Archive for June, 2010

Don’t Put the Brakes on Job Creation

Posted on June 9, 2010. Filed under: Uncategorized |

That loud screeching sound you heard recently was the brakes being applied to what was thought to be a robust recovery.
In May, the nation’s private sector job-creation engine slowed dramatically in what was either a temporary setback or a signal that the U.S. economic recovery might not be as strong as Americans were coming to believe.

At first glance, the Labor Department’s employment report for May looked encouraging with 431,000 new jobs being created. But a closer look reveals that most of those jobs were temporary positions created by the federal government to help conduct the decennial U.S. Census. Under the covers, it turns out, only 41,000 private sector jobs were created, a decline from 218,000 in April and 158,000 in March.

As other economic indicators continue to point toward gains, it’s the nation’s jobless rate of close to 10 percent that fiscal experts are watching as the most significant factor in gauging the strength of the economy’s come back. On Capitol Hill, they’re watching too, but action to boost the recovery’s momentum has been slow.

In the House, a measure sponsored by House Banking Committee Chairman Rep. Barney Frank (D-Mass.) would provide $30 billion in support to small and medium-size banks to provide loans to small business. The point is to get cash into the hands of small businesses, the most fertile sector for job growth.

President Obama is all about this legislation, noting that from the middle of 2007 through the end of 2008, small businesses lost 2.4 million jobs. At the same time, banks have become tight fisted when it comes to the loans small businesses need to open up shop and to grown.

“Government can’t create jobs, but it can help create the conditions for small businesses to grow and thrive and hire more workers. Government can’t guarantee a company’s success, but it can knock down the barriers that prevent small business owners from getting loans or investing in the future,” Obama said.

Another measure passed by the House and moving toward final action in the Senate bill would extend expiring economic aid programs including unemployment benefits at a cost of $123 billion. With the federal budget deficit expected to be $1.5 billion this year, Republicans and some Democrats are bridling at the measure’s price tag.

The American Jobs and Closing Loopholes Act was dismissed as “blatantly reckless” by Republicans. But its backers, like Sen. Max Baucus (D-Mont.) said the bill’s tax cuts and benefits enhancements “will ensure American families continue to have the support of unemployment insurance and other programs they depend on while we work to create jobs. This bill is the jump start our economy needs.”

The Senate version of this legislation would revive and extend expanded unemployment benefits through Nov. 30, resurrect tax breaks that expired at the end of 2009 and provide funding for items ranging from legal settlements to agricultural disaster assistance. It also includes $24 billion for a 19-month “doc fix,” a term for a plan to delay a cut in Medicare reimbursements to doctors.

“We have to wind this down as quickly as we can,” said Senate Majority Leader Harry Reid (D-Nev.). Reid said he expects Senate action by the end of the week, which would send the measure to House-Senate conferees to craft a final version.
It’s easy to see why fiscal conservatives are concerned, but as the May jobless report shows, the economic recovery is at a critical phase right now. A year ago, the nation was mired in the worst recession in 80 years and Congress responded with stimulus initiatives that have turned things around.

Today, the mission has changed from sparking a recovery to managing one. This is no time to be slamming on the breaks.

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Dude, where’s my funding?

Posted on June 9, 2010. Filed under: Uncategorized |

Omnibus, minibus, continuing resolution, consolidated appropriations: Aw yes, it is that time of year again when Congress is advancing spending bills (called appropriations bills), attempting to get everything approved before the end of the fiscal year.

In order to keep the entire government operating, Congress needs to pass 13 appropriations bills before October 1. Rarely do they meet this deadline.

Funding, as any government observer knows, is the primary function of Congress. There isn’t a year that goes by without a fair amount of drama and suspense surrounding how the appropriations process will be completed; or for that matter, if it will be completed.

In 1995, Congress made good on its threat to shutdown the government. Arguably a poor move for all involved. Other, less drastic options are available and a shutdown is the least likely this year.

Given the electorate climate this year, many Members of Congress are in full self-preservation mode and could perceive contentious spending votes as adding misery to an already tenuous reelection bid. To avoid making tough spending decisions which could affect elections, it’s likely that Congress will turn to a concurring resolution, or CR, as the fix of choice until early November. A CR would allow the government to function on the authority of the previous funding bill, basically extending the fiscal year. Under a CR, all budget lines remain “flat,” meaning no agency would receive an increase to their overall appropriation. With a CR, pay-raises could not be granted or new programs begun. However, authorized or other programs with statutory authority could receive increases if an agency decided to shift money within their jurisdiction.

After Election Day, an omnibus appropriations bill is the likely next-step remedy. An omnibus, by definition, takes all the remaining, un-passed, funding legislation and rolls it into one package. In years when only a few bills remain un-resolved, the omnibus is warmly called a minibus.

Yes, funding increases are provided in an omnibus as this is basically just one large appropriations bill. But given the size of these all-in-one bills, transparency becomes the main criticism of such a vehicle and they are often derided as containing hidden pork or other excessive funding.

This brings us back to the preferred process of passing 13 individual appropriation bills. Each appropriation bill, passed by its subcommittee of reference, voted on individually in each chamber and then “conferenced” (a process of negotiation so that both House and Senate versions are identical) produces a far a better product than any other method.

Regardless of Congress’ best efforts to control expenditures, rein-in discretionary appropriations and to find a balance between receipts and expenses, Congress will spend money.

How FY 11 is ultimately funded will largely be determined by the results of the mid-term elections. In the end, the opaque omnibus is the likely victor this year.

Appropriations legislation can be tracked at: http://www.thomas.gov/home/approp/app11.html

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