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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

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.

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.

BenjaWiz 03/13/2011 12:53pm

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

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.

fakk2 03/17/2011 2:17pm
in reply to luminous Mar 16, 2011 5:26pm

I see what you’re saying with the BIG plan, but no one deserves money just for being alive. So when BIG promises, “…an unconditional, government-insured guarantee that all citizens will have enough income to meet their basic needs”, I just don’t see how it will work. I could be wrong, but I wonder if you’re liberal/progressive. If so, then that’s cool. If we can agree on things other than taxes, then it at least gives hope to the rest of the nation.

I am curious though what makes a fair tax an unworkable system. I haven’t done as much research into that as other things, but the proposed bill [http://www.opencongress.org/bill/112-s13/show] seems pretty good to me.

luminous 03/17/2011 4:30pm
in reply to fakk2 Mar 17, 2011 2:17pm

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

fakk2 03/19/2011 9:26am
in reply to luminous Mar 19, 2011 1:53am

No doubt we need to fix our trade policy.

As far as having a negative trade deficit though (which is interesting you brought it up): I was listening to “America’s Mr. Right” Jason Lewis’s radio show on my way home from work last night and he had a guest (Todd Wynn) which talked about green energy mandates and trade inequality and Todd made a concise, compelling argument about trade deficits. Thinking about trade between nations as trade between me and my supermarket, I am running a trade deficit against my supermarket for my entire life. I buy things from them, they don’t buy things from me. This creates trade inequality. The big thing here though, is trade inequality is sustainable because they create products for a cheaper price that I wouldn’t be able to match. The problem comes when our trade partners don’t repatriate the dollar. Or even worse, when they repatriate too many dollars and devalue our currency. My example is in no way me personally favoring trade deficits though.

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.

fakk2 03/16/2011 11:00am
in reply to luminous Mar 13, 2011 4:22pm

@Luminous,

sorry it took so long to reply, I haven’t checked the boards in a while. I can agree with your plan except for the tax cuts and increasing the top bracket. We’ve had our progressive system for about 98 years now, and it’s not worked out very well for us so far. I’d prefer a fair tax instead. We can’t tax our way out of this anymore than Wisconsin or Texas could tax their way out of their debt holes. Everything else holds water and makes a lot of sense, especially the corn subsidies and wars.

fakk2 03/18/2011 4:20pm
in reply to luminous Mar 17, 2011 4:42pm

HAHAHA, I don’t like their character limit either.

As far as prebates go, I’m ok with it if it is administered by the states, from revenue collected in the states, and that revenue is given back to the people in the state upon which it was collected, on a program constitutionally protected FOR the states. I emphasize “for” because the basic premise is more state independence from the federal government. Even if it’s not constitutionally protected, if the people in a state vote for something like this, then they should be able to have it.

I would contend though that ending taxes on businesses, especially the payroll tax, would provide more incentive than the hiring credits or other credits & incentives that they currently enjoy.

You’ve definitely given me a lot to do research on, and some good stuff to think about. Thanks!

luminous 03/17/2011 4:42pm
in reply to fakk2 Mar 17, 2011 2:17pm

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!

luminous 03/19/2011 1:53am
in reply to fakk2 Mar 18, 2011 4:20pm

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!

fakk2 03/11/2011 7:30am

You know what’s amazing, these are cuts to bring our spending back down to 2007-2008 levels, or as Donny said, “below 2010 levels”. This is only a 4 year difference in spending AT MOST, and it’s not enough to erase our deficits in the next 10 years, let alone do good immediately. What we need is to return to 1999-2000 spending levels so we can pay off the interest/debt that we have so the value of the dollar will raise which will make things easier for us as a nation. If we can’t agree on 4 years of cuts, then there’s no way we’ll ever get to where we need to get at 10 years of cuts.

fakk2 03/11/2011 7:37am

OOOOH, just thought of something. If we stop paying SSA/SSI for 1 month, only 1 month out of the twelve that we have, then we’ll cut $60 billion from the federal government. Within 1 month, we can achieve the cuts originally proposed and not cut funding to anything else. Now, the states will have to carry SSA/SSI for that 1 month, so taxes will probably increase and such, but that would mean we get cuts without cutting programs, and those on SSA/SSI still get paid. Would it ever happen? No, it wouldn’t. But thinking about it, progressives (to my understanding) believe social responsibility is important. What is more responsible than having everyone in a state pay for someone else’s retirement? That’s the same thing as giving room/board/food to a homeless person for a month.

luminous 03/17/2011 4:10pm
in reply to fakk2 Mar 17, 2011 2:17pm

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

luminous 03/16/2011 5:26pm
in reply to fakk2 Mar 16, 2011 11:00am

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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