Federal Budget & Tax

Federal Budget & Tax: News Blog Background

Monday, March 31, 2008

DAILY FISCAL POLICY REPORT -- Mar. 31, 2008

Housing -- Reid May Attempt to Move Housing Bill This Week: Hoping that the higher profile of the mortgage meltdown will prompt a few Senators to change their votes, Sen. Harry Reid (D-NV) may bring up his housing assistance package for consideration this week.

Budget -- War Spending: CongressDaily reports ($) that House Appropriations Chair David Obey (D-WI) will begin work on a war supplemental bill. This would round out the president's $196 billion FY 2008 request - $86 billion of which has been enacted through various bills since Sept. 2007. The bill could reach the House floor the week of April 21.

Contractor Oversight -- USAF Signed Contract with Suspended Contractor: The Washington Times reports that the U.S. Air Force inked an $11.6 million deal with a contractor two weeks after it was suspended by the GSA.

Posted by Craig Jennings, 11:16:18 AM

Wednesday, March 26, 2008

How The Fed Put Taxpayers on the Hook for $30 Billion

When the Federal Reserve engineered JPMorgan's takeover of failing investment bank Bear Stearns, the Fed guaranteed some $30 billion in Bear Stearn's assets. This has prompted an investigation into the deal by the Senate Finance Committee. Sen. Max Baucus (D-MT) explains why Congress should get involved:

Americans are being asked to back a brand-new kind of transaction, to the tune of tens of billions of dollars. With jurisdiction over federal debt, it's the Finance Committee's responsibility to pin down just how the government decided to front $30 billion in taxpayer dollars for the Bear Stearns deal, and to monitor the changing terms of the sale.

The Federal Reserve is an independent central bank that does not need approval from Congress or the president to execute its policies. And while it is subject to Congressional oversight, its does not require federal appropriations to maintain its operations, because, in its role as a bank, it actually turns a profit. If the bank is self-financing, then, how has its role in the Bear Stearns deal put taxpayer dollars at risk?

2007 Federal Reserve Budget Report:

The major source of Federal Reserve Bank income is earnings from the portfolio of U.S. government securities in the System Open Market Account, estimated at $36.5 billion in 2006. Earnings in excess of expenses, dividends, and surplus are transferred to the U.S. Treasury—in 2006 an estimated $28.5 billion. (These earnings are treated as receipts in the U.S. budget accounting system and as anticipated earnings projected by the Office of Management and Budget in the U.S. budget.)

In 2007, the Fed gave the Treasury over $32 billion. Essentially, the federal government required $32 billion less tax revenues (or borrowing) that year to operate. So, if the Bear Stearns assets turn out to be worthless, the Fed will give the Treasury $30 billion less than it otherwise would have, requiring the federal government to finance $30 billion more of its annual budget through borrowing - borrowing with interest that taxpayers will eventually have pay off.

Posted by Craig Jennings, 03:57:36 PM

Thursday, March 20, 2008

Earmark Requests Shut Down House Web Site

Bill Allison over at the Sunlight Foundation has a great blog up about a report in Roll Call that the House Appropriations committee website was overwhelmed with requests for earmarks shortly before yesterday's deadline. Because the website crashed, the deadline has been extended until next week.

Bill makes the excellent point that instead of a one-year break for earmarking, only to return to the same system in 2009, why not just make the appropriations committee online submission system public, so people can judge for themselves the merits of the requests submitted by their representatives? Sounds like a great idea to me.

Posted by Adam Hughes, 10:35:04 AM

Tuesday, March 18, 2008

IRS: Stimulus Calculator & Payment Schedule

The IRS has put up on their website an online calculator to help you figure out what your stimulus rebate will be.

They've also issued a calendar of when they will transmit and mail payments.

IRS Stimulus Payment Schedule
Last two SSN digits	Payment will be transmitted
*Direct Deposit*
00 through 20	May 2
21 through 75	May 9
76 through 99	May 16
*Paper Check*
00 through 09	May 16
10 through 18	May 23
19 through 25	May 30
26 through 38	June 6
39 through 51	June 13
52 through 63	June 20
64 through 75	June 27
76 through 87	July 4
88 through 99	July 11

Posted by Craig Jennings, 11:01:11 AM

Friday, March 14, 2008

Democrats Pass Budget in House & Senate

The House and Senate successfully passed their versions of the FY 2009 budget resolution yesterday. The House passed their spending outline on a mostly party-line vote 212 - 207 and the Senate passed their version early this morning 51 - 44 (roll call not available yet). Sixteen Democrats in the House opposed the budget along with all Republicans and in the Senate, Sens. Olympia Snowe (R-ME) and Susan Collins (R-ME) supported the budget, while Sen. Evan Bayh (D-IN) opposed it.

The House and Senate versions are similar in a number of areas, but the House blueprint is more fiscally responsible - strictly adhering to PAYGO rules by requiring offsets for mandatory spending increases and any additional tax cuts - particularly offsetting changes to the alternative minimum tax. Way to go House of Representatives!

There were tons of amendments in the Senate all through the day and night on key fiscal issues. We'll be dissecting the amendments and votes throughout the day today here on the BudgetBlog. Stay tuned!

Posted by Adam Hughes, 09:25:16 AM

Wednesday, March 12, 2008

Federal Contract Bidding: It's Complicated

Last week, we noted that Sen. John McCain (R-AZ) played a role in killing the Air Force's deal with Boeing to provide tanker planes. Citing corruption in the original bidding process as the reason for his intervention into the deal, McCain said:

All I asked for in this situation was a fair competition...I never weighed in for or against anybody that competed for the contract. All I asked for was a fair process. And the facts are that I never showed any bias in any way against anybody — except for the taxpayer.

Hooray for fairness in contracting! A noble effort, indeed. Well, it would be, except that a number of McCain's "top campaign advisers" had lobbied for the firm - EADS - that won the contract after the bidding procedures were revised.

McCain finance chairman Thomas G. Loeffler and Susan E. Nelson, who left Loeffler's lobbying firm to be McCain's finance director, both began lobbying for Airbus's parent company in 2007, Senate records show. William L. Ball III, a former secretary of the Navy and frequent McCain surrogate on the trail, also lobbied for Airbus, as did John Green, who recently took a leave from Ogilvy Public Relations to serve as McCain's legislative liaison.

It is not clear what specifically the McCain campaign advisers did for Airbus. Lobbying registration documents list only "initiatives and interests regarding the KC-30 Aerial Refueling Tanker Program." Loeffler did not respond to e-mail requests for an interview.

McCain spokeswoman Jill Hazelbaker said the senator from Arizona and his advisers have done "nothing improper" in the tanker deal. "John McCain was never personally lobbied on this issue," she said.

Additionally, McCain has taken campaign contributions from EADS.

EADS' interest in the tanker deal is evident in the political contributions of its employees. From 2004 to 2006, donations by its employees jumped from $42,500 to $141,931, according to an analysis by the nonpartisan Center for Responsive Politics. So far this election cycle, company employees have donated $120,350. Of that, McCain's presidential campaign has received $14,000, more than any other member of Congress this election cycle.

It may very well be that no special treatment was afforded EADS by McCain. The moral of this story, however, is that when it comes to government contracting, the devil(s) is (are) in the details. In a world in which bidding rules are not complex and uneven, lobbyists do not become employees of Senators (and vice versa), and policy makers abstain from taking money from potential contractors, awarding contracts to the "best" firm may be the norm, but that's not the world we live in. And when billions of dollars of federal funds are in the offing, only careful oversight and transparency will blunt the effects of arrangements like McCain's

Posted by Craig Jennings, 12:03:37 PM

Imagine Spending $3 Trillion on the Iraq War
It's Easy if You Try

Sunday's Washington Post carried an op-ed piece entitled The Iraq War Will Cost Us $3 Trillion, and Much More. Take a moment to read it; this is serious subject matter.

As the ID tag at the bottom of the piece indicates, it was written by Linda J. Bilmes, a former chief financial officer at the Commerce Department, who teaches at Harvard University's Kennedy School of Government and Joseph E. Stiglitz, a professor at Columbia University, who served as chairman of the Council of Economic Advisers under President Bill Clinton. Indeed, Prof. Stiglitz is a Nobel prize-winning economist. This is serious pedigree.

Bilmes and Stiglitz write "You can't spend $3 trillion -- yes, $3 trillion -- on a failed war abroad and not feel the pain at home. Some people will scoff at that number, but we've done the math." The piece makes for interesting if depressing reading, but see if the math the authors claim to have done is anywhere in evidence.

Of course, Bilmes and Stiglitz aren't seriously suggesting that the U.S. has spent $3 trillion on the war in Iraq. They are trying to suggest when "the costs to our society and economy" are taken into account, the war's real price tag is $3 trillion: "And that's a conservative estimate... We face an economic downturn that's likely to be the worst in more than a quarter-century... seriously exacerbated by reckless war financing."

However you feel about the cost of the war in blood and treasure, this would be more than a serious claim -- but, unfortunately, the august authors' argument is seriously flawed.

Posted by Dana Chasin, 11:17:00 AM

Monday, March 10, 2008

Private Sector Bleeding Jobs Since December

Friday's job figures - a 63,000 job loss - are further evidence that the economy is taking a downward turn, but the private sector has been cutting jobs since December. The real story, however, is in the private sector, which took a 101,000 job hit in January.

(click to enlarge)

The loss in private sector jobs is not new. It's just been glossed over a bit. When the 41,000 job gain in December was proffered as a counterpoint to the dismal 0.6% GDP growth rate in the fourth quarter; "things aren't all bad," they said. However, keen observers of the data coming from the BLS noted that, yes, things are that bad.

In fact, since December, the private sector has been shedding jobs at a rate of 47,000 per month.

Posted by Craig Jennings, 02:47:40 PM

Friday, March 07, 2008

GAO Report Highlights Troubling Trend in Supplemental Spending
A report recently released by the GAO indicates that with rising rates of supplemental appropriations comes decreasing budgeting transparency. Looking at supplemental requests - emergency and non-emergency - from 1997 to 2006, the report concludes:

To the extent possible, funds should be provided through the regular appropriations process to ensure that trade-offs are made among competing priorities, especially in an environment of increasingly constrained resources. Therefore, controls should be in place to ensure that emergency supplementals are enacted for their intended purpose—to address unforeseen needs that arise suddenly after the start of a fiscal year.

The timeliness of the report is underscored by the trend in supplemental spending seen since 1997.

And while spending on the Global War on Terror (GWOT) since the Sep. 11 attacks accounts for the majority of the funding, other, non-GWOT spending has been on the rise. Compared the period 1987-1996 when some $80 billion in non-war, supplemental spending was enacted, the period 1997-2006 saw $323 billion allocated in supplemental spending acts. And in that same time period all non-emergency totalled $101 billion.

For more on supplementals, see our background brief on supplemental appropriations.

Posted by Craig Jennings, 01:54:31 PM

Thursday, March 06, 2008

Senate Budget Committee Approves FY 2009 Budget Resolution

Voting along party lines - 12-10 -, the Senate Budget Committee has approved its FY 2009 budget resolution. The $3.1 billion resolution includes a one-year, non-offset $62 billion AMT patch. And at $472 billion, its non-defense, domestic top line is 2.2% more than Bush's $462 billion proposal.

Posted by Craig Jennings, 05:27:24 PM

DAILY FISCAL POLICY REPORT -- Mar. 6, 2008

The House budget resolution, legislation and statements

Legislation

Statements

The Senate budget resolution, legislation and statements

Legislation

Statements

Taxes -- House Appropriations Financial Services Subcommittee Chairman Jose Serrano (D-NY) and committee member Rep. Maurice Hinchey (D-NY) will continue their efforts to kill the IRS private tax collection program through fiscal 2009 appropriations.

Contracting -- Sen. John McCain's (R-AZ) role in killing an Air Force deal with Boeing several years ago resurfaces as the row over the Air Forces's decision to contract with Airbus's parent, EADS, for a fleet of new tanker planes

Posted by Craig Jennings, 09:51:43 AM

Wednesday, March 05, 2008

Federal Meat Inspectors Spread Thin as Recalls Rise

The federal regulator of meat, poultry, and egg products, the Food Safety and Inspection Service (FSIS), faces resource limitations that make it more difficult for the agency to ensure the safety of the food supply. Although the agency's budget has risen since it was created, staffing levels have dropped steadily, according to a new article by OMB Watch. Widespread vacancies in the agency have spread FSIS's inspection force too thin. Meanwhile, the number of meat, poultry, and egg product recalls has risen, and a recent recall of 143 million pounds of beef is the largest in the nation's history.

Click here for more

Posted by Matt Madia, 01:38:31 PM

Tuesday, March 04, 2008

New Medicaid Rules May Cost States Triple Administration Estimate

Yesterday, the House Oversight and Government Reform Committee Democrats released a report detailing the effects of the Bush Administration's Medicaid rule changes (one went into effect on Monday while several others are pending). According to the report, the new rules would cost state governments a total of $50 billion over five years - over three times the administration's $15 billion estimate.

The report is the product of the House committee's request to states to estimate their expected federal funding losses due to the proposed Medicaid rule changes.

The Centers for Medicare and Medicaid Services (CMS) has cast doubt on the accuracy the report, saying that ($):

"The Committee paper fails to provide any reliable information such as the assumptions, expenditure reports, the knowledge of how states will respond, and budget forecasts necessary to substantiate any of the numbers contained in the paper..."

However, committee chair Rep. Henry Waxman (D-CA) emphasized the role that federal funding plays in state budgets and its ability to provide resources to low-income families in economic downturns.

"As the economy tips into recession, the last thing we should be doing is taking federal funds from states, especially funds that are supposed to help people with their health and medical expenses..."

Posted by Craig Jennings, 01:42:15 PM

Impact of Fed Budget Cuts in GA Hits Home

The Macon Telegraph ran an article yesterday about how federal budget cuts are imperiling a drug/violent crime prevention program called the Edward Byrne Justice Assistance Grant Program. This program gives grants to states to establish state and regional drug task forces that form partnerships between area sheriffs offices and local police departments. And the program has been particularly successful in Georgia. Sen. Saxby Chambliss, who is a strong supporter of the grants, released data showing multi-jurisdictional drug task forces in Georgia made about 5,600 drug arrests and seized nearly $50 million in drugs during the 2006-07 budget year. (Not surprisingly, because it is a block grant program, the administration's PART tool concluded the program could not demonstrate results. hmmm....)

Despite its successes and strong support from local law enforcement, the program has regularly seen its budget cut, and next year the Georgia state drug task force will see more cuts of over 40 percent. Other offices receiving funding, such as the Criminal Justice Coordinating Council in Georgia, have seen even larger cuts in the past few years. From the Telegraph article:

Molly Perry, director of the Criminal Justice Coordinating Council, said the federal money her agency distributes to the drug task forces in the state has been reduced drastically over the years despite the program's success.

"We got $13 million five years ago," Perry said. "It was $8.5 million last year. We're expecting it to be $2.8 million this year. That's the lowest it's ever been. That's a two-thirds cut."

Local law enforcement have repeatedly advocated in front of Congress to sustain or increase funding for the program - cited by many in Georgia to be essential to their drug and crime prevention efforts. Monroe County Sheriff John Cary Bittick, who is a past president of the National Sheriffs Association, was on Capitol Hill again this past January, continuing the effort to save funding for the program.

"We are trying, along with 25 other law enforcement groups, to get the funding back in," said Bittick, who serves as the chairman of the National Sheriffs Association Congressional Affairs Committee. "I think if we don't get (the funding) in the supplemental budget, there's a very good chance that there will be a year where some of the small task forces may have to drop out. That would mean huge swaths (of the state) not covered by a task force."

Macon Telegraph: Cuts may threaten anti-drug program

Posted by Adam Hughes, 10:07:49 AM

Monday, March 03, 2008

Early Bird Nussle Makes a Play for the Worm

Getting Bush's veto-threats out early, OMB Director Nussle promises Bush will veto...well pretty much anything that wasn't written by the president.

CongressDaily PM ($):

OMB Director Nussle today sent what officials are billing as the first of its kind, a pre-emptive letter to the House and Senate Budget and Appropriations committees outlining veto threats over Democratic spending and tax policies -- before their budgets have been unveiled....Nussle's letter states that President Bush will veto FY09 appropriations bills that exceed his overall spending target and do not meet his mandate to cut the number and cost of earmarks in half from what was enacted for FY08....[and] reiterated the president will "veto any attempt to increase taxes."

Still, you gotta hand it to him. Nussle is nothing if not a go-getter.

Image by Flickr user phirleh. Used under a Creative Commons license.

Posted by Craig Jennings, 05:32:01 PM

The $3 Trillion War

Testifying before the Joint Economic Committee on Thursday, Nobel Laureate economist Joseph Stiglitz said that the wars in Iraq and Afghanistan could cost more than $3 trillion.

Stiglitz's testimony is based on research that was released as a book, The Three Trillion Dollar War, on Friday. Coauthored with Harvard University professor Linda Bilmes, the book estimates that when interest expenses on the deficit spending used to finance the war and other costs, like health care benefits for wounded veterans, are calculated, the wars' costs could range from $5 to $7 trillion.

McClatchy:

In an interview, Stiglitz said that too much of the public debate had been over the wars' operational costs while the real budget strains would show up only years from now.

"The peak expenditures are way out," he said, noting that the peak expenditures for World War II vets came in 1993.

The pair estimated that future medical, disability and Social Security costs for veterans of the conflicts in Iraq and Afghanistan range from a best-case $422 billion to what they call a more probable long-term expense of $717 billion.