Federal Spending

[dude1394]

The number one thing imo that has caused the collapse of dubya's poll numbers. Spending. Not the tax cuts, not the war, spending.
http://online.wsj.com/article/SB1221...w_and_outlooks

The Spending Explosion
September 10, 2008; Page A14

Here's a prediction: The media will report today that the federal budget deficit is big and getting bigger. What most of them won't report, alas, is that the cause of these deficits is an explosion in federal spending. The era of big government is back, bigger than ever.
[The Spending Explosion]

The real news in yesterday's Congressional Budget Office semiannual report is that federal expenditures on everything from roads to homeland security to health care will on present trends reach 21.5% of GDP next year. That's a larger share of national output than at anytime since 1992. If the cost of the federal takeover of Fannie Mae and Freddie Mac prove to be large and are taken into account, next year federal outlays could be higher as a share of the economy than at anytime since World War II. In this decade alone, federal spending has increased by almost $1.2 trillion, or 57%.

The federal deficit is expected to hit $407 billion for fiscal 2008 (which ends at the end of this month) and $438 billion next year. Still, the deficit is expected to be only 3% of GDP, which is in line with the average of the last 30 years. We hope Congress and the Presidential candidates don't obsess over the deficit per se, because the real fiscal drag from government comes from how much it spends, not how much it borrows.

The Bush tax cuts also aren't the budget problem. Until this year federal tax collections have been surging. In the four years after the 2003 tax cuts become law, tax receipts exploded by $785 billion. This year revenues have declined by 0.8%, but a major reason is the $150 billion bipartisan tax rebate that has hit the Treasury without spurring the economy. Without these nonstimulating rebates, federal tax payments would have climbed another 2.5%, according to CBO. Revenue is expected to be a healthy 18.5% of GDP next year without any tax increase.

Another myth is that the war on terror has busted the budget. While operations in Iraq and Afghanistan are expensive, defense spending is $605 billion this year, or about 4.5% of GDP. That only seems large by comparison to the holiday from history of the 1990s, when defense fell to 3% of GDP. As recently as 1986, defense spending was 6.2% of GDP.

The real runaway train is what CBO calls a "substantial increase in spending" that is "on an unsustainable path." That's for sure. The nearby chart shows how much some federal accounts have expanded since 2001, and in inflation-adjusted dollars. This year alone, federal agencies have lifted their spending by 8.1%, with another 7% raise expected for 2009. There's certainly no recession in Washington. The CBO says that, merely in the two years that Democrats have run Congress, federal expenditures are up $429 billion -- to $3.158 trillion.

The fiscal blowouts have included a record farm bill, notwithstanding record farm income; an aid bill for distressed homeowners, extended unemployment benefits, and more generous veterans benefits. Next up: votes on $50 billion for Detroit auto firms, an $80 billion energy bill, as much as $50 billion for spending masked as a "second stimulus," plus $100 billion or more for the Fannie and Freddie rescue. Rather than sort through priorities, Congress is spending more on just about everything.

Meanwhile, remember that "pay as you go" spending promise that Speaker Nancy Pelosi made in 2006? We called it a ruse at the time, and the last two years have proved it. Senator Judd Gregg (R., N.H.) has tallied up at least $398 billion in "paygo" violations so far. Earmarks were also supposed to be cut in half by this Congress. In 2008 there were some 11,000 at a cost of $17 billion, the second most ever, and far more than half the peak of 14,000 in 2006.

The point to keep in mind is that this big spending blitz is coming even before a new President and Congress arrive next year with far more spending promises in tow. As they contemplate their choice for President, voters might want to consider which of the candidates is likely to be a check on Congressional appetites, rather than a facilitator.

[rabbitproof]

Glad we acknowledge it is a long list of things. As for what's at the top of this mile long list, it's pick and choose your failure.

[Arne]

Federal Shortfall To Double This Year

Next President To Inherit Deficit Of $500 Billion

By Lori Montgomery
Washington Post Staff Writer

Wednesday, September 10, 2008; A01

A weak economy and a sharp increase in government spending will drive the federal budget deficit to a near-record $407 billion when the budget year ends later this month, and the next president is likely to face a shortfall in January of well over $500 billion, congressional budget analysts said yesterday.



A deficit of that magnitude could severely constrain the next administration's agenda, regardless of whether Sen. John McCain (Ariz.), the Republican candidate, or Sen. Barack Obama (Ill.), his Democratic opponent, wins in November. Each has promised billions in new tax cuts or new spending. The expanding deficit also will increase the national debt and could impair future economic growth, particularly if lawmakers are forced to pay down that debt by raising taxes.

This year's deficit will be more than double last year's $161 billion, and it will rise from 1.2 percent of the gross domestic product to nearly 3 percent. If the next president extends some or all of President Bush's signature tax cuts, as both candidates have promised, annual deficits could balloon to as much as 5 percent of the economy, rivaling the dark fiscal days of the early-1990s and those of the Reagan administration, said Peter Orszag, director of the Congressional Budget Office.

The budget picture is likely to grow even bleaker once government analysts factor in the anticipated costs of the Treasury Department's decision last weekend to take over struggling mortgage-finance giants Fannie Mae and Freddie Mac.

Orszag declined yesterday to attach a price tag to the takeover, under which Treasury Secretary Henry M. Paulson Jr. has pledged to invest as much as $200 billion to keep the companies solvent. However, Orszag said Paulson's action has bound the government so tightly to the two companies that he will incorporate them directly into the federal budget when he reexamines the nation's fiscal picture in January.

The massive companies, which together hold or guarantee about half the nation's 12 million residential mortgages, claimed more than $1.5 trillion in debt at the end of the second quarter. Because that debt is backed by a nearly equal amount in assets, Orszag said it will not significantly increase the nation's indebtedness.

Orszag said it was also unclear how the takeover will affect the annual budget deficit. Government accounting methods do not reflect the risk inherent in assuming control of billions of dollars worth of mortgage-backed securities in the middle of the worst housing bust since the Great Depression. As a result, budget analysts said it is possible that the takeover could add tens of billions of dollars to the deficit -- or little to nothing.

"One of the ironies of what we're experiencing is the shortcomings in the way in which the federal government currently accounts for credit transactions. When you engage in actions that do contain risk, it can look like there's a profitable opportunity because the system does not reflect the cost of risk," Orszag said.

The complex question of how to value the companies and their assets on the government's books will be decided in coming weeks. Meanwhile, the White House budget office has yet to decide whether to follow Orszag's lead and fully incorporate the companies into its budget, an act that could increase the perception of complete government control.

Regardless of the White House's decision, the government's underlying financial condition is likely to get worse, an administration budget official said. "Treasury will still have to raise money to keep these guys whole," the official said, speaking on condition of anonymity in order to speak candidly. "We will be spending money on these companies. It would be hard to say we're going to make money on this."

On Capitol Hill, lawmakers were less focused on the implications of taking over Fannie Mae and Freddie Mac than on casting blame for the rapidly rising deficit.

"This is a doubling by the Democratic Congress, and Congress controls the purse strings," said Sen. Judd Gregg (R-N.H.).

Democrats called that assertion preposterous, noting that much of the increase was the result of measures that received strong Republican support: one to return billions of dollars to taxpayers as part of the economic stimulus package and another to increase war funding. Bush signed legislation this summer to pay for the wars in Iraq and Afghanistan through the rest of his presidency, bringing total Iraq spending to more than $650 billion and the total for Afghanistan to nearly $200 billion.

"So they're fully responsible for the increase in the deficit," said Senate Budget Committee Chairman Kent Conrad (D-N.D.). "All of this happened on their watch, under their president."

In January, congressional budget analysts had estimated the deficit would be only $219 billion by year's end. By July, however, the White House was predicting that the number would spike to $389 billion because of new spending. Yesterday, the congressional analysts upped it even further, saying the increase over 2007 had been driven equally by two factors.

The weak economy has clobbered corporate profits, halting the growth of tax collections. And spending has jumped sharply, in part because of tax rebates, as well as a hike in expenditures to cover unemployment insurance and deposits of insolvent financial institutions.

This year's deficit will rival the record of $413 billion set in 2004. With the economy expected to remain sluggish for at least the next several months, the Congressional Budget Office projects that next year's deficit will rise to $438 billion. But Orszag said that number could easily climb to $540 billion if Congress acts in the coming months, as expected, to restrain the growth of the alternative minimum tax and to extend a variety of expiring business tax breaks.

Despite the gloomy budget outlook, Democrats said they would press ahead with plans for a second stimulus package of about $50 billion, a proposal opposed by Republicans but supported by Obama. "We would probably be in a worse situation if we didn't do a second stimulus," said Sen. Charles E. Schumer (D-N.Y.), who heads the Joint Economic Committee.

Economic advisers to the presidential campaigns said the big deficits would do little to change their plans for cutting taxes or, in Obama's case, for increasing spending on priorities such as health care and education. "A weak economy is not the time to dramatically reduce your budget deficit," said Jason Furman, an adviser to Obama, who wants to extend some of Bush's tax cuts. "The top priority is creating jobs and getting the economy going again."

Douglas Holtz-Eakin, an economic adviser for McCain, acknowledged that the deeper budget hole will make it much harder for McCain to keep his promise to balance the budget while extending all of Bush's tax cuts. "But that doesn't mean the first and best thing to do is raise taxes," Holtz-Eakin said. "The best thing to do is get the economy going again and create jobs."

http://www.washingtonpost.com/wp-dyn...090901029.html

[alexamenos]

this is like a bad re-run....

Democrats spend like democrats

Republicans gain power by railing against Dem spending;

Repubicans spend like drunken democrats on shore leave;

Republicans get ousted because they spend like democrats;

Democrats return to power;

Republicans immediately begin railing against dem spending....

[dalmations202]

Originally Posted by alexamenos

this is like a bad re-run....

Here let me fix it just a little.....


Democrats spend like drunken democrats on shore leave while trying to appease the world and make the US military inferior due to the appeasement decisions.

Republicans gain power by railing against Dem spending; and garnering a strong military to resolve the military screwups (ie Hostage crisis, Bay of Pigs, Tomahawks and Tents, etc)

Republicans spend like drunken democrats on shore leave - primarily with a huge military budget.

Republicans get ousted because they spend like democrats; and the new generation doesn't remember the last military screw up of the democrats.

Democrats return to power; Immediately they start the appeasement process again with foreign countries -- who then decide that the US still has too much power. Democrats immediately cut the military to try and appease them and spend even more money on special interest.

Republicans immediately begin railing against dem spending and the military cuts....





Been happening all my life..........................

[alexamenos]

i'll fix it better...

Democrats spend like democrats

Republicans gain power by railing against Dem spending;

Repubicans spend like drunken democrats on shore leave;

Republicans get ousted because they spend like democrats;

Democrats return to power;

Republicans immediately begin railing against dem spending....

Republican party rank and file fall for it, everytime.

(incidentally.....George Delano Bush's prescription drug benefit spending package is a massive socialist boondoggle that rivals anything done by Johnson or Roosevelt. Is that Medicare spending package part of the War on Tourism, or is does it have some other military relevance?)

[dalmations202]

Originally Posted by alexamenos

i'll fix it better...



(incidentally.....George Delano Bush's prescription drug benefit spending package is a massive socialist boondoggle that rivals anything done by Johnson or Roosevelt. Is that Medicare spending package part of the War on Tourism, or is does it have some other military relevance?)

When are you going to fix it better?

[mcsluggo]

Personally, I think Alex's account bears quite abit more resemblance to the truth.

what is interesting is that Johnson was really the last democrat to spend like a democrat (from the oval office), while Bush Senior was the only Republican since Eisenhower to save like a Republican (once again, from the oval office).

Frankly, we need split the presidency into the social president and the fiscal president (i know, iknow... the devil is in the implimentation) and then let the Dems and the Reps duke it out in the seperate arenas. I would hope that the crowd that moderates the populism on BOTH spending, and the claims that unilateral tax cuts will miraculously save everything would carry the day.... but that message is always being shouted down by the questions of whteher or not gays schould marry each other or whether they should be allowed to coordinate olive-drab outfits with bright red french hats (and how hard is it to accessorize with holsters and ak47s?)

[alexamenos]

Originally Posted by mcsluggo

Personally, I think Alex's account bears quite abit more resemblance to the truth....

I once did a "where are they now?" on the Republican class of '94 -- the revolution which was to really, really, really get a grip on spending in DC....long story short,

the one's that got re-elected and hung around for awhile were invariably big spending boondogglers....

...the rest were run out of town pretty quickly.

so....it's not so much that I don't think that there are no genuine fiscal conservatives hidden deep in the bowels of the republican party....it's more like it's just not possible to go to DC and not spend -- try going to a strip club but don't look at a naked woman and don't order a drink....it's just not natural.