Sandra Fabry

Happy Birthday, "Stimulus"!? One Year By the Numbers


Posted by Sandra Fabry on Thursday, February 18th, 2010, 11:20 AM PERMALINK

$787 billion size of the “stimulus” package as signed into law on February 17, 2009
$862 billion size of the “stimulus” package per CBO’s updated January review
$288 billion claimed total tax cut amount in “stimulus” package
$214.6 billion actual total tax cut amount in “stimulus” package (some of the tax cuts were in fact spending)
3.6 million          
jobs “stimulus” package was supposed to create per the Administration’s estimations
3.3 million number of jobs lost since signing of “stimulus” package
67,000
number of federal civilian employees added since “stimulus” package was signed
$270.7 billion
cost to taxpayers* for these new government employees
7.6 percent unemployment rate at signing of “stimulus” package
8 percent rate under which unemployment was supposed to be held with “stimulus” package in place
10.2 percent highest unemployment rate since signing of “stimulus” package
9.7 percent current unemployment rate
440
number of non-existing Congressional districts in which the “stimulus” package was supposed to  have “saved and created” jobs according to Recovery.gov
$224,525.22 cost per job “saved or created” in 440 phantom districts
94,341 (and counting)
number of jobs clearly not saved/created by “stimulus” package
6 percent number of Americans who think the “stimulus” package has actually created jobs
$17 billion
Cost added to “stimulus” package due to Davis-Bacon prevailing wage requirements

Click here for a pdf version.


Yet Another Healthcare Transparency Farce?


Posted by Sandra Fabry on Friday, February 12th, 2010, 4:46 PM PERMALINK

The following is cross-posted at www.fiscalaccountability.org:

Maybe they thought they could keep their plans buried under the snow that fell in Washington, DC over the last few days, but it appears their secret is out. 

Media reports indicate that in spite of all the solemn promises of a bipartisan and transparent dialogue on healthcare and the President's explicit call for a bipartisan summit on the issue, a pre-negotiated backroom healthcare deal may be in the works.

According to Politico, walking into the bipartisan summit with such a pre-negotiated deal between Nancy Pelosi and Harry Reid would be the President's preference, and, Congress Daily has reported on the procedural maneuvers Pelosi's office is cooking up to accomplish such a deal.

House Republican Leaders John Boehner, Eric Cantor and Mike Pence are rightfully concerned, and right on the money when they say (in a letter to House Speaker Pelosi and Senate Democratic Leader Reid):

The existentence of any kind of backroom health care deal among the White House and Democratic leaders would certainly make a mockery of the President's stated desire to have a "bipartisan" and "transparent" diaolgue on this issue.

In their letter, they demand that Pelosi and Reid

publicly disavow these reports and assure the American people that Democratic Leadership is not putting together any kind of backroom deal or plotting any kind of legislative trickery to pass it.

We're very interested in the response, and you sure are, too.

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Not All Bipartisan Reform Commissions Are Created Equal


Posted by Sandra Fabry on Friday, February 5th, 2010, 11:43 AM PERMALINK

There has been a lot of talk lately about various ideas to set up bipartisan reform commissions to address our fiscal problems.  However, as we have been pointing out, not all commission proposals are good ones. In fact, some of them would be extremely damaging if implemented.  

In order to help you discern which commission proposal is pro-taxpayer, and which one is not, we have put together a brief comparative analysis of six different proposals that have been floated.  Click here to view the chart.

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PACT Act May Reduce Tax Hike Pressures


Posted by Sandra Fabry on Thursday, February 4th, 2010, 5:03 PM PERMALINK

As states around the country are facing fiscal problems, a bill in Congress stands a chance to help alleviate pressures to raise revenues through damaging tax increases at the state level.

The PACT Act, which would make revisions to the Jenkins Act governing the collection of taxes on, and trafficking in, cigarettes and smokeless tobacco, may reduce tax hike pressures by recovering additional revenue as a result of increased compliance with the law, and consequently represents a prudent way to address the issue of illicit tobacco sales.

Click here to view ATR's letter to the Senate.

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ATR and CFA Will Rate House Vote Against Debt Ceiling Hike and PAYGO


Posted by Sandra Fabry on Thursday, February 4th, 2010, 11:14 AM PERMALINK

The U.S. House of Representatives is set to vote today on yet another hike in the debt ceiling, a hike of a staggering $1.9 trillion.  While this alone is outrageous, the amendments sent over from the Senate, which passed the hike at the end of last month, come coupled with the PAYGO scheme - a fig leaf for tax-and-spend policies.  And yet, under the budget proposed by President Obama, even with this massive debt ceiling hike, Congress will still have to take up another debt limit increase by October of next year.

ATR and CFA have notified Members of the U.S. House of Representatives that we will rate a vote against the debt ceiling hike coupled with PAYGO in our annual Congressional ratings. From our vote alert:

Taxpayers across the country are dealing with lower bottom lines and smaller paychecks. They do not have the option of expanding their household budgets to support irresponsible spending with careless abandon. Congress should hold itself to the same standards, and rein in wasteful spending, rather than seeking the easy way out by raising the debt ceiling yet again.

The concept of PAYGO may be rhetorically appealing - after all, the concept of paying for something ‘as you go’ sounds like a common sense idea. Ultimately, however, this type statutory PAYGO is nothing more than a fig leaf to provide political cover for tax-and-spend policies, and would in fact set the stage for higher taxes being touted as the only way to avoid across-the-board cuts in entitlement spending.

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The President's Budget: No Fiscal Restraint in Sight


Posted by Sandra Fabry on Tuesday, February 2nd, 2010, 11:48 AM PERMALINK

On Monday, February 01, 2010 President Barack Obama unveiled his budget for Fiscal Year 2011. Despite ongoing verbal nods to the need for fiscal restraint, this budget however delivers little of that. The budget, rather than freezing spending – let alone cutting it – continues down the path of fiscal recklessness and continues to increase total government spending.

Quick Facts:

  • Overall 2011 Spending: $3.834 trillion – a 5.7 percent increase over the current budget
  • 2011 Discretionary Spending: $1.415 trillion
  • 2011 Public Debt: $10.498 trillion, soaring to $18.573 trillion in 2020 – expressed as a percentage of GDP this means an increase from 53% in 2009 to 77.2% in 2020, the highest since 1950. Note that even after the Senate just passed a $1.9 trillion increase in the Federal debt ceiling, this will warrant another increase in 2011.

The Discretionary “Spending Freeze:”

The President’s discretionary spending “freeze” proves to be little more than a sleight of hand. A more accurate portrayal than “discretionary spending freeze” was given by Republican staff on the Committee on the Budget, who referred to the “freeze” as a “freeze in non-defense, non-homeland, non-Veterans, non-international affairs, non-Pell Grant, non-emergency discretionary spending.” Indeed, the three-year freeze only applies to 13% of the budget and does not go into effect until 2011.

What is needed is an across-the-board roll back of Federal spending to pre-binge levels, not locking in increased levels. And there is no reason such a spending cut could not occur immediately rather than in 2011. Leaving “stimulus” and TARP aside, the FY2010 appropriations bills signed by President Obama have increased non-defense, discretionary spending by 12% over last year.

“Terminations, Reductions, and Savings:”

The budget touts a list of 126 “terminations, reductions, and savings” in areas and programs that range lower on the President’s priority list. The budget document claims that these would amount to more than $23 billion in 2011. 78 discretionary terminations and reductions are said to save $10 billion in 2011, while 33 mandatory terminations and reductions would save $240 billion over ten years.

However, even at first glimpse, this list fails to impress when the $23 billion in “savings” for 2011 is compared to the sheer size of the overall budget - $3.834 trillion.

The picture gets worse when reviewing the list of individual proposals for program termination or reduction. The list is disingenuous, as it mixes tax increases in with spending cuts. For example, under “mandatory terminations,” the list boasts $36.5 billion in energy tax increases, disguised as ending “oil and gas company tax preferences.”

Experience shows that most of the spending reductions put forth by Presidential budgets fail to make it through Congress, further evidenced by the fact that some of this year’s proposals were already part of last year’s budget. Consequently, when political realities are factored in and tax increases are taken out of the equation, the actual savings are a drop in the bucket when compared to the overall Federal spending spree.

More Gimmickry

To create the illusion of fiscal responsibility, the budget touts some other gimmicks which will do little to rein in Federal spending but will likely lead us down the path of higher taxes. Among them are:

The enforcement of pay-as-you-go, which is nothing more than a fig leaf to provide political cover for tax-and-spend policies, and would in fact set the stage for higher taxes being touted as the only way to avoid across-the-board cuts in entitlement spending.

 A Presidential bipartisan tax and spending “reform” commission, modeled after the Conrad/Gregg bipartisan commission proposal which would have guaranteed a tax increase. While not binding, the Presidential commission will most certainly put “everything on the table,” and seek to build momentum to increase taxes. In doing so, any such commission looking at both tax increases and spending reductions is placing a misguided emphasis on the “deficit” when the real problem of our fiscal woes is total government spending.

A prudent way to address the issue would be to set up a commission modeled after the successful Base Realignment and Closure commission (BRAC), which would subject all Federal agencies and programs – across the board – to a BRAC-style review process.
 

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Presidential Math: Failed Policies + More Failed Policies = More Jobs


Posted by Sandra Fabry on Monday, February 1st, 2010, 8:53 AM PERMALINK

In his State of the Union speech, President Obama acknowledged the need to focus more on job creation. Unfortunately, rather than turning to true pro-growth policies, he is, with few exceptions, doubling down on failure.

Flawed Premise:

“Because of the steps we took [AKA the “stimulus], there are about two million Americans working right now who would otherwise be unemployed.

The President continued to tout the “stimulus” as a job creation engine. His numbers are based on the bogus and entirely arbitrary metric of counting jobs “saved or created.” Even Obama’s chief economist Christina Romer had admitted the questionable nature of the job creation numbers saying: “It’s very hard to say exactly because you don’t know what the baseline is, right, because you don’t know what the economy would have done without it.”

Nonetheless, against the background of an unemployment rate standing at 10%, far higher than the Administration had claimed it would go once the “stimulus” came to the rescue, the President defended his Administration’s fuzzy math and even one-upped it arguing the package would “add another one and a half million jobs to this total by the end of the year.”

Flawed Conclusions:

Passing Healthcare Bill for Job Creation:

At last count, the Senate-passed healthcare bill contained eighteen separate tax hikes. It increased government spending by nearly $1 trillion over the next decade. In what universe does raising taxes and increasing the size of government “create jobs?” Raising taxes takes money out of the hands of job creators and consumers, and puts them in the government’s hands. Raising government spending crowds out vital capital from the private sector—capital which is the very seed corn of economic growth and job creation.

The healthcare mess also creates uncertainly for job creators. If they don’t know what regulatory compliance and higher taxes they will face, how are they to plan for the future? Chaos invites petrification.

“Slash the tax breaks for companies that ship our jobs overseas”:

Obama is no doubt referring to his tax hikes from last year’s budget. ATR has compiled a series of one-pagers detailing his $210 billion in proposed tax hikes on American companies who have overseas income. How raising taxes on American companies will incent them to remain in the United States is a mystery. The reason these tax breaks are in place is to avoid double taxation of international corporate income. To take away these tax breaks is to tell an American company that they will potentially have to pay taxes twice on the same income.

The best solution is to transition the U.S. tax code toward a territorial system (which most of the developed world has done), but getting rid of these tax breaks without doing that reform is foolish. There’s no reason that an American company with an Irish subsidiary cannot become an Irish company with an American subsidiary—and take the American jobs with them to Ireland. America has a 39 percent “all-in” corporate rate. Ireland’s is 12.5 percent.

More “Stimulus” for High-Speed Rail, Research Funding:

The president is looking to double down spending on pet projects such as high-speed rail and investing more in research. The problem with high speed rail (or high and moderate speed rail, which might be more accurate) is that based on our experience with Amtrak, these types of projects lead to many subsidizing transportation for only a small segment of the population – at high cost and only negligible benefit in terms of reduced congestion or pollution.

As for research funding, the first “stimulus” has brought us a myriad of research projects that are questionable at best already. The National Science Foundation, for example is doling out funding for projects ranging from the search for fossils in Argentina, over studying the learning patterns of honey bees, to developing the next generation of football gloves.

Agencies and projects should be subjected to a comprehensive review à la BRAC commission rather than doling out more taxpayer dollars to fund more dubious “research” pet projects, the job-creation benefits of which are more than questionable.

More “Clean Energy” jobs:

They may not be called “green jobs” any longer, the President now refers to them as “clean energy jobs. However, the premise remains: So called “green jobs” do not work in any country. Since 2000, Spain has spent €571,138 ($753,778) to create each “green job,” including subsidies of more than €1 million ($1,319,783) per wind industry job. Those programs resulted in the destruction of nearly 113,000 jobs elsewhere in the economy. Each “green” megawatt installed destroyed 5.39 jobs in non-energy sectors of the Spanish economy.

Pass “comprehensive energy and climate bill” AKA Cap-and-Trade:

The Heritage Foundation has predicted that cutting CO2 emissions will hurt manufacturing jobs as well. By 2029: durable-manufacturing employment will decrease by 28%; machinery-manufacturing job losses will exceed 57%; textile-mill employment will decrease by 27.6%; electrical-equipment and appliance-employment will decrease by 22%; paper and paper-product jobs will decrease by 36%; and plastic and rubber products employment drops 54%.

Trade:

While his “conclusion” regarding the importance of trade and exports is not misguided, he fell short in defining a pro-trade agenda. Touting improving relations with foreign nations can mean anything. A strong statement would have been a direct commitment to continue to push for the pending free-trade agreements, yet the President failed to deliver on this aspect. What’s worse, his record so far does not instill much hope in his trade agenda. Case in point: the recent tariff hikes on Chinese tires. The tariff increase only applies to Chinese-made tires, which were generally cheaper to purchase at the retailer. As a result, families purchasing those lower-end tires are taking a hit to their wallet. But the tax hikes don’t stop there.

Obama also imposed higher tariffs on Chinese steel and pushed an isolationist agenda by requiring businesses to “Buy American” through his February stimulus bill. While the term “Buy American” sounds good in theory, the fact remains that it’s just another form of protectionism. Focusing solely on American goods creates a monopoly of sorts within our own borders. When American businesses face no competition from foreign companies, American consumers feel the impact. Additionally, if Americans stop importing goods from abroad, then foreign nations could also stop importing American products. According to a Reuters study, “About 6,500 U.S. jobs could be lost if countries shut off 1 percent of that market to U.S. exporters and about 65,000 U.S. jobs could be lost in the ‘extreme case’ that 10 percent was shut off.” Protectionism only begets protectionism.

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SOTU: The President's Misguided Take on Spending


Posted by Sandra Fabry on Friday, January 29th, 2010, 10:06 AM PERMALINK

In his State of the Union speech, President Obama gave a verbal nod to the need for spending restraint. However, his calls for restraint and his proposed solutions ring hollow against the record of fiscal recklessness of his first year in office and his largely unchanged, costly agenda.

Obama’s Spending Freeze:

The President proposed a three-year non-defense, non-homeland security discretionary spending freeze beginning in 2011. While we do not yet have the details as to whether his freeze would apply to actual outlays or budget authority, his proposal falls short either way. After a massive spending spree of unprecedented proportions, the goal should not be to “freeze” spending, the goal has to be to cut spending.

What is needed is an across-the-board roll back of Federal spending to pre-binge levels, not locking in increased levels. And there is no reason such a spending cut could not occur immediately rather than in 2011. Leaving “stimulus” and TARP aside, the FY2010 appropriations bills signed by President Obama have increased non-defense, discretionary spending by 12% over last year.

Rescinding remaining “stimulus” funds and immediately ending the TARP program, as well as a comprehensive rescissions package along the lines of Sen. Coburn’s amendment to the debt ceiling increase bill would have been a first good step in the right direction.

Creating a Bipartisan Fiscal Commission:

President Obama lashed out at Senators for having prudently rejected the Conrad/Gregg bipartisan tax and spending “reform” commission which, as proposed, would have lead to a guaranteed tax increase. He vowed to create a bipartisan Fiscal Commission via executive order modeled on Conrad/Gregg.

However, taxpayers will not be served by any commission that puts tax increases, which only aggravate the situation by draining money out of the private sector and productive use, on the table. The 1990 budget deal, in which taxpayers were promised two dollars in spending cuts for every dollar in tax increases only to be left with higher taxes and higher spending made that all too clear.

A prudent commission proposal would focus only on the root cause of our fiscal crisis – out-of-control government spending. Endorsing a pro-taxpayer commission proposal like Sen. Brownback’s CARFA Act, which would review all Federal agencies and programs via a commission modeled on the successful Base Closure and Realignment Commission (BRAC) would have been a prudent step.

PAYGO:

The President called on the Senate to reinstate the Pay-As-You-Go (PAYGO) law, citing it as the big reason for record surpluses in the 1990s. However, the surpluses of the 1990s were in large part the result of other factors including the end of the Cold War, and an exceptionally strong economy bringing in more tax revenues. In the past, PAYGO has helped opponents of tax cuts to kill such efforts. However, when it came to increasing spending, Congress repeatedly found ways to circumvent PAYGO.

What’s worse, statutory PAYGO is nothing more than a fig leaf to provide political cover for tax-and-spend policies, and would in fact set the stage for higher taxes being touted as the only way to avoid across-the-board cuts in entitlement spending.

Click here for  the pdf.

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ATR and CFA Endorse CARFA Act


Posted by Sandra Fabry on Wednesday, January 27th, 2010, 11:30 AM PERMALINK

The Senate GOP has introduced an alternative to the fatally flawed (and now failed) Conrad/Gregg commission proposal.  The CARFA Act, modeled after the successful BRAC process, stands a real chance of providing benefits without increasing the burden on taxpayers.  From our letter endorsing CARFA:

We write to urge you to support the amendment implementing the CARFA Act, which would set up a BRAC-style spending-only commission. After a series of government bailouts, the trillion dollar spending and debt package passed under the guise of “economic stimulus,” and an overall increase in federal spending, taxpayers demand that Congress take action. Thankfully, the Senate has already rejected what would have been the wrong course of action: The Conrad/Gregg commission proposal, which would have led to a guaranteed tax increase because of the way it was structured.

Unlike the Conrad/Gregg commission, the CARFA Act, which would create a task force modeled after the Defense Base Closure Realignment Commission (BRAC) is a prudent mechanism to address our nation’s fiscal problems. The BRAC process led to the successful closure of military bases that were underused. Put in place by Congress in 1990, it would not have worked if it had been tasked with either closing unnecessary bases or raising taxes to pay for unnecessary bases. It worked precisely because it had one job: to save taxpayer money by closing unnecessary bases, and that is the model we should follow now.

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CARFA Act Provides Alternative to Flawed (and Failed) Conrad/Gregg Commission Proposal


Posted by Sandra Fabry on Tuesday, January 26th, 2010, 5:17 PM PERMALINK

Today, the U.S. Senate rejected the Conrad/Gregg bipartisan tax and spending “reform” commission amendment to the bill to increase the Federal debt ceiling at a vote of 46-53. As written, the Conrad/Gregg proposal would have lead to a guaranteed tax increase. Meanwhile, Sen. Mitch McConnell will be offering an alternative amendment to this bad deal for taxpayers – the so-called “CARFA Act,” which would establish a commission that would focus exclusively on spending, and is modeled after the successful Defense Base Closure and Realignment Commission (BRAC).

The BRAC process, put in place by Congress in 1990, led to the successful closure of military bases that were underused in the wake of the Cold War, and has consequently helped to streamline military spending. Proponents argue that there is no reason this successful model could not be applied to all of the rapidly expanding federal agencies and programs.

Says ATR president Grover Norquist:

In light of the challenges we’re facing, it is understandable that Members of Congress are concerned about the ever-increasing debt and are looking to address it. However there is a right way, and a wrong way to do it. Thankfully, the Senate has rejected the Conrad-Gregg commission – which would have been the wrong course of action. The CARFA Act, which has enjoyed bipartisan support in the past, addresses the root cause of our current fiscal crisis – excessive government spending, without running the risk of increasing the burden on taxpayers by raising taxes.

A BRAC-style spending-only commission has a historic precedent in the World War II so-called “Byrd Committee.” The Joint Committee on Reduction of Non-essential Federal Expenditures was a joint-House-Senate committee set up with the goal of eliminating nonessential expenditures.

Continues Norquist:

I commend the Senate GOP for putting forth a proposal that rejects the notion that tax increases should be part of the solution to our problems, and takes them off the table. The BRAC commission would not have worked if it had been tasked with either closing unnecessary bases or raising taxes to pay for unnecessary bases. It worked because it had one job: to save taxpayer money by closing unnecessary bases, and that’s the model we should follow now. Taxpayers would be well-served if Congress rallied behind the CARFA Act.

Click here for the PDF.

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