Why the Trump-led GOP Continues to be the Party of Massive Budget Deficits

From today’s LA Times:

The Trump administration proposed a spending plan on Monday that projects deficits as far as the eye can see, giving up the longtime Republican goal of a balanced budget to champion a spending plan replete with cash for a host of military programs and some domestic ones the president’s supporters might admire.

The budget calls for about $716 billion in annual defense spending, more than $100 billion above the level Trump requested last year. Add in the tax cut Republicans pushed through in December and the extra spending Congress approved just last week, and the result is a flood of red ink projected to send the national debt ever higher.

Trump’s budget anticipates deficits throughout the next 10 years even if Congress were to approve some $3 trillion in cuts over that same time period that he’s proposing for a wide range of federal programs. Both parties already rejected most of those cuts last year and have shown little interest in pursuing them.

The deficits persist even though the White House is forecasting extremely optimistic levels of economic growth. If growth falls short of those projections — most economists think it will — deficits would be higher still.

As a result, the budget marks something of a milestone — the Trump administration’s abandonment of the quest for budget balance that the Republican Party has claimed as a guiding light for years, at least rhetorically.

In reality, deficits have often soared under Republican presidents as the party has put cutting taxes ahead of balancing budgets on its list of priorities. In the past, however, Republican administrations have taken pains to at least come up with a budget that would balance on paper.

Read the complete article here.

Thorny Logistics Of A Federal Shutdown and How It Affects Agency Employees

From National Public Radio:

Hundreds of thousands of federal employees will either be sent home or have been told to not show up to work at all on Monday, as furloughs due to the government shutdown that began Friday night start to affect workers around the country.

Senate Majority Leader Mitch McConnell, R-Ky., gave a foreboding warning from the Senate floor on Sunday.

“The shutdown is going to get a lot worse tomorrow,” he warned. “A lot worse.”

Republicans are insisting the shutdown is less “weaponized” than the last time this happened, in 2013 under then-President Barack Obama, but it’s still sure to have a broad effect across the country and get worse the longer it goes.

“Essential services” will continue, and essential workers will remain on the job, albeit without pay.

But there will be a lot of federal workers — thousands — who will see a change.

Every federal agency has a specific contingency plan, in the case of a loss of funding, and you can look through them all here. In 2013, about 800,000 of the 2.1 million civilian federal employees were furloughed in 2013, according to The Washington Post.

Read the complete article here, including a list of different agencies and the affects the shutdown will have on employees and services.

American Priorities at a Crossroads: Trump’s Budget Leaves America Behind

The Trump Administration released its 2018 Budget Proposal and the picture is a disturbing set of priorities aimed at increasing military and law enforcement spending over the next 18 months by $100 billion, while slashing spending on domestic programs that will adversely affect health and human services, education, and scientific advancement.

If this is putting America First, then there are surely tough times ahead for the majority of working Americans and families.

Increasing spending on the military budget is a monumental waste of money that would be better used to rebuild America’s crumbling infrastructure, create jobs, and shore up entitlement programs that are in need of sensible reform: Social Security, Medicare, and Medicaid. Currently, military spending accounts for 54 percent of the federal budget (2015 figures). That means for every tax dollar raised in revenue, over half of it goes to spending that does not directly benefit American workers and taxpayers. The benefits we do get from such lavish spending in terms of national security is largely indirect in the form of a subsidized belief that the bigger our military, and the more money we spend on it, the safer we are. That is a false argument to be sure.

Spending more money on the military in a time of social, economic, and political crisis is a failure of Trump to live up to his stated priorities of putting Americans back to work and ensuring that economic prosperity is spread around to those states, and the working class citizens in them, who feel they have been left behind in the wake of trade agreements, technological innovation, and the forces of globalization.

Many people who voted for Trump may “feel” that his budget proposal reflects their values. But when the anti-tax Congress refuses to fund vital programs, including a much needed overhaul of our nation’s infrastructure, and jobs do not suddenly materialize by returning from overseas, they will once again be left holding the bag. We may have the most powerful military in the world, but the most powerful nation it protects will not be able to provide good paying jobs for its workers, while the streets and bridges crumble under their very feet.

Federal shutdown costs U.S. billions and erodes investor confidence

From the New York Times:

The government shutdown that ended this week will cost the United States economy several billion dollars, according to estimates by economic research firms.

But the affiliated damage — like the undermining of consumer and business confidence — will be far greater, economists said, especially combined with the financial effects of the near-breach of the country’s statutory debt ceiling.

When the federal government shut down on Oct. 1, permit offices across the country stopped accepting fees, contractors stopped receiving checks and research projects became stalled. Such disruptions come with a price tag, although it will be small in the context of the $3.5 trillion the federal government spends every year.

It might take months for the Obama administration to come up with a thorough accounting of the direct cost to the taxpayers of putting much of the government out of business and then reopening it. Several offices, including the National Aeronautics and Space Administration and the National Institutes of Health, said they were in the process of gauging the disruptions.

“The three weeks of government shutdown will cost the economy $3.1 billion in gross domestic product from lost government services,” estimated Paul Edelstein and Doug Handler of IHS Global Insight, an economic research firm. “There will also be some impact from lost private-sector jobs tied to the shutdown, as well as a loss of consumer and business confidence resulting from the debt-ceiling showdown.”

Mr. Edelstein and Mr. Handler added that the shutdown had delayed the data necessary to evaluate the shutdown: “The exact impact on the rest of the economy will be hard to measure until delayed economic data are released.”

Read the entire article here.

Watch an online video explaining what the shutdown will cost the economy.

MOOA’s needed to reign costs of bloated college administrations

Benjamin Ginsberg, a political science professor at Johns Hopkins University, has recently proposed an innovative idea for college’s and universities to save money during this austere budget climate. Following the lead of major universities such as Harvard and MIT to offer massive open online courses, or MOOC’s, Ginsberg proposes to reduce administrative costs at institutions of higher education my introducing MOOA’s, or massive open online administrations.

Dr. Ginsberg is the author of The Fall of the Faculty, an examination of the decline of tenure and job security for teachers in higher education. According to Ginsberg, one of the single biggest problems that has gone unaddressed is the massive increase in corporate bureaucracy that now governs most colleges and universities, and a rise in professional class of administrators who are charged with keeping education costs down but who siphon off money from much-needed educational funding.

“Studies show that about 30 percent of the cost increases in higher education over the past twenty-five years have been the result of administrative growth,” Ginsberg noted. He suggested that MOOA can reverse this spending growth.  “Currently, hundreds, even thousands, of vice provosts and assistant deans attend the same meetings and undertake the same activities on campuses around the U.S. every day,” he said.  “Imagine the cost savings if one vice provost could make these decisions for hundreds of campuses.”

The use of MOOA would allow schools to get rid of their most expensive administrators, leading to substantial savings.

“One way to look at it,” Ginsberg said, “Is that through their tuitions students paid about $500 million for strategic planning that might have been used for curricular development or other educational purposes.”

Ginsberg calls his model for MOOA “Administeria,” an ominous Orwellian sounding virtual administration. He admits that widespread use of this online bureaucracy might result in unemployment among college administrators, but with substantial savings in education one of the key components of austerity measures during the ongoing budget crises in higher education, the proposal should be popular among legislators and other financial decision-makers.

Since Congress will not do its job, the “fiscal cliff” will do it for them

The failure of Congress to make substantial economic reform is nowhere more visible than in the present hysteria regarding the “fiscal cliff” and its consequences for the federal budget and American economy.

House Speaker John Boehner (R-OH) and Republicans have painted themselves into an awkward corner. They are unwilling to raise taxes on anyone, anywhere thanks to Grover Norquists’s anti-tax pledge and Tea Party extremism, but automatic rate increases and spending cuts are set to kick in once the Bush tax cut extension expires on the first of the New Year. This unwillingness to bend is an ideological straight-jacket that may lead them to break their pledge, all without casting a single vote.

The failure to reach a compromise with the more moderate Senate and President Obama means that Republicans are effectively going to raise taxes on all Americans including its most vulnerable citizens. What does this mean in financial terms?

• The poorest Americans making less than $20,000 a year would  have to pay more to the IRS. The average increase would be $590—a significant sum for low-income earners.
• Those earning more than $40,000 a year would also be significantly affected with tax hikes averaging about $1200.
• Those earning between $40,000 and $64,000 annually would see an average increase of nearly $2,000.
• Those earning $108,000 or more also face an increase of nearly $13,000.

Not only will rates increase—immediately effecting payroll taxes and decreasing the daily earnings of American workers, potentially undermining effective demand and triggering another recession—automatic spending cuts will set in, leading to reductions in basic social services that are also essential for the most vulnerable Americans. Unfortunately, we live in a time of political extremism with an opposition party that has stated it wants to “shrink” the federal government. (Since metaphors are all the rage in politics these days, it is important to point out that “shrink” means “wreck” here.)

The metaphor of the the “fiscal cliff” has been thrown out haphazardly— scaring investors, dragging down markets, and creating unwarranted fear. The damage of going over the cliff is unknown in terms of the long-term financial viability of the federal government paying its debt obligations, but the real damage is to average American workers who will take home less income, shoulder more than their fair share in tax revenue, and pay more out-of-pocket expenses for everything ranging from food to health care.

The statutory tax increases and spending cuts basically do what Congress is supposed to do in the first place, however. The inability of Republicans to compromise on the budget has led to a legislative impasse that the “fiscal cliff” resolves in extreme terms. In short, the automatic hikes and cuts does the job of politicians for them, but the form it takes will hurt real American workers and initiate a new wave of political cynicism about government in this country.

The Golden State’s Tarnished Anti-Tax Image

According to the U.S. Labor Department’s monthly household survey released today, unemployment and joblessness in California officially stands at 12 percent. That number is, of course, an underrepresented sample. It counts only those who are actively looking for work and qualify for federal unemployment insurance. It does not count the millions of people who no longer qualify for benefits, and therefore “officially” have “given up” looking for work. Never mind that millions of people need work and are still looking for work without federal assistance, because they are not counted in official unemployment figures.

The Golden State now has the second-highest unemployment rate in the country, following the dismal likes of Nevada, where even the luxury-gaming-entertainment-recession-proof juggernaut called Las Vegas has downsized noticeably thanks to the recession. California’s economic woes are further compounded and prolonged by the political morass in Sacramento. The state’s government has slashed spending heavily over the last year, but it has failed to resolve the biggest sticking point:  an anti-tax bias against balancing budgets sensibly that is crippling the public sector. Then again, the national debate over raising the debt ceiling, and the rather crappy compromise made by Congress, highlights the fact that it is primarily to blame for compounding and prolonging the economic woes of the nation. (Though one would think the Constitution gives the President the duty to run the economy, given the finger pointing and finger wagging of Tea Party and Republican rhetoric.)

States like California face a choice that is unpleasant but also unnecessary. Cutting deficits is unpleasant but doing so without raising taxes is unnecessary. Resolving the state’s $25 billion deficit required a huge disinvestment in the public sector:  education, roads, police and fire services, parks, and public health all suffered deep cuts. The fiscal year began on July 1 and the projected deficit shortfall over the next year will be well-above $10 billion. That means more unilateral cuts hurting millions of Californians unless Gov. Brown and the California Assembly can find a way to bring an end to the anti-tax bias that is enshrined in the State Constitution and hamstrings legislators from raising taxes without a super-majority vote.

California needs a new social compact in which the tax system is clear, fair, and protected from market failures, and where the public sector is transparent, well-funded, and protected from the failure of moral and economic leadership in the private sector. Whether the Assembly gets smart and finds a legislative solution to the initiative-driven policy of direct democracy? Only time will tell, and Gov. Brown has an uphill battle against another looming deadline to convince Californians it is time for substantive reform to the politics of taxation. ::KPS::