Yahoo.com : House GOP unveils $61 Billion spending cut plan

[DRSmith]

It is extremely difficult to invest in the United States with all the rules, regulation and taxes that go into it. Capital and investments go to where they can make the greatest return. The fact that we have an economic system that doesn't allow for the greatest return is not the fault of business or industry. This huge government spending is at the expense of available credit to businesses and efficiency in the market. If investors can make more money abroad than they can domestically then they are going to invest abroad. The government shouldn't be upset with their people for investing in other countries, the people should be upset with the government for not having a system that allows them to be prosperous.

I hear that arguement and yet places like Canada and Europe have more regulation and more taxes and yet businesses thrive.

Business go where they have consumers and it they decide to go abroad they can and the government can make rules on content and if a company does not comply they lose consumers.

Yes a system that gives more advantage to corporations and benefits the rich instead of the greater number of the population should have people upset.

[SnyderShrugged]

I hear that arguement and yet places like Canada and Europe have more regulation and more taxes and yet businesses thrive.

Business go where they have consumers and it they decide to go abroad they can and the government can make rules on content and if a company does not comply they lose consumers.

Yes a system that gives more advantage to corporations and benefits the rich instead of the greater number of the population should have people upset.

You arent trying to infer that businesses thrive better in Canada and Europe and American businesses move there as a result, are you?

[DRSmith]

You arent trying to infer that businesses thrive better in Canada and Europe and American businesses move there as a result, are you?

They move there because that is where customers are coupled with sound laws to protect the local economy and the citizens

[SnyderShrugged]

They move there because that is where customers are coupled with sound laws to protect the local economy and the citizens

would you happen to have some data or sources that indicate this large amount of companies moving to Europe and Canada from the US for these "better laws"? Maybe name the top 10 that have moved and where.?

[mojobo]

I hear that arguement and yet places like Canada and Europe have more regulation and more taxes and yet businesses thrive.

Business go where they have consumers and it they decide to go abroad they can and the government can make rules on content and if a company does not comply they lose consumers.

Yes a system that gives more advantage to corporations and benefits the rich instead of the greater number of the population should have people upset.

Consumption in the United States has never been greater in the last 20 years and most of our industries left to other countries that had very little consumption. Right now our consumption and government spending is based on China's willingness to lend us money, but we are probably in the last year or two of that happening and we are going to see an extremely sharp rise in inflation very soon. This isn't about trying to maintain the #1 economy anymore, its about doing damage control now when China pulls the plug on our economy.

[DRSmith]

That is because the US has been signing bad trade laws

China is not going to pull the plug anytime soon there is still lots of money flowing infact the trade deficit with China hit a new high recently

[mojobo]

That is because the US has been signing bad trade laws

China is not going to pull the plug anytime soon there is still lots of money flowing infact the trade deficit with China hit a new high recently

Its really not bad trade laws. It's horrible economic policy here. When companies fail as brutally as they did in the dot com era and then again in 2008 with the whole financial mess mismanaged and insolvent companies are supposed to fail. That way the people who mismanage their capital are forced to sell to those who were able to succeed. Instead by bailing out companies that have failed we take capital from companies who have been successful and give it to companies who fail.

China is going to be forced to cut off the U.S. because their dollar peg is what is causing inflation. By inflating their currency to keep pace with ours they are propping up our economy at the expense of people who save in their nation. Pretty soon they are going to stop throwing good money at bad money and will just cut their losses. Again this isn't going to happen in 5-10 years, it is going to happen in 1-2 years if not sooner. Believe me you are in a good position being in Canada right now.

[Larry]

So, anybody planning on actually discussing the proposed cuts?

[SnyderShrugged]

So, anybody planning on actually discussing the proposed cuts?

I'd love too!

I personally think that the proposed cuts are too one sided on minutae items and there isnt enough focus on the larger spending categories of Defense, DHS, SSI and Medicare/Medicaid.

I also dont think they are doing them fast enough for the impact to be felt by the individual citizen.

[Burgold]

Obama to announce trillion-dollar cuts package

Thought this might be interesting coming from an Irish perspective which would be less Dem vs. Rep.

http://www.irishtimes.com/newspaper/world/2011/0214/1224289738433.html

US PRESIDENT Barack Obama is poised to announce $1.1 trillion (€800 million) in budget cuts today in a 10-year deficit reduction plan to avert a budget crisis and silence conservative opposition.

Mr Obama is expected to introduce a five-year freeze on discretionary spending and a pay freeze for government workers.

Severe cuts are expected to programmes that have previously had the president’s support. Fuel assistance for low-income families would be halved and an initiative to restore the environmental health of the Great Lakes would be reduced by a quarter.

The community development block grant, which goes to state governments to develop low-income areas, and funding for the Forest Service are also likely to be cut.

However, the cuts will have only a marginal impact on the national debt, which stands at $14.1 trillion. The 10-year deficit reduction would be less than the total projected deficit for 2011 alone, which the non-partisan congressional budget office estimates will be $1.48 trillion. The budget will not contain proposals to tackle areas of major spending in the US budget, such as social security.

The cuts will begin in October and extend over the next decade. Most savings will come from spending cuts. Even the Pentagon, often considered untouchable, will face cuts.

[SnyderShrugged]

Obama to announce trillion-dollar cuts package

Thought this might be interesting coming from an Irish perspective which would be less Dem vs. Rep.

http://www.irishtimes.com/newspaper/world/2011/0214/1224289738433.html

US PRESIDENT Barack Obama is poised to announce $1.1 trillion (€800 million) in budget cuts today in a 10-year deficit reduction plan to avert a budget crisis and silence conservative opposition.

Mr Obama is expected to introduce a five-year freeze on discretionary spending and a pay freeze for government workers.

Severe cuts are expected to programmes that have previously had the president’s support. Fuel assistance for low-income families would be halved and an initiative to restore the environmental health of the Great Lakes would be reduced by a quarter.

The community development block grant, which goes to state governments to develop low-income areas, and funding for the Forest Service are also likely to be cut.

However, the cuts will have only a marginal impact on the national debt, which stands at $14.1 trillion. The 10-year deficit reduction would be less than the total projected deficit for 2011 alone, which the non-partisan congressional budget office estimates will be $1.48 trillion. The budget will not contain proposals to tackle areas of major spending in the US budget, such as social security.

The cuts will begin in October and extend over the next decade. Most savings will come from spending cuts. Even the Pentagon, often considered untouchable, will face cuts.

Not a fan of Obama's proposal as a whole either. In fact, outside of the defense spending cuts, its a whole lot of window dressing starting with the fact that it is yet another silly "10 year plan". I want to see 2011 cuts of large amounts or its not a good plan for our immediate economic condition.

- A five-year freeze on non-defense discretionary spending would save more than $400 billion over 10 years

- $2 billion in cuts to travel, printing, supplies and other overhead costs. The plan also would cut more than $1 billion in grants to large airports and $950 million to revolving funds for state water treatment plants, among other things. (I like these)

The proposed budget seeks to prevent many middle-class Americans from being subjected to the Alternative Minimum Tax, which would raise their tax bills, for three years starting in fiscal 2012. To cover the cost, the administration would put new limits on the ability of the wealthiest earners to utilize tax deductions to lower their tax burden, among them deductions for charitable contributions and mortgage interest.

Hate this part... discourage charity? WTF?

The budget will also propose averting scheduled reductions in payments to doctors who treat Medicare patients (Doc Fix Bill) for the next two fiscal years, at a cost of $62 billion over 10 years. To cover the cost, savings would be found by making improvements in the health care delivery system Administration officials have no idea how exactly this will occur, but they will claim it until the end of time!)

Wasnt this supposedly the key factor in the "savings" that the CBO claimed would come from Obamacare? hate to say I told you so, but...

The White House will propose cutting 12 tax breaks to oil, gas and coal companies, which it projected will raise $46 billion in revenue over 10 years.

The budget calls for $148 billion in overall spending on research and development, which includes $32 billion in biomedical research at the National Institutes of Health. It would create 20 new Economic Growth Zones, providing tax incentives meant to attract investors and employers in hard-hit economic areas. (welfare)

[Larry]

I'd love too!

I personally think that the proposed cuts are too one sided on minutae items and there isnt enough focus on the larger spending categories of Defense, DHS, SSI and Medicare/Medicaid.

I also dont think they are doing them fast enough for the impact to be felt by the individual citizen.

Just wondering why it is, when people want to talk about reducing the deficit, they always want to target the only part of the federal budget that isn't running a deficit.

(But I mostly agree with you. The 800 lb gorilla is Medicare/Medicaid. (And it looks like the Obamacare bill actually contained some things which might slow the growth of that gorilla. Although it remains to be seen whether Congress will override that.))

[SnyderShrugged]

Just wondering why it is, when people want to talk about reducing the deficit, they always want to target the only part of the federal budget that isn't running a deficit.

(But I mostly agree with you. The 800 lb gorilla is Medicare/Medicaid. (And it looks like the Obamacare bill actually contained some things which might slow the growth of that gorilla. Although it remains to be seen whether Congress will override that.))

I mention SSI more due to the insolvency issue. If unaddressed, it will ultimately add more to the debt too.

[Larry]

- A five-year freeze on non-defense discretionary spending would save more than $400 billion over 10 years

Why "non-defense"?

- $2 billion in cuts to travel, printing, supplies and other overhead costs. The plan also would cut more than $1 billion in grants to large airports and $950 million to revolving funds for state water treatment plants, among other things. (I like these)

I can see cutting government subsidies for airports. Seems to me that the airline industry isn't an infant industry that needs subsidies to survive, any more.

Cutting funding for water treatment, though? Again, that sounds like one of those things where the feds get to claim they cut the deficit, and the states are going to have to raise taxes by the same amount. (Not that there's anything wrong with reducing the deficit by raising taxes. But I also suspect that the states will raise the taxes on the poor and middle class.)

The proposed budget seeks to prevent many middle-class Americans from being subjected to the Alternative Minimum Tax, which would raise their tax bills, for three years starting in fiscal 2012. To cover the cost, the administration would put new limits on the ability of the wealthiest earners to utilize tax deductions to lower their tax burden, among them deductions for charitable contributions and mortgage interest.

Hate this part... discourage charity? WTF?

Partially agree with you. Although I observe that what that says is "put limits on".

But I also have to point out one of my problems with this (and similar) tax deductions: What they do is provide government subsidies to the rich.

Illustration: I'm unemployed right now. No income whatsoever. If I give $1000 to the Red Cross, then it costs me $1000. If Bill Gates "gives $1000" to the Red Cross, then actually he's giving $650 and the government's giving $350.

The government should subsidize Bill Gate's charity, but not mine, because . . . ?

By a similar token, the government should pay 35% of Bill Gate's mortgage (and 35% of his health care expenses, and 35% of his children's expenses, and his property taxes, and . . . ), but only 10% of Joe the Plumber's mortgage (etc.), is . . . ?

The budget will also propose averting scheduled reductions in payments to doctors who treat Medicare patients (Doc Fix Bill) for the next two fiscal years, at a cost of $62 billion over 10 years. To cover the cost, savings would be found by making improvements in the health care delivery system Administration officials have no idea how exactly this will occur, but they will claim it until the end of time!)

Actually, I was reading about "doc fix" recently, while looking for information on the Obamacare effect on the deficit. Apparently, in 97, Congress passed a law to automatically reduce the amount that Medicare paid to doctors every year. And Congress has been temporarily overriding that law every year since then. (Out of concerns that if Medicare cuts the amount they pay any more, more and more doctors will start refusing to take Medicare.)

Obama is simply proposing to recognize, officially, something that the government's been doing for 14 years, anyway.

Wasnt this supposedly the key factor in the "savings" that the CBO claimed would come from Obamacare? hate to say I told you so, but...

Actually no, it wasn't, but there are parallels. (That's what I found out by reading about Obamacare and the deficit.)

The Obamacare law enacts Medicare cuts to people other than doctors (to hospitals and nursing homes, for example), similar to the automatic cuts which the law mandates (and which we have not been implementing) for doctors. Yes, it's possible that when the Obamacare future cuts are due to take effect, that they'll be overridden, too.

Here's a factcheck article about Obamacare and the deficit that mentions it.

The White House will propose cutting 12 tax breaks to oil, gas and coal companies, which it projected will raise $46 billion in revenue over 10 years.

The budget calls for $148 billion in overall spending on research and development, which includes $32 billion in biomedical research at the National Institutes of Health. It would create 20 new Economic Growth Zones, providing tax incentives meant to attract investors and employers in hard-hit economic areas. (welfare)

Well, corporate welfare.

[SnyderShrugged]

Why "non-defense"?

I can see cutting government subsidies for airports. Seems to me that the airline industry isn't an infant industry that needs subsidies to survive, any more.

Cutting funding for water treatment, though? Again, that sounds like one of those things where the feds get to claim they cut the deficit, and the states are going to have to raise taxes by the same amount. (Not that there's anything wrong with reducing the deficit by raising taxes. But I also suspect that the states will raise the taxes on the poor and middle class.)

Partially agree with you. Although I observe that what that says is "put limits on".

But I also have to point out one of my problems with this (and similar) tax deductions: What they do is provide government subsidies to the rich.

Illustration: I'm unemployed right now. No income whatsoever. If I give $1000 to the Red Cross, then it costs me $1000. If Bill Gates "gives $1000" to the Red Cross, then actually he's giving $650 and the government's giving $350.

The government should subsidize Bill Gate's charity, but not mine, because . . . ?

By a similar token, the government should pay 35% of Bill Gate's mortgage (and 35% of his health care expenses, and 35% of his children's expenses, and his property taxes, and . . . ), but only 10% of Joe the Plumber's mortgage (etc.), is . . . ?

Actually, I was reading about "doc fix" recently, while looking for information on the Obamacare effect on the deficit. Apparently, in 97, Congress passed a law to automatically reduce the amount that Medicare paid to doctors every year. And Congress has been temporarily overriding that law every year since then. (Out of concerns that if Medicare cuts the amount they pay any more, more and more doctors will start refusing to take Medicare.)

Obama is simply proposing to recognize, officially, something that the government's been doing for 14 years, anyway.

Actually no, it wasn't, but there are parallels. (That's what I found out by reading about Obamacare and the deficit.)

The Obamacare law enacts Medicare cuts to people other than doctors (to hospitals and nursing homes, for example), similar to the automatic cuts which the law mandates (and which we have not been implementing) for doctors. Yes, it's possible that when the Obamacare future cuts are due to take effect, that they'll be overridden, too.

Here's a factcheck article about Obamacare and the deficit that mentions it.

Well, corporate welfare.

larry, Those arent my ideas, these are parts of Obama's budget proposal from today.

and Yes, the Doc Fix bill that we all knew wouldnt ever go into play in the end, was a huge factor that the CBO used to claim the erroneous "savings" from Obamacare.

[Busch1724]

None of this will be easy, but why don't the representatives in these committees from each party sit down and present a budget cut and present the amount of the cut? Democrats get one, Republicans get one and debate the merits of each cut. Instead of puting out something to the public that will never pass and cause ill will, why not begin constructively and hash it out one by one until there is a 100 billion or so this year right off the top?

[Larry]

and Yes, the Doc Fix bill that we all knew wouldnt ever go into play in the end, was a huge factor that the CBO used to claim the erroneous "savings" from Obamacare.

The doc fix bill was passed in 97, and has absolutely nothing to do with Obamacare. As the factcheck article I provided a link for, tells you.

Obamacare contains a similar law, which will (supposedly) do to hospitals and nursing homes what the doc fix bill would have done to doctors, if we didn't override it every year.

House Republicans argue that the cost of avoiding a scheduled 21 percent reduction in Medicare payment rates to physicians should be charged against the health care law. But this so-called "doctor fix" has nothing to do with the law.

In fact, the "fix" is designed to roll back the effects of a 1997 provision in the Balanced Budget Act passed by a Republican-controlled Congress and signed by Democratic President Bill Clinton. It’s known technically as the "sustainable growth rate payment formula" or SGR. For the past eight years, Congress already has enacted a series of temporary "fixes," rather than face the possibility that more doctors will start refusing to take Medicare patients.

In early versions of their legislation, Democrats proposed a permanent "doctor fix" as part of the health care law, but they took that out before final passage. The CBO estimates the cost over 10 years would be $208 billion. But it’s not a cost of the health care law.

[Hubbs]

None of this will be easy, but why don't the representatives in these committees from each party sit down and present a budget cut and present the amount of the cut? Democrats get one, Republicans get one and debate the merits of each cut. Instead of puting out something to the public that will never pass and cause ill will, why not begin constructively and hash it out one by one until there is a 100 billion or so this year right off the top?

Why don't the parties actually do what's best for the people? You're new to these discussions, aren't you?

[DRSmith]

Its really not bad trade laws. It's horrible economic policy here. When companies fail as brutally as they did in the dot com era and then again in 2008 with the whole financial mess mismanaged and insolvent companies are supposed to fail. That way the people who mismanage their capital are forced to sell to those who were able to succeed. Instead by bailing out companies that have failed we take capital from companies who have been successful and give it to companies who fail.

China is going to be forced to cut off the U.S. because their dollar peg is what is causing inflation. By inflating their currency to keep pace with ours they are propping up our economy at the expense of people who save in their nation. Pretty soon they are going to stop throwing good money at bad money and will just cut their losses. Again this isn't going to happen in 5-10 years, it is going to happen in 1-2 years if not sooner. Believe me you are in a good position being in Canada right now.

And what you end up with is fewer companies, fewer market choices and more and more money going to a smaller group of people. And thne you get what you have now a ruling class of the corporate elites who influence all policy and media, higher unemployment and eventually a situation like you just saw in Egypt where the populace can not take it anymore.

If America started to to tax at the cash register anything in imported at ten percent and a ten percent tax on companies whose profit came from goods manufactured outside the US with countries that are manipulating their currency or preventing US goods from being sold they could pay down their debt and you would see companies move back to the US which would lower the number of unemployed and boost the money flowing in the economy

[The Sisko]

I read with great interest a thread from a few weeks ago in which Larry, SS and others argued about the merits/need for spending cuts vs. tax hikes. I think both are necessary to some degree. One might not understand the term "structural deficit" but cursory glance at Fanboy's graphic below explains it much better than I ever could. All one needs to do to understand the problem is look at the blue bar and the very small margin by which it exceeds mandatory spending.

Let's delay the hard choices a little longer...

What this means is that we could cut all discretionary spending to $0, nothing, zero, zip, nada and we'd still be looking at many, many years to pay off the current debt. The implications of this are obvious, i.e. we're not taking in enough tax revenue. The GOP's stock talking point a few weeks ago was about the need to have "an adult discussion..." The irony of that is striking given that we have a structural deficit that has lead to massive long-term debt and the GOP proposes trimming a little around the edges as the solution.

(**Edit** I corrected "non-discretionary" to read "discretionary" in the first sentence of the previous paragraph)

Now take a look at this and notice that the things at the bottom of the list, i.e. the sacred cows for both liberals and conservatives are the things that need to be cut in order to make a meaningful difference in our structural deficit and our long-term debt. And yet nobody wants a tax increase either.

As Fanboy said, let's delay the hard choices a bit longer. As I've said before I don't blame the pols too much anymore. It's become apparent to me that it's actually our fault. We're a nation of children who want government services-and yet don't want to pay for them.

[Larry]

I read with great interest a thread from a few weeks ago in which Larry, SS and others argued about the merits/need for spending cuts vs. tax hikes. I think both are necessary to some degree. One might not understand the term "structural deficit" but cursory glance at Fanboy's graphic below explains it much better than I ever could. All one needs to do to understand the problem is look at the blue bar and the very small margin by which it exceeds mandatory spending.

You think that chart (fanboy's) (I'm the one that started it.) is neat?

Want to know something that's even better?

The chart's wrong. That chart assumed that the tax cut on the rich was going to go away. (That was the budget as Obama proposed it.) The blue bar is actually smaller than shown. (It's closer to $2,100, not the $2,200 shown.)

Have a nice day.

[Busch1724]

Why don't the parties actually do what's best for the people? You're new to these discussions, aren't you?

I lurk and watch a lot, but get frustrated by folks here who say politicians can't do anything or get anything useful done, but when it comes to challenging a belief they have there is no compromise on it - much like politicians.

Everyone says cut the budget, but should say "cut the budget as long as it doesn't affect something I believe in". I'm a teacher, education funding needs to be reigned in. There are ways to do that. As soon as Republicans talk about education cuts the Democrats get up in arms. We spend too much on defense, a democrat says lets come some defense spending...well Republicans say we can't do that. So what do you do, it takes sacrifice from everyone including oneself's beliefs.

---------- Post added February-14th-2011 at 02:37 PM ----------

As Fanboy said, let's delay the hard choices a bit longer. As I've said before I don't blame the pols too much anymore. It's become apparent to me that it's actually our fault. We're a nation of children who want government services-and yet don't want to pay for them.

Perfectly said.

[Larry]

As Fanboy said, let's delay the hard choices a bit longer. As I've said before I don't blame the pols too much anymore. It's become apparent to me that it's actually our fault. We're a nation of children who want government services-and yet don't want to pay for them.

Actually, I think the only way this problem gets solved is to raise some taxes (but only a little. Too much would kill the recovery), slow the growth of entitlements and other spending, and wait for revenues to grow.

Not speedy or flashy. But it's the only method I see that really stands a chance.

[mojobo]

And what you end up with is fewer companies, fewer market choices and more and more money going to a smaller group of people. And thne you get what you have now a ruling class of the corporate elites who influence all policy and media, higher unemployment and eventually a situation like you just saw in Egypt where the populace can not take it anymore.

Exactly. But competition and free markets are the best way to take down the corporate elites. Bailouts come at the expense of other productive companies and people with savings. When a government says a company is "too big to fail" they are enabling them to become elite at the expense of competing companies.

If America started to to tax at the cash register anything in imported at ten percent and a ten percent tax on companies whose profit came from goods manufactured outside the US with countries that are manipulating their currency or preventing US goods from being sold they could pay down their debt and you would see companies move back to the US which would lower the number of unemployed and boost the money flowing in the economy

The U.S. is the one manipulating its currency, not other nations. I could see putting a tariff on nations that wont allow U.S. imports, but that will only do so much and the fact that China hasn't been importing with their U.S. dollars is going to end up hurting them, and the longer they hold on to them the more wealth they will lose. Unfortunately prices for everything would rise significantly if we had high tariffs since most of our consumption is from foreign products.

[DRSmith]

Then if you want to make sure companies are not too big to fail you set limits on how large a company can get and prevent monopolies and you increase market choice.

If you do not think China and other countries are not playing with their currencies than you are very naive.

Prices will go up and it will force goods to be made in the US again or allow even trade with other nations either way it benefits the US and gets people working, with more people working they take less from the government and pay taxes which in turn can pay down debt