Archive for January, 2011
The national parks, public schools, local arts programs, babies of poor mothers, college students, space scientists, and elderly low-income home owners are just a few of the organizations and individuals that will take big time financial hits if House Republicans make good on their plans to ratchet back government spending to Bush-era levels.
To fulfill the GOP promise to cut $100 billion from the federal budget, the House Rules Committee is considering a resolution to “reduce spending through a transition of non-security spending at fiscal year 2008 levels.” The resolution gives Rep. Paul Ryan (R-WI), chairman of the Budget Committee, the power to set spending levels for the Appropriations Committee for the remainder of fiscal year 2011 with a mandate to cut budgets for domestic agencies back to 2008 spending levels.
The real-world impact of such a move means cutting about $1 of every $6 spent for things like education, housing, health care, law enforcement, and energy by agencies like the FBI, NASA, National Endowment for the Arts, DOE, National Park Service, the IRS and more.
The “non-security” language in the resolution means that the Republicans aren’t including the Pentagon and Homeland Security in its budget cutting plans.
Still, the actual spending cuts would have to be made in appropriations bills that must be approved by the Senate, where Democrats still hold the majority.Read Full Post | Make a Comment ( None so far )
One of the brightest days on the Congressional calendar is the day when members are sworn in to a new Congress. January 5th, the 112th didn’t disappoint. Walking down the halls of Congress you are warmly welcomed into the offices of many MOC who host welcome back receptions. It’s a time to catch up with friends, congratulate members on their reelection and/or committee chairmanships, express sympathy for the many losses and recharge for the new session. Though the Democrats were generally a bit glum about handing over chairmanships and majority control of the House, I was struck by the miracle of the peaceful movement of the gavel from the Democrats to the Republicans. By contrast, and for a variety of personal and professional reasons, we have been studying the elections in the Ivory Coast and Belorussia where strongmen have refused to step down despite international sanctions and world outcry. Violence, kidnapping, armed guards and other horrors abound.
Nevertheless, our peaceful transitions and open society is too often marked by armed violence and tragedy, such as the events in Tucson with Rep. Gabrielle Giffords, demonstrate. Pundits nationwide are assigning causal relationships between the Tucson violence and pet theories – too many guns, vitriolic political rhetoric, Sarah Palin’s crosshairs, media incitement, poor communication between mental health professionals and others, gun magazine clips that have too many rounds. We will never be able to ascertain causality. However, in the interim, we need to acknowledge that threats against legislators and other public figures is not new. Even during my time on the Senate Banking Committee, so many years ago, we separated constituent letters from the “crazies” from the rest. Two of our Presidents have been shot. One particular woman used to wander K Street and allege that a Pennsylvania Congressman was engaged in “mind control” through radioactive waves and he should be killed.
Causality theories are difficult, if not impossible to tease out. In the interim, we think we need the Secret Service or Homeland Security to beef up their budgets and assign security detail, metal detectors and bomb prevention methods to members of Congress and other policymakers.
We need to ensure that our leaders can safely continue to pass the gavels peacefully and uneventfully.Read Full Post | Make a Comment ( None so far )
Signs emanating from Washington indicate the credit crunch may be easing, but this is no time for small businesses to take their eyes off the action in Washington.
With uncertainty around every corner, small businesses and the financial services sector should be watching to make sure the new political dynamic works to facilitate a resumption of easy credit for businesses and consumers alike.
The Republicans now wielding power in the House have vowed to boost the economy through policies aimed at helping business and creating jobs. At the same time, President Obama, chastened by the results of November elections, seems ready to pursue compromise.
Overall, the GOP plan is to attack the administration’s regulatory policies and cut spending. Among the first targets will be provisions of the Dodd–Frank Wall Street Reform and Consumer Protection Act, though opponents of the bill have yet to say if their plans will be aimed at easing access to credit.
Republican Rep. Spencer Bachus of Alabama, the incoming chairman of the House Financial Services Committee, has said he wants to change certain provisions possibly including banking regulations.
Facing a divided Congress for the first time, Obama seems prepared to compromise somewhat on business matters. His appointment of William Daley as White House chief of staff was praised by U.S. Chamber of Commerce President and CEO Thomas J. Donohue, who called Daley “a man of stature and extraordinary experience in government, business, trade negotiations, and global affairs.”
Likewise, President Obama’s selection of Gene Sperling to head his National Economic Council could be a good sign. Sperling was the architect of the Small Business Lending Fund, the administration’s initiative to ease the credit crunch by providing community banks with cheap capital to boost lending to small businesses.
And as the recovery continues, the financial system seems headed toward stabilization on its own. According to a recent survey of senior loan officers by the Federal Reserve, many banks are no longer tightening the availability of credit.
“On net, banks eased standards and terms over the previous three months on some categories of loans to households and businesses (and) substantial fractions of banks reported…that standards for many categories of loans would not return to their longer-run averages for the foreseeable future,” the Fed report said.
For small businesses in particular, this could mean easier access to credit in 2011, since the Fed has instituted a near-zero target for short-term interest rates and a $600 billion program of bond purchases.Read Full Post | Make a Comment ( None so far )
Despite the heated and highly partisan calls to repeal health care reform, or short of that, gut the legislation, the real fight on Capitol Hill will center on the debt limit.
You better believe that the next few weeks won’t be for the faint of heart as lawmakers prepare to play a dangerous game of chicken. And it’s anybody’s guess as to who blinks first.
Treasury Secretary Timothy Geithner warns that the debt ceiling that now stands at $14.3 trillion could be reached by the end of March. However, House Speaker John Boehner (R-OH) has already vowed not to increase the national debt ceiling, which enables the country to meet its financial obligations, without first making significant spending cuts.
But are the Republicans in Congress—including newly elected tea party-backed lawmakers—really willing to let the nation default on its debt and risk world-wide financial chaos? That will be the question at the heart of the debt limit showdown coming our way.
According to the Los Angeles Times the U.S. has never failed to raise the debt ceiling, in fact it has done so 75 times since 1962, the last time in February 2010. However, some of the GOP’s most conservative members have said they won’t vote to raise the debt limit, saying to do so would be to ignore the voters’ demand for debt reduction.
It’s clear that House Republicans aren’t going to wait for the normal budget process or even the President’s State of the Union address at the end of January to press for spending cuts. It is expected that they will send the Senate weekly spending cuts, which will be all but ignored by that Democratic-controlled body.
Likely to be undaunted by the anticipated Senate snub, Republicans will next set their sights on the President’s FY12 Budget slated to be released on February 14 and on another continuing resolution, which will replace the one voted on in late December and is set to expire on March 4.
Still it’s the debt ceiling that provides the strongest point of leverage for the GOP. With the White House needing to raise the debt limit to avoid, in the words of Geithner – “catastrophic economic consequences” – compromise on spending cuts is inevitable.
What remains to be seen is how the tragic and terrible shootings in Arizona that left six people dead and several others fighting for life, including Congresswoman Gabrielle Giffords (D-AZ), will impact the tenor of discourse on the Hill going forward.