Following on from blog 3 down (26th Feb) more on the US Federal Budget that has been voted down in The Senate.
Yesterday, Republicans Party leaders wrote to the Speaker of the House and the Majority Leader asking for the upcoming omnibus spending bill to be posted online so everyone can read it. They wrote, "[T]he [Democratic] Majority has asked the American taxpayers to fund nearly $1.5 trillion in new government spending [roughly $14,000 per family] in just four short weeks. And yet now the Majority plans to spend hundreds of billions more without yet sharing the content of the bill with Republican Members or the public. In the midst of a severe recession, taxpayers have a right to see each provision of this legislation and evaluate the merit of each dollar of government spending their children and grandchildren are being required to fund."
Through the second half of 2008, the Bush Administration was pushing the bailout bill, TARP - worth (merely as a convenient measure) $3,000 per household in spending. The Federal budget year ends in September. So while TARP was voted down before being voted through, Congress passed a bill to authorise the regular spending of the Federal government into early March 2009, worth about $8,000 per household for 5 months. Congress didn’t finish the regular fiscal year 2009 spending process, and so kicked that can down the road until after the Presidential election by authorising funding until March 6th, until after both handover of the White House and time for the new administration to fully populate all office desks.
Then the priority became the Economic Stimulus Bill (fiscal stimulus or deficit-spending- that-we-hope- will-be-a-stimulus) worth $4,300 per household. Note deficit spending is Federal government spending minus revenue = net new Treasury bonds.
Funding for the regular operations of most of the government flashed "fuel tank empty" last week just as a bill to finish out the fiscal year was heading to final passage. But there were upwards of 9,000 'earmarks' (special interest projects, otherwise known as 'pork barrel') in that bill, and that didn’t sit right with a lot of people, especially given that in the Presidential debates both candidates were adament they would scrutinise each and every earmark and probably cancel most of them. So Senate conservatives took up the anti-earmark crusade and prevented passage of the omnibus spending bill on Friday 6th. So, instead, Congress passed another short-term spending bill. H.J. Res. 38 or £100 per household to fund the federal government until Wednesday, the 11th. By then, Congress must figure out what to do with the earmarks to get H.R. 1105 bill passed in the Senate to fund the government through to September 30th at about $4,090 per U.S. household.
The bill that’s in only very few offices on Capitol Hill totals about $500 billion, or $5,100 per household to cover 7 months and less than one third of the total annual Government budget. One solution might be to strip the earflaps out and put them all in a sperate bill for line by line debate. That should keep Congress busy for a few months?
Subscribe to:
Post Comments (Atom)
1 comment:
from Associate Editor
Money Morning - 2/19/09
The nomination of Geithner to succeed current U.S. Treasury Secretary Henry M. Paulson Jr. was leaked over the weekend, and was reported by Money Morning yesterday. Geithner (pronounced: GITE-ner) obtained a Master of Arts degree in International Economics and East Asian Studies from Johns Hopkins University’s School of Advanced International Studies in 1985. He also has studied Japanese and Chinese and has lived in present-day Zimbabwe, India, Thailand and China. As the nation’s top financial authority, Geithner will inherit oversight of the Bush administration’s $700 billion bailout for Wall Street and a U.S. economy struggling with recession.
He will be flanked by former Treasury chief Lawrence Summers, who will head Obama’s National Economic Council. Analysts say this appointment puts Summers in line to succeed Ben S. Bernanke as chairman of the U.S. Federal Reserve in 2010. New Mexico Gov. Bill Richardson, who ran against Obama in the Democratic primary, will take over the Commerce Department, and Congressional Budget Office Director Peter Orszag will head the Office of Management and Budget. In other key appointments, economist Christina Romer will be the director of his Council of Economic Advisors, which provides economic analysis and advice to the president, and Melody Barnes will be the director of his Domestic Policy Council (DPC). Before being tapped by Obama, Barnes was executive vice president for policy at the Center for American Progress.
“I’ve sought leaders who could offer both sound judgment and fresh thinking, both a depth of experience and a wealth of bold, new ideas, and most of all who share my fundamental belief that we cannot have a thriving Wall Street without a thriving Main Street,” Obama said at a press conference in Chicago.
Obama’s economic team will be faced with the grand task of restoring confidence to Americas stricken financial sector, and may have to wrestle the U.S. economy out of its worst downturn in decades. President-elect Obama made it clear that the first priority for he and his team will be to pass an economic stimulus package. “The main thing right now is to get this economic recovery package on the road, to get money in the pockets of the middle class, to get these projects going, to get America working again,” David Axelrod, Obama’s chief campaign strategist, said in an interview with Fox News Sunday. “That’s where we’re going to be focused in January.”
Over the weekend, the president outlined a plan to create or save 2.5 million jobs by 2011. “It will be a two-year, nationwide effort to jump-start job creation,” Obama said of the plan. “We’ll put people back to work rebuilding our crumbling roads and bridges, modernizing schools that are failing our children, and building wind farms and solar panels.”
Tax cuts will also be a critical fixture in the stimulus. And they’d be preferable to rebates because they would have a more immediate impact on the economy. Of course, the question is who will receive those tax benefits.
Obama has repeatedly sounded calls for middle-class tax relief, but he also hinted that he might refrain from repealing tax cuts initiated by President George W. Bush that favored the wealthy – those who make more than $250,000 a year.Other measures that Obama has proposed in the past include:
Suspending penalties and income tax on early withdrawals from IRA and 401(k) accounts.
Offering a temporary tax credit of $3,000 to companies for each new full-time employee hired in the United States.
Extending unemployment benefits by a period of 13 weeks and temporarily suspending income taxes on those benefits.
Requiring a 90-day moratorium on foreclosures for homeowners.
Clinton Stretch, a tax principal at accounting firm Deloitte & Touche LLP, told Bloomberg that two other Obama tax proposals could be good candidates for inclusion in a stimulus package.
The first is Obama’s “Make Work Pay” tax credit, which would provide a partial Social Security payroll tax holiday for most taxpayers, worth up to $500 for individuals and $1,000 for married couples.
The second would be an extension of the Earned Income Tax Credit, which favors low-income workers.Of course, the pending stimulus package could include any of these measures, or none at all. The only certainty is that the stimulus will be costly. Sen. Charles Schumer, D-NY, said the amount set aside for a new stimulus package could equal or surpass the $700 billion designated for the TARP fund, more than half of which has been used to shore up U.S. banks and insurer American International Group Inc. (AIG).
Martin Baily, who was the White House’s chief economist under President Bill Clinton, told Bloomberg that the stimulus could exceed $1.2 trillion. That would dwarf the $175 billion package Obama proposed just one month ago, and even the $168 billion tax-break stimulus package President Bush issued earlier this year.
“We’re out with the dithering, we’re in with a bang,” Austan Goolsbee, a senior Obama economic adviser, said on CBS’ Meet the Press.
Post a Comment