A mini-revolt is brewing among Republican backbenchers on Capitol Hill now that the specific spending cuts in Friday’s budget deal are being revealed. After separating out the accounting gimmicks and one-year savings, the actual cuts look to be closer to $20 billion than to the $38 billion that both sides advertised. This is not going to help Speaker John Boehner’s credibility with the tea party.
Even $20 billion is worthwhile, and the genuine reductions include cuts in high-speed rail, Pell grants, highway projects, renewable energy programs, housing subsidies, low-income home energy assistance, agriculture programs, contributions to the United Nations, and many more. There is also an immediate across the board 0.2% reduction in all nondefense accounts.
This would be very funny at a different time in our history, but during this time, this lady’s Roderic is dangerous
San Diego Tea Party
The Obama administration has been sounding hazard warnings all year on the need to raise the U.S. debt limit, but it has yet to deliver the worst news: Congress may have to raise it by more than $2 trillion.
Neither the administration nor lawmakers in Congress want to talk about it, but an increase of at least $1 trillion is needed to keep the government running through the end of the fiscal year on Sept. 30, an analysis of deficit forecasts and U.S. Treasury borrowing needs shows.
To last until the November 2012 presidential election, the increase would need to be well over $2 trillion.
The figures are politically hard to swallow.
Getting an increase with a “trillion” handle on it seems unlikely for a Congress with many freshman Republican lawmakers bent on keeping campaign promises to slash spending.
Any increase may be part of a comprehensive budget plan lawmakers need to hammer out as the year progresses. With a multi-trillion price tag difficult to swallow, Congress may opt for a tortuous string of smaller increases. In the process they could bring the United States close to default.
U.S. Treasury Secretary Timothy Geithner won’t say how much of an increase he wants. Instead, administration officials say it needs congressional action and is in lawmakers’ hands.
Some in Congress think otherwise.
“The number is up to Treasury,” Senator Richard Durbin, the No. 2 Senate Democrat, told Reuters on Tuesday. “I want to raise it to whatever is necessary to make sure that the full faith and credit of the United States is not jeopardized.”
Geithner has warned of “catastrophic” consequences if the debt limit is not raised and the United States defaults on its debt and other obligations.
Not having a real budget means the Federal Reserve doesn’t have to compete with anyone for scarce resources. What the central bank needs is a little money competition.
‘I will maintain to my deathbed that we made every effort to save Lehman, but we were just unable to do so because of a lack of legal authority.” So said Federal Reserve Chairman Ben Bernanke in 2009. The statement was striking—not because it was false, but because the Fed lacked explicit legal authority to do so much of what it did during the financial crisis. Drawing the line at Lehman seemed arbitrary, and it proved that the Fed has become an unaccountable power within American government.
Mr. Bernanke’s insistence that the Fed is restrained by some obscure statute is central to his argument that the Fed is a body subject to the check of external forces. But it’s not. The principal check on its power is the self-restraint of its chairman, a point proven by the Lehman example: Had Mr. Bernanke saved Lehman, who would have enforced the statute that he had violated? No one. That’s because the Fed, as currently configured, has no opposing force to rein it in.
In the beginning, it was not so. When the Fed was created in 1913, the gold standard limited its power as did the balance between the 12 reserve banks across the country and the Federal Reserve Board in Washington. Lawmakers thought that the reserve banks would represent regional economic interests in tension with the national political agenda of the board in Washington. Moreover, the Federal Reserve Act imposed a hard constraint on the Fed’s balance sheet: 40% of the Fed’s notes had to be backed by gold. Finally, the Fed’s charter was temporary, lasting only 20 years before requiring congressional reauthorization.