As part of the payroll tax bill on Friday, Congress voted to tweak federal worker benefits. New federal hires will be required to make an additional contribution to their pension plans. While just a small change, federal worker unions railed against the bill as if were armageddon.
After catching flack from both fiscal conservatives and the transit lobby, House Speaker John Boehner has postponed consideration of a transportation bill. Fiscal conservatives (including my fellow Cato scholar Michael Tanner) objected to the bill’s deficit spending; transit interests (including Republicans from New York and Chicago), objected to the bill’s lack of dedicated funds to public transit.
The president’s fiscal 2013 budget includes a 213 page document that contains 210 proposed cuts, consolidations, and other savings. That sounds like a lot until one finds out that the alleged savings would only amount to $24 billion in a $3.8 trillion budget. Not only would the cuts do little to reduce the size of government, they would do nothing to reign in the scope of government.
The Washington Post did a great job last week comparing spending earmarks by members of Congress with the locations of property they own in their states. Some members are apparently using our tax dollars to expand infrastructure near their homes and businesses, thus gaining a personal benefit from federal spending.
In his recent State of the Union address, President Obama said that he wanted an American economy that is “built to last.” Today’s release of his fiscal 2013 budget proposal shows that the president still thinks he can build economic prosperity with more spending, taxes, and debt. Those are the building materials for an economic time-bomb that will explode on future generations.
The new federal budget includes a range of accounting maneuvers to cast the administration’s 10-year projections in the best possible light. Senate Republicans point out some of President Obama’s funky accounting here. But note that the George W. Bush administration also used tricks to make deficit forecasts look more optimistic.
President Obama is releasing his FY2013 budget today, and it’s more of the same—trillion-dollar deficits, huge spending, and tax hikes on high-earners. The president wants to raise taxes substantially on households earning more than $250,000. It’s all about fairness he claims, even though effective tax rates on high-earners are already double the rates on middle-earners.
Each January the Congressional Budget Office provides updated projections of the federal budget for the coming decade. Let’s compare the January 2011 projections to the January 2012 projections to see whether the switchover of the House to Republican control during 2011 has made a dent in spending.
One of the issues discussed in my new essay on the Bureau of Indian Affairs (BIA) is the lobbying by groups of American Indians seeking official tribal status. The BIA has the power to confer tribal status, and it does so in a non-transparent manner. With official status comes tribal access to a wide range of federal subsidy programs plus the ability to earn monopoly profits with a casino. The gaining of official status for tribes was one of Jack Abramoff’s specialty services.
At the center of the debate over efforts by policymakers to “stimulate” the economy with government spending is the issue of fiscal multipliers. Some economists argue that government spending can be a free lunch: an additional dollar of government spending increases GDP by more than one dollar. Other economists say that government spending is not so free: an additional dollar of government spending increases GDP by less than one dollar or even reduces it.