Greece is expected to default on its government debts tomorrow as its bailout package from the European Union (EU) expires. The country will also hold a referendum on Friday on whether to accept the latest round of terms from its EU funders. Greece continues to grab all the headlines, but there is another government closer to home that is in a similar situation: Puerto Rico. Over the weekend, the governor of the island announced that Puerto Rico is unable to repay its $70 billion in debt.
I testified to the House Budget Committee yesterday on the history of federal debt and reasons to balance the budget. John Taylor, Jared Bernstein, and Ryan Silvey also testified.
George Pataki, the governor of New York from 1995 to 2006, is expected to announce the launch of his presidential campaign tomorrow. Pataki joins an already crowded Republican field and is expected to highlight his record as governor to win support. A review of Pataki’s record presents a question: which Pataki will be running for the presidency?
According to opinion polls, Americans think the federal government is too big and too powerful. On average, people think that more than half of the tax dollars sent to Washington are wasted. When Gallup asked people what the most important problem facing the nation was, more people identified “government” than any other concern, including the economy, immigration, health care, and terrorism.
Former Arkansas Governor Mike Huckabee launched his presidential campaign last week. Huckabee highlighted his fiscal successes as governor during his announcement. He claims that he cut taxes 94 times while governor, and he promised to bring his tax-cutting experience to Washington, D.C. Huckabee’s statements do not tell the full story. While Huckabee cut some taxes, his time in office also included a rapid increase in Arkansas state spending and multiple tax hikes.
The federal government runs more than 2,300 subsidy programs. One of the problems created by the armada of hand-outs is that many programs work at cross-purposes.
Negotiators for the House of Representatives and the Senate are expected to announce a deal on the budget resolution as early as today. A budget resolution sets overall spending limits for the year. If it passes, it would be the first resolution in six years, but it does little to fix the country’s long-term fiscal mess.
A Wall Street Journal story today looks at government spending through the lens of the national income and product accounts (NIPA). The article says that as government spending rises, it is “no longer dragging on growth.” Unlike recent years when spending was supposedly cut, the government today “has ceased to be a drag on growth.” But that is an unwarranted conclusion from the NIPA data, which are produced by the Bureau of Economic Analysis (BEA).
Republicans control both chambers of Congress. Republicans trumpet their desire to cut federal spending and control the growth in entitlement programs, but a number of their actions over the last month suggest otherwise.
Senate Budget Chairman Mike Enzi released his budget proposal yesterday afternoon. The request follows yesterday’s proposal from House Budget Chairman Tom Price. The two requests are similar. Both would reduce projected spending by $5 trillion and balance the federal budget over the next ten years. Both budgets repeal ObamaCare, and neither includes reforms to Social Security. The big difference between the two is that the Senate version is even vaguer than the House version.