GOP Spending Cuts Would Affect Millions of People

According to reports, millions of taxpayers are likely to be affected by the spending cuts promised by Republicans in Congress. Those who stand to lose: low-income students and the disabled. This is sure to make the GOP popular…

From the Associated Press:

Low-income students may get smaller grants and the newly disabled might have to wait longer for their benefits. And just about every politician is going to get an earful from the local PTA if school aid gets whacked.

Republicans are finding it's one thing to issue a blanket promise to cut spending, an entirely different matter when you actually take the scissors to $1 of every $6 spent by agencies like the IRS, the FBI, NASA and the National Park Service. Federal layoffs would be unavoidable, the White House warns.

That's the real-world impact of House Republicans' campaign promise to cut $100 billion from the budgets of domestic agencies. Next week, they plan to vote on a resolution setting appropriations for the rest of the year at 2008 pre-recession levels. before President Barack Obama took office.

The vote will be largely symbolic. The actual cuts would have to be made in appropriations bills that would have to clear a 60-vote hurdle in the Senate, where Republicans hold only 47 seats.

The $100 billion promise, contained in the GOP's "Pledge to America" campaign manifesto, is based on cuts from Obama's budget recommendations for 2011, but the actual savings in returning to Bush-era levels would be a little less since the government is operating at last year's slightly lower budget.

Still, compared with 2010 rates and assuming a full year of implementation, Republicans are promising to cut up to $84 billion from nine appropriations bills, cuts that would average 18 percent. Some Republicans, especially in the Senate, may join Democrats in balking when they see their size.

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GAO Sees Problems in Government’s Financial Management

Yesterday the Government Accountability Office (GAO) said it would not officially form an opinion on the federal government financial management because of widespread material control weaknesses, significant uncertainties, among other limitations.

From Accounting Today.com:

“Even though significant progress has been made since the enactment of key financial management reforms in the 1990s, our report on the U.S. government's consolidated financial statement illustrates that much work remains to be done to improve federal financial management,” Acting Comptroller General Gene Dodaro said in a statement. “Shortcomings in three areas again prevented us from expressing an opinion on the accrual-based financial statements.”

The main obstacles to a GAO opinion were: (1) serious financial management problems at the Department of Defense that made its financial statements unauditable, (2) the federal government’s inability to adequately account for and reconcile intragovernmental activity and balances between federal agencies, and (3) the federal government’s ineffective process for preparing the consolidated financial statements.

In addition, the GAO said last week it was unable to render an opinion on the 2010 Statement of Social Insurance because of significant uncertainties, primarily related to the achievement of projected reductions in Medicare cost growth. The consolidated financial statements discuss these uncertainties, which relate to reductions in physician payment rates and to productivity improvements, and provide an illustrative alternative projection to illustrate the uncertainties.

Dodaro also cited material weaknesses involving an estimated $125.4 billion in improper payments, information security across government, and tax collection activities. He noted that three major agencies — the DOD, the Department of Homeland Security, and the Department of Labor — did not get clean opinions. Nineteen of 24 major agencies did get clean opinions on all their statements.

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Why the Spending Stimulus Failed

Yesterday the CBO reported that tax breaks were the least effective portion of the stimulus plan. Now we’re being told that the stimulus failed because it needed more tax breaks? Here’s the thing, we’ll never be able to prove that an economic plan “worked” or didn’t, simply because we can’t know what would have happened had we acted differently. So, at the end of the day, it’s all just speculation, but enjoy some more:

From the Wall Street Journal:

President Obama and congressional leaders meeting yesterday confronted calls for four key fiscal decisions: short-run fiscal stimulus, medium-term fiscal consolidation, and long-run tax and entitlement reform. Mr. Obama wants more spending, especially on infrastructure, and higher tax rates on income, capital gains and dividends (by allowing the lower Bush rates to expire). The intellectual and political left argues that the failed $814 billion stimulus in 2009 wasn't big enough, and that spending control any time soon will derail the economy.

But economic theory, history and statistical studies reveal that more taxes and spending are more likely to harm than help the economy. Those who demand spending control and oppose tax hikes hold the intellectual high ground.

Writing during the Great Depression, John Maynard Keynes argued that "sticky" wages and prices would not fall to clear the market when demand declines, so high unemployment would persist. Government spending produced a "multiplier" to output and income; as each dollar is spent, the recipient spends most of it, and so on. Ditto tax cuts and transfers, but the multiplier is assumed smaller.

Continue reading at WSJ.com...

Recovery.Gov a Model for Transparency

Recovery.com, the government funded site created to track the spending of government stimulus money, is celebrating it’s one year anniversary today. As this article from USA Today explains, the site has become a model for spending transparency and led to the creation of other sites such as USAspending.gov.

Of the $814 billion in government stimulus spending, there's $18 million that could forever change the way government spends money.

That's how much the Recovery Accountability and Transparency Board spent to create Recovery.gov, the website that tracks where the government's stimulus money goes.

The website turns 1 year old today. While it's had a number of publicized flaws, the site already has become the template for how the government will collect and report on its spending.

On Friday, the federal government will begin requiring recipients of non-stimulus money to report to USAspending.gov where that money's going — just like the Recovery.gov does for stimulus funds.

"For good or bad, the needle has been moved by Recovery.gov," says Gary Bass, founder of OMB Watch, a non-profit group that tracks federal spending.

The requirement to make federal spending transparent started before the stimulus. In 2006, Congress required that the government create USAspending.gov — but efforts to get federal recipients to report where the money went fell almost two years behind schedule.

Continue reading at USAToday.com…

Obama's Secret Plan to Save Money on Missile Defense

From the Washington Post.com:

I'm glad to see the Obama administration abandoning the really dumb and provocative long-range missile defense system based in Poland and the Czech Republic and replacing it with a short-range missile defense system that's sea-based with sites in (probably) Romania, Israel and Turkey. I might like to see them abandon the idea altogether, but them's the breaks. This way, you do less to anger Russia and you save a bit of money. You just can't say you're saving any money.

Look at the Pentagon's fact sheet, courtesy of Spencer Ackerman. "Cost-effective" is the preferred euphemism for "will save a boatload of money." In his remarks today, Obama stuck to the message: He used the term "cost-effective" three times.

Usually, of course, you don't need to dance around the fact that your policy change will save taxpayers giant sacks of cash. But you do on national security. Saving money there, after all, is pretty much like sending Osama bin Laden a great big check. This view is particularly strongly held by conservatives who are normally quite quick to point out the bloat and waste and inefficiency inherent in government spending projects, but stand proudly behind a hyper-funded and largely unaccountable military-spending sector. It reminds me of Chris Hayes's comment that the most fiscally pernicious words in the English language are "non-defense discretionary spending."