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Three-Week Stopgap in the Works

March 11, 2011 - by Donny Shaw

Following the Senate’s rejection of two long-term government funding proposals — one from Republicans and one from Democrats — congressional negotiators are back to working out another stopgap bill to keep the federal government from shutting down. The current stopgap bill is set to expire next Friday. According to reports, the plan now is to move a three-week funding extension that continues the same rate of cuts from the current extension — about $2 billion per week below 2010 levels — and gives Congress until early April to work out a longer-term solution.

New York Times:

With little hope of a budget deal being reached before the end of next week, House Republicans are preparing another short-term spending measure to give the House and Senate a chance to come to agreement over a broader plan to keep the government operating through Sept. 30.

Lawmakers and top aides on Thursday said stopgap legislation to be considered next week would most likely cover three weeks and include an additional $6 billion in cuts, possibly drawn from spending reductions offered by Democrats and the White House in earlier budget talks. The current two-week law expires next Friday and carries $4 billion in cuts.

These continuing resolutions are relatively non-controversial. They cut spending at the rate the Republican leadership prefers by accelerating specific cuts that are supported by most members of both parties. But they can’t go on forever. Eventually, they’re going to run out of cuts that Democrats support, and when that happens we’re going to be stuck in a stalemate between the Republican House and the Democratic Senate. Some kind of grand bargain is going to have occur at that point, and it will probably have to involve the Democrats moving closer to the Republicans on cutting levels and the Republicans agreeing to take some of their contentious social policy items out of the funding bill.

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Comments

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  • BenjaWiz 03/13/2011 12:50pm

    Our biggest budget buster is defense spending which accounts for 90% of our overall fiscal budget if Republican’s compromise on cuts in this area say about $200 Billion a year we could cut our deficit.

  • BenjaWiz 03/13/2011 12:52pm

    SSA/SSI are so small compared to the waste on defense spending.

  • BenjaWiz 03/13/2011 12:53pm

    Get rid of all that useless defense equipment that will never see the light of day.

  • luminous 03/13/2011 4:22pm

    Social security also doesn’t draw from the government general fund which is where the deficit is. The reason the deficit is so large is due to out of control defense spending($725 billion), unemployment insurance($553 billion), temporary uptick in medicaid eligible people due to recession($100-$200 billion or so), 2 wars($150 billion), and a half trillion dollar hole in tax revenue due to downturn, and another half trillion dollars in lost revenue from the Bush tax cuts.

    So I propose we cap the yearly defense budget to the total spent by the ENTIRE rest of the world(basically we cut the budget by 50%). End the oil subsides($68 billion), end corn subsides($100+ billion), triple royalty rates for resource extraction industries using public lands, end the bush tax cuts and in fact increase the top bracket to at least 50%.

    Their yea balanced budget with plenty left over to pay debt down.

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    luminous 03/16/2011 5:26pm

    Fair tax by itself is an unworkable system, their are other changes that could be implemented to make such a system workable, but politically they would be very difficult to pull off.

    http://en.wikipedia.org/wiki/Basic_income_guarantee

    replacing most welfare functions(wic, foodstamps, min wage, etc) with a basic income guarantee(BIG), funded by much much higher royalties on resource extraction industries, vat taxes, and a carbon tax(tax and dividend system).

    Single payer health care funded via income/payroll taxes, and an expansion of social security to provide about 75% of retirement income basically making it a national pension fund.

    Only under these conditions a fair tax(aka flat income tax rate with no deductions/credits/subsides or otherwise loopholes) would be workable.

    We would still need something to direct industrial and agricultural policy else China would simply “corrupt” our industries out from under us.

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    luminous 03/17/2011 4:10pm

    Winners of the Nobel Prize in Economics who fully support a basic income include Herbert Simon, Friedrich Hayek, James Meade, Robert Solow, and Milton Friedman

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    luminous 03/17/2011 4:30pm

    The basic libertarian argument for a BIG is that the public should be compensated for use of public lands and resources, and that if the money is managed by the government it will simply be miss allocated.

    Even the 2008 Huckabee presidential nominee “fair” tax proposal had a monthly prebate up to the poverty line, which is something very similar, And their is also the Alaska Permanent Fund which is another very similar concept. BIG works together the compensation for use of public resources, prebates of taxes upto the poverty line, and money that would otherwise be spend in welfare uses into a simple flat payment to every citizen.

    I support BIG from an entirely liberal position however…… =p

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    luminous 03/17/2011 4:42pm

    As to the functionality of the “fair” tax proposal, In theory it sounds great, it has that baby’s and puppy’s feel good to it. In practical implementation however it neglects the needs of industrial/agricultural policy, doesn’t correct for the international tax book switcharoo game played by the mega wealthy(see Irish sandwich).

    Now I won’t argu that our system of deductions/credits/subsides/whatever is corrupt as hell, But the fact is those things do serve a purpose. $450 billion year in health care tax deductions(prior to Obamacare), $100 billion year in home mortgage interest deductions, another $100 billion or so a year for employer related 401k fund matching writeoff’s, etc.

    A fair tax would end ALL of these. It would also end employer hiring credits, other credits and incentives that keep businesses here.

    PS, Damn their 1000 character limit!

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    luminous 03/19/2011 1:53am

    China has 0% corporate/individual/capital gains/etc tax, most Asian and European countries run sovereign wealth funds, State owned and Otherwise State subsidised industries is very common outside the united states.

    Many countries, use nationalised resource extraction industries to provide the revenue to subsides their other industries.

    All cross Europe and Asia, and China heavy import tariffs are used to prevent foreign businesses from enter their markets, Even Nations that we have “free trade” agreements with use back door tariffs(vat,direct industry subsides,etc) to keep other nations out of their markets.

    I find amusing the concept that people think we can win in a game of tax rate chicken, on this tilted board. We need to fix our trade policy!

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  • Semnae 03/13/2011 5:56pm

    Who says this can’t go on forever? I think it’s in the GOP’s interest to keep doing continuing resolutions until the next elections. That way they can continue to use the budget for leverage.

  • BenjaWiz 03/13/2011 6:10pm

    luminous exactly spot on everyone knows defense spending is a big problem yet it’s not addressed and all the tax cuts for the rich that just passed most of them won’t even spend it they will hoard it what a waste.

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