 budget Monday, White House chief of staff Jack Lew this morning was asked by CNN to defend the Senate’s refusal to pass a budget in more than 1,000 days.

“You can’t pass a budget in the Senate of the United States without 60 votes and you can’t get 60 votes without bipartisan support,” Lew said. “So unless… unless Republicans are willing to work with Democrats in the Senate, [Majority Leader] Harry Reid is not going to be able to get a budget passed.”

That’s not accurate. Budgets only require 51 Senate votes for passage, as Lew — former director of the Office of Management and Budget — surely must know.

Of all the things this White House should get wrong, budget reconciliation rules, etc. should be the very last thing considering how they passed Obamacare. But there you go.

No budget for a thousand days — it really is not difficult to understand why so many Americans keep their money on the sidelines when their own government can’t tell them a spending plan for the next year.

Anne Boleyn was queen for 1000 days then her head rolled off her shoulders thanks to a Frenchman’s sword. We’re seeing the Anne Boleyn of budgets making its way to Capitol Hill now — after 1000 days the President is finally presenting his budget. But like the last one that got rejected 97-0 in the Senate, this one too, it seems, will get rejected by a bipartisan group lamenting big spending.

Along the way, the White House Chief of Staff is getting his facts wrong.

As President Obama prepares to unveil his FY2013 budget Monday, White House chief of staff Jack Lew this morning was asked by CNN to defend the Senate’s refusal to pass a budget in more than 1,000 days.

“You can’t pass a budget in the Senate of the United States without 60 votes and you can’t get 60 votes without bipartisan support,” Lew said. “So unless… unless Republicans are willing to work with Democrats in the Senate, [Majority Leader] Harry Reid is not going to be able to get a budget passed.”

That’s not accurate. Budgets only require 51 Senate votes for passage, as Lew — former director of the Office of Management and Budget — surely must know.

Of all the things this White House should get wrong, budget reconciliation rules, etc. should be the very last thing considering how they passed Obamacare. But there you go.

No budget for a thousand days — it really is not difficult to understand why so many Americans keep their money on the sidelines when their own government can’t tell them a spending plan for the next year.

On Monday, Obama is slated to release his annual budget proposal for FY 2013, along with a 10-year budget (2012-2021) outlook.  One would think that after talking incessantly about cutting spending, Obama would spend less money next year than this year.  Yet, in Obama’s world, a spending cut means spending less than you were slated to spend, even though it is still higher in nominal terms.  The Wall Street Journal has already obtained the outline of his budget:

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.

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On Monday, Obama is slated to release his annual budget proposal for FY 2013, along with a 10-year budget (2012-2021) outlook.  One would think that after talking incessantly about cutting spending, Obama would spend less money next year than this year.  Yet, in Obama’s world, a spending cut means spending less than you were slated to spend, even though it is still higher in nominal terms.  The Wall Street Journal has already obtained the outline of his budget:

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.

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Senator Ron Johnson (R-WI) asked Ben Bernanke at the recent Senate Budget Committee if the lack of Presidential leadership was hurting the US economy. He asked, “I’m afraid President Obama has just been phoning it in here the last couple years in terms of our debt and deficit issue. … Can you speak to how harmful that is in terms of economic growth?”

Now Bernanke can’t answer these sorts of things straight away. But he basically got there. Here’s what he said:

Well Senator, I’m not going to comment on parliamentary maneuverings, but Senator Wyden made exactly the same question. You know, is uncertainty about the future of the tax code, government programs, and so on a negative for growth? I think it is because firms like to have certainty, like to be able to plan. And again I would take on the same responsibility as a regulator, that we need to make regulations as clear and as effective as possible.

So he’s saying that firms like to have certainty and that as a regulator, Bernanke wants things to be clear and effective. Today Jake Tapper asked Jay Carney about this. Should Senate pass a budget? Does the President have an opinion on this? Turns out that the answer is no

TAPPER: The White House has no opinion about whether or not the Senate should pass a budget? The president’s going to introduce one. The Fed chair says not having one is bad for growth. But the White House has no opinion about whether –

CARNEY: I have no opinion — the White House has no opinion on Chairman Bernanke’s assessment of how the Senate ought to do its business.

I think it is worth recalling why the Senate stopped passing budgets. Because they are politically difficult, and being accountable is hard in an election year. The Senate last passed a budget on April 29, 2009. They didn’t work on a budget in 2010. Why? Because a budget requires taking responsibility for the fiscal state of our country. And it was clear that the 2010 election was going to be rough for Democrats. So what did they do? They ducked. They dodged all responsibility. Republicans were willing to do it in the House, but the Senate was not. They didn’t even bring a serious budget to the floor and haven’t since.

And since the Republicans have been able to put their ideas up for inspection by the American people. See the Ryan Budget. Republicans are willing to fight an election on ideas and tell the American people what sacrifices will need to be made to address our fiscal crisis.

But now, not only is the Senate failing the American people, but President Obama is helping the Senate in dodging this responsibility. The fact is that he has no opinion on running the country like an adult. He has “no opinion” about giving business certainty.

Thank you Ron Johnson for asking the question and getting the clarity on this from Chairman Bernanke. And thank you to Jake Tapper for asking the White House if they are interested in leading.

They aren’t.

Senator Ron Johnson (R-WI) asked Ben Bernanke at the recent Senate Budget Committee if the lack of Presidential leadership was hurting the US economy. He asked, “I’m afraid President Obama has just been phoning it in here the last couple years in terms of our debt and deficit issue. … Can you speak to how harmful that is in terms of economic growth?”

Now Bernanke can’t answer these sorts of things straight away. But he basically got there. Here’s what he said:

Well Senator, I’m not going to comment on parliamentary maneuverings, but Senator Wyden made exactly the same question. You know, is uncertainty about the future of the tax code, government programs, and so on a negative for growth? I think it is because firms like to have certainty, like to be able to plan. And again I would take on the same responsibility as a regulator, that we need to make regulations as clear and as effective as possible.

So he’s saying that firms like to have certainty and that as a regulator, Bernanke wants things to be clear and effective. Today Jake Tapper asked Jay Carney about this. Should Senate pass a budget? Does the President have an opinion on this? Turns out that the answer is no

TAPPER: The White House has no opinion about whether or not the Senate should pass a budget? The president’s going to introduce one. The Fed chair says not having one is bad for growth. But the White House has no opinion about whether –

CARNEY: I have no opinion — the White House has no opinion on Chairman Bernanke’s assessment of how the Senate ought to do its business.

I think it is worth recalling why the Senate stopped passing budgets. Because they are politically difficult, and being accountable is hard in an election year. The Senate last passed a budget on April 29, 2009. They didn’t work on a budget in 2010. Why? Because a budget requires taking responsibility for the fiscal state of our country. And it was clear that the 2010 election was going to be rough for Democrats. So what did they do? They ducked. They dodged all responsibility. Republicans were willing to do it in the House, but the Senate was not. They didn’t even bring a serious budget to the floor and haven’t since.

And since the Republicans have been able to put their ideas up for inspection by the American people. See the Ryan Budget. Republicans are willing to fight an election on ideas and tell the American people what sacrifices will need to be made to address our fiscal crisis.

But now, not only is the Senate failing the American people, but President Obama is helping the Senate in dodging this responsibility. The fact is that he has no opinion on running the country like an adult. He has “no opinion” about giving business certainty.

Thank you Ron Johnson for asking the question and getting the clarity on this from Chairman Bernanke. And thank you to Jake Tapper for asking the White House if they are interested in leading.

They aren’t.

We’ve directed a lot of attention to the deficiencies of the House version of the highway bill (here and here).  We must also work to defeat the Senate version, which is even worse.  The 2-year $109 billion Senate bill (S.1813) offers no reform to mass transit and continues to mandate that states use 10% of their funding for wasteful “enhancement projects.”  As bad as the House bill is for conservatives, the Senate bill is absolutely indefensible.  Yet, amazingly, it was reported out of the Senate Environment and Public Works Committee with unanimous support from Republican members last year.  Last night, it was approved by the Finance Committee.

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).

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We’ve directed a lot of attention to the deficiencies of the House version of the highway bill (here and here).  We must also work to defeat the Senate version, which is even worse.  The 2-year $109 billion Senate bill (S.1813) offers no reform to mass transit and continues to mandate that states use 10% of their funding for wasteful “enhancement projects.”  As bad as the House bill is for conservatives, the Senate bill is absolutely indefensible.  Yet, amazingly, it was reported out of the Senate Environment and Public Works Committee with unanimous support from Republican members last year.  Last night, it was approved by the Finance Committee.

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).

Read More →