HOW MUCH DOES IT COST?

THE MATH OF PAUL RYAN'S BUDGET: YOU OWE THE 1% AND WILL PAY 22MAR12 & Three Hidden Time Bombs in the GOP's Medicare Budget 21MAR12

BIG surprise, not only does rep paul ryan's (r WI) proposed budget continue the repiglican / tea-bagger assault on the middle class, the poor, the disabled, the elderly and children, it also rewards the greed of the 1% (not all of them are greedy, remember the Patriotic Millionaires) with a minimum $150,000 tax cut. How will he pay for that? By destroying the social contract in America, by decimating Medicare, Medicaid and Social Security.

Every day, you and your family make choices about how you spend your money and what investments you make. Leaders in Congress do the same thing when they draw up their budgets for the country. And if you spend some time with their plans, you learn what they value, you see the type of country they want America to be. So when Congressman Paul Ryan put out a new budget for the House Republicans this week, we spent some time with it. We took a careful look and did the math. Here's what we learned. Republicans in Washington want to give millionaires and billionaires an average tax break of at least $150,000. They want to pay for those tax cuts by slashing programs that create jobs and protect our children, our seniors, and the veterans who have fought for the country. They want to end Medicare as we know it. And they want to undercut our economic strength by rolling back key investments in education, research, and our nation's roads and bridges. President Obama believes we need to live within our means and that's why he put forward a balanced plan that reduces the deficit by more than $4 trillion. But the plan put forward by the GOP fails that test of balance. To show you what we mean, we've put together an infographic that breaks out the kinds of priorities we'd have to give up for the $150,000 tax break that Republicans want to give to the nation's millionaires and billionaires. Check it out below and forward this message to your friends. The more people who share it, the more folks will understand what's at stake and how we can do better for the middle class. Thanks, David David Plouffe Senior Advisor to the President

Three Hidden Time Bombs in the GOP's Medicare Budget

By now most people have heard some of the worst things about the Republican budget proposal -- commonly called the "Ryan plan" and unironically described by the GOP as "the Path to Prosperity": That it decimates programs for middle class and lower-income Americans while giving even greater tax breaks to the rich -- $3 trillion worth, in fact. That it guts education, research, and transportation while preserving tax breaks for Big Oil. That it undercuts Medicare with a voucher system that will be worth less and less with each passing year.
And that, despite all that, it would actually increase the deficit.
You'd think that pretty much covers it -- but it doesn't. When it comes to Medicare, there are three more ugly facts about this plan that have yet to attract widespread attention -- mostly because the Republicans have done their best to keep them secret:
1. They're secretly planning to raise the Medicare age.
It's not in House Budget Chair Paul Ryan's Wall Street Journal editorial, the one where he sneered at "some who would distort for political gain our efforts to preserve programs like Medicare" and said "our plan provides guaranteed coverage options financed by a premium-support payment." It's not in the summary description of the GOP budget, which claims it "strengthens health and retirement security by taking power away from government bureaucrats and empowering patients instead with control over their own care." It's not even in the full budget document itself, which is 99 pages long and contains a section entitled "Strengthening Health and Retirement Security."
So how do we know that the GOP wants to raise the Medicare eligibility age from 65 to 67? Because that's what Ryan and his staff told the Congressional Budget Office when they asked the CBO to calculate the impact of their plan. It's right there in the CBO report on the budget.
Here's the key sentence: "In addition, the eligibility age for Medicare would increase by two months per year beginning in 2023 until reaching age 67 in 2034."
That's right: When Ryan and his staff instructed the CBO to calculate the impact of the Republican budget, they told its analysts that the GOP plan included an increase in the eligibility age for Medicare. Apparently they didn't have room to mention that fact anywhere in their 99-page document, and didn't see fit to bring it up while they were spouting all that rhetoric about "preserving entitlement programs for the future."
The Republican Party intends to raise the Medicare age for people as they approach the costliest years for receiving health insurance, and they're keeping it a secret from the public. This change alone would indirectly cut Social Security benefits by as much as 45 percent, by forcing seniors to spend that much of their benefit check on additional health care costs.
And remember, the GOP wants to raise the eligibility age for Social Security, too. The net effect of these two changes means that older Americans would be forced to keep working -- or looking for work -- at an age when their medical expenses would make hiring them prohibitively expensive for employers who offer health insurance. They would be forced to try purchasing health insurance on the open market.
Which gets us to our second dirty secret ...
2. Insurers will get to set their own rates.
The Ryan plan lets private, for-profit health insurers set their own rates -- rates which, according to the Ryan plan, will determine the Federal budget for senior health. It doesn't say that, of course, but that's how it would work.
According the the GOP's proposal, "All plans... would participate in an annual competitive bidding process ...The second least expensive approved plan... would establish the benchmark that determines the premium support amount... Program growth would be determined by the competitive bidding process..."
What does that mean in English? That Medicare goes away, to be replaced by a system of private health insurance companies who'll be paid to provide services that are supposed to (but won't) resemble the level of coverage seniors currently receive under Medicare. That health insurers would submit their bids to provide those services once a year.
And then comes the surprising part: The Federal government's expenditures for senior health care will be determined by the private insurers themselves, because the second-lowest bid establishes what the government is willing to pay for health insurance.
How crazy is that? Private health insurance rates have been climbing at three and four times the rate of today's Medicare. They've shown no ability to restrain costs -- and have no motive to do so, since they make money the old fashioned way: on the mark-up. And now they -- or the lowest bidder among them -- will dictate what the government must pay.
The plan says so, very clearly. "As opposed to pegging the growth rate to a predetermined formula," the GOP document say, "competitive bidding offers the ideal means of harnessing the power of choice and competition to control costs, while also securing guaranteed affordability for patients." In other words, the Republican Ryan plan places budgetary control for a major government program in the hands of the very insurance companies that profit from it.
At least that's what it would do, if they didn't contradict themselves in the very next paragraph.
3. The GOP plan radically cuts per-person spending for Medicare.
Remember that sentence we just quoted, the one about not pegging the growth rate to a predetermined formula? They totally lied about that. The plan does peg the growth rate to a predetermined formula, and Ryan's staff were very specific about it in their instructions to the CBO: "Total spending would grow in subsequent years," the CBO was told, "with nominal growth in per capita GDP plus 0.5 percentage points per year."
That's a "predetermined formula." And it's important to note that "nominal growth in per capita GDP" is not the same as the the growth in per capita health care costs, which have risen much more quickly than general inflation or GDP. That amounts to a major cut in benefits every year.
It gets even worse. The "per capita GDP" applies to everybody in the nation, not the ever-swelling ranks of Medicare-eligible seniors. This gets technical, but here's what it means: After this formula takes effect in 2023, there will be much faster growth in the Medicare-eligible age group than in the overall population. By structuring their formula this way the Republicans have ensured that there will be dramatic benefit cuts, especially as the "age wave" of Baby Boomers retires in the 2023-2030 period.
The "predetermined formula" is itself a secret, since they said there wasn't one. And the way it's structured will lead to dramatic cuts in Medicare.
Three-Pronged Attack
While the contradictions and evasions make exact forecasts difficult, it's clear that the net effect of these three changes would be to create a budget-busting giveaway to rich insurance corporations while at the same time slashing health coverage for seniors. And this isn't some radical ideologue's manifesto: it's the Republican Party's official Medicare proposal.
One terrible plan, three dreadful secrets. Presidential candidate Mitt Romney has said very, very nice things about this budget. In fact, all of the GOP's leaders have been bragging about it. Since they're so proud of it, why don't they tell more people what it really does?
http://www.huffingtonpost.com/rj-eskow/three-hidden-time-bombs-i_b_1371531.html?utm_source=Alert-blogger&utm_medium=email&utm_campaign=Email%2BNotifications

Obama Unveiling Defense Strategy, Military Cuts 5JAN12

MUCH can be done to cut the Pentagon budget while maintaining the readiness and integrity of the U.S. military. The best place to start would be eliminating the bloated and wasteful contracts with "service" providers. When my father and uncles were in the Army there were no private contractors providing food, laundry, transportation, communications and housing services to the military; men and women in the Army did that AND were trained in infantry and / or medical skills. Military Intelligence was just that, not contracted out to private firms. People who wanted to serve enlisted or were recruited and were paid according to their rank and job within the military. They were also provided housing or a housing allowance, meals or a food allowance, health care within the military system, and had access to subsidized shopping and transportation, all within the military system. People entered the military to serve their country, to have a job, for access to higher education after their service, and for some a career in the military. The military-industrial complex has become dependent on the Pentagon's contractor welfare system, greedily slopping taxpayer dollars from the nation, ensuring their excessive executive compensation while failing to provide quality, reliable service to the military war after war. Cut the war profiteers and get the Pentagon focused on maintaining a lean, mean and properly supplied and supported U.S. military. From HuffPost....
WASHINGTON — President Barack Obama put his personal stamp Thursday on a rejiggered Pentagon strategy for absorbing hundreds of billions of dollars in defense budget cuts, marking a turning point in U.S. security policy after a decade of war.
In a rare appearance in the Pentagon press briefing room, the president announced that the military will be reshaped over time with an emphasis on countering terrorism, maintaining a nuclear deterrent, protecting the U.S. homeland, and "deterring and defeating aggression by any potential adversary."
Those are not new military missions, and Obama announced no new capabilities or defense initiatives. He described a U.S. force that will retain much of its recent focus, with the exception of fighting a large-scale, prolonged conflict like the newly ended Iraq mission or the ongoing war in Afghanistan.
"As we end today's wars and reshape our armed forces, we will ensure that our military is agile, flexible and ready for the full range of contingencies," he wrote in a preamble to the new strategy, which is titled, "Sustaining U.S. Global Leadership: Priorities for 21st Century Defense."
The strategy hints at a reduced U.S. military presence in Europe and says Asia will be a bigger priority. It also emphasizes improving U.S. capabilities in the areas of cyberwarfare and missile defense.
Obama's decision to announce the strategy himself underscores the political dimension of Washington's debate over defense savings. The administration says smaller Pentagon budgets are a must but will not come at the cost of sapping the strength of a military in transition, even as it gets smaller.
In a presidential election year, the strategy gives Obama a rhetorical tool to defend his Pentagon budget-cutting choices. Republican contenders for the White House already have criticized Obama on a wide range of national security issues, including missile defense, Iran and planned reductions in ground forces.
Obama also wants the new strategy to represent a pivot point in his stewardship of defense policy, which has been burdened throughout his presidency by the wars he inherited and their drag on resources.
The new strategy moves the U.S. further from its longstanding goal of being able to successfully fight two major regional wars – like the 1991 Gulf War to evict Iraqi forces from Kuwait or a prospective ground war in Korea – at the same time.

The strategy document announced by Obama contained no specifics on the size of expected troop reductions; the Army and Marine Corps already are set to shrink beginning in 2015. The document said the Pentagon will have to find savings in pay and health care benefits for members of the military, but it offered no specifics.
It made clear that while some current missions of the military will be curtailed, none will be scrapped entirely.
"Wholesale divestment of the capability to conduct any mission would be unwise, based on historical and projected uses of U.S. military forces and our inability to predict the future," the document said.
The administration and Congress already are trimming defense spending to reflect the closeout of the Iraq war and the drawdown in Afghanistan. The massive $662 billion defense budget planned for next year is $27 billion less than Obama wanted and $43 billion less than Congress gave the Pentagon this year.
Appearing with Obama to answer reporters' questions about the strategy document were Defense Secretary Leon Panetta and the Joint Chiefs chairman, Army Gen. Martin Dempsey. Panetta in recent months had previewed the main themes of the strategy by emphasizing a need to continue pressuring al-Qaida and paying more attention to Asian security challenges, including China and North Korea.
Factors guiding the Obama administration's approach to reducing the defense budget are not limited to war-fighting strategy. They also include judgments about how to contain the growing cost of military health care, pay and retirement benefits. The administration is expected to form a commission to study the issue of retirement benefits, possibly led by a prominent retired military officer.
The administration is in the final stages of deciding specific cuts in the 2013 budget, which Obama will submit to Congress next month. The strategy to be announced by Panetta and Dempsey is meant to accommodate about $489 billion in defense cuts over the coming 10 years, as called for in a budget deal with Congress last summer. An additional $500 billion in cuts may be required starting in January 2013.
A prominent theme of the Pentagon's new strategy is what Panetta has called a renewed commitment to security in the Asia-Pacific region.
The administration is not anticipating military conflict in Asia, but Panetta believes the U.S. got so bogged down in Iraq and Afghanistan after 9/11 that it missed chances to improve its position in other regions.
China is a particular worry because of its economic dynamism and rapid defense buildup. A more immediate concern is Iran, not only for its threats to disrupt the flow of international oil but also for its nuclear ambitions.
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Robert Burns can be reached on Twitter at http://twitter.com/robertburnsAP

Can an Orange Bracelet Turn Hearts in Washington? JUST WHAT WOULD JESUS CUT FROM THE BUDGET? from SOJOURNERS 3MAR11

A NATIONAL BUDGET IS A MORAL DOCUMENT, and what is being proposed by the Obama administration and congress is immoral, especially when you consider the President and a vast majority of the members of congress tout their Christian faith in every election. This from Sojourners....
In a credit to both Republicans and Democrats, Congress just passed a measure that will avoid a government shutdown for at least the next two weeks. This means that there is still time to protect the poor and most vulnerable during the budget debate.
Sojourners' supporters and partners placed a full-page ad in Monday's Politico entitled, "What Would Jesus Cut?" which was signed by 28 leaders of churches and faith-based organizations across the theological and political spectrum. It created quite a stir. The ad's purpose was to ask our legislators to defend critical and effective programs that save the lives of thousands of children every day and help low-income people survive -- the same programs that were created with bipartisan support in the past. Tough choices are upon us, but faith leaders are saying that abandoning the most vulnerable should not be among our choices. The ad reminds us that a budget is a moral document, revealing our priorities and choices. And it reminds us that Jesus says in Matthew 25 that we will be judged by how we treat "the least of these." As a result of this ad, a discussion about what budget priorities might please or sadden Jesus has now been raised on CNN, MSNBC, PBS, The Washington Post, USA Today, and many national and local radio shows. It has also exploded across Facebook and Twitter.
This week, I have reminded television and radio talk show hosts that our budget didn't get into this mess because we spent too much money on poor people! And cutting programs that help the most vulnerable (which are among the most cost-effective and least costly public spending we have) isn't going to get us out of financial trouble, or reduce the deficit in ways that we now need. Excessive deficits are indeed a moral issue and they place crushing burdens on our children and grandchildren. But how we reduce the deficit is also a moral issue.
But, of course, I have been asked, "Okay then, what would you cut?" This debate has reminded me of the famous statement by bank robber Willie Sutton. When asked why he robbed banks, he famously replied, "Because that's where the money is." If we really want to reduce the deficit, we also have to go where the real money is: our massive military spending, corporate welfare subsides to big businesses, and corporate tax loopholes, as well as the long term costs of health care and Social Security, which will require important future reforms. On a television program yesterday evening, I said that I want those who now propose major cuts to critical low-income family support programs to say, out loud, that every item of Pentagon spending is more important to our well-being and security than school lunches, child health, and early education programs.
Our good partner, Bread for the World, has made a list of the top 10 cuts that would hurt poor and hungry people at home and abroad. The total amount of those cuts is $5.177 billion. Let's do the numbers. For President Obama's "surge" in Afghanistan we sent more than an additional 30,000 troops. The estimated cost of keeping one soldier in Afghanistan for one year is now $1 million. Preserving the funding for the top 10 cuts that would most hurt poor and hungry people would cost about as much as 5,000 troops in Afghanistan. This is the simple math. Bring 5,000 troops home from Afghanistan and save funding for Head Start; the Low Income Home Energy Assistance Program; the Women, Infants, and Children nutrition assistance program; Hunger Free Communities Grants; McGovern-Dole food aid programs; the Development Assistance Account; the President's Emergency Plan for AIDS Relief; the Global Health and Child Survival Account; the Millennium Challenge Account; and the Peace Corps.
Most of these programs have enjoyed significant bipartisan support in the past because they are both cost-effective and literally save the lives of children and families. Of course, the Bible doesn't mandate specific programs or prescribe a specific level of funding for any of them. And, we haven't been trying to get Jesus to be the head of any budget committee, or think that he would ever want that job! The ad was made to simply make a point about our faith and our values. Since Jesus is concerned about our action (and our inaction) when it comes to the poor, we should also be concerned. If these programs were being reformed to be more effective or replaced with better strategies to help the poor, that would be another issue; instead, they are just being slashed. Because our biblical values demand that we both serve and defend the poor, we want to make sure that legislators consider how their actions will impact the most vulnerable people. This is part of our vocation as people of faith.
Thanks to all of you, next week, orange WWJC? bracelets will be delivered to every member of Congress, and they will be invited to wear the bracelets when they vote on the budget. This is no longer just an ad; it's a campaign.
Jim Wallis is the author of Rediscovering Values: A Guide for Economic and Moral Recovery, and CEO of Sojourners. He blogs at www.godspolitics.com. Follow Jim on Twitter @JimWallis.

$960 BILLION IN DEFENSE DEPARTMENT FAT 25AUG10

THE Defense budget should be subject to the same scrutiny all other department budgets are subject to, and if waste and abuse are found they should be deleted from the budget and returned to the Treasury. The military-industrial complex's hold on our economy has to be broken, and Reps Barney Frank (D-MA) and Ron Paul (R-TX) have a proposal in Congress to start this by trimming $960 billion in "defense" spending. Please see the campaign from TrueMajority below and participate by clicking the link to send a letter to your representative to support them. Former President Dwight D. Eisenhower may have said it best: "The United States should spend as much as necessary on national defense, but not a penny more."

Dear Craig,

"Hey, Congress, trim the fat!" Barney Frank wants to save billions. Will you help?

We could cut over $960 billion from the Department of Defense and be just as safe as we are now. Perhaps even safer.

With the national debt continuing to soar, unemployment teetering around 10 percent and the threat of a double-dip recession hovering, the last thing we need is for a government bureaucracy rife with inefficiencies to continue costing us billions of dollars with no overhaul in sight.

But there is another way.

Led by Congressmen Barney Frank and Ron Paul, a bipartisan group in Congress is demanding an honest look at military spending without sacrificing our safety.

The good news? Over $960 billion could be cut without endangering our current safeguards and programs. The bad news? This opportunity is probably not on your member of Congress's radar.

Which is why we need your help. Send a message to your member of Congress, asking him or her to sign on in support of Congressman Frank's effort to clean up the wasteful spending in the Pentagon!

We'd like to believe that our military power stems directly from a financially sound American government and a vibrant economy that supports not just the protection of the people, but the education, health and well-being of the people as well.

But we have to speak up for what we believe.

Will you tell your representative to help put an end to wasteful government spending by supporting Congressman Frank's letter?

Former President Dwight D. Eisenhower may have said it best: "The United States should spend as much as necessary on national defense, but not a penny more."

We hope Congress thinks so too.

ARE YOU REPRESENTED BY A HIGHWAY HYPOCRITE?

Click the header to find out!

Highway Hypocrites voted against the Recovery Act and spent the last year attacking it -- while praising it in letters requesting funds and press releases touting projects in their districts.

We've identified 118 Republican senators and representatives guilty of highway hypocrisy. But we know there are more.

Are you represented by a highway hypocrite?

The nonpartisan Congressional Budget Office says the Recovery Act created as many as 3.9 million jobs. But Highway Hypocrites already knew the Recovery Act was putting Americans to work across the country, they were simply attacking it to score political points.

We've identified just over half of all Republicans in Congress as Highway Hypocrites -- but we're on a campaign to expose them all. So we've got one question for every Republican who voted against the Recovery Act: How much Recovery Act money have you requested for your district?

Find out where your representatives stand on the Recovery Act now. If you are represented by a Republican who voted against the Recovery Act, use our easy online tool to write them a letter asking how much money they have requested.

We're hoping to build pressure to make them come clean. After all, shouldn't Republican members of Congress be proud of fighting to create jobs in their districts?

GROW UP DEMOCRATS and THE STIMULUS BILL HYPOCRISY from RACHEL MADDOW 9FEB10

CHARITY, WE CAN AFFORD IT 5 FEB 10

Listening to the Diane Rehm Show on WAMU this morning I was saddened by the callers that objected the amount of aid the U.S. government is providing to earthquake victims in Haiti. $100 million was pledged by Pres. Obama right after the quake, it is going to cost the Pentagon approx. $150 million so far for the troops and material we have sent there, and regular Americans have donated tens of millions of dollars in private donations to the Red Cross, Doctors Without Borders, Oxfam, UNICEF and other organizations providing relief. It shows we are a nation of compassion. Yet some callers stated we should not be spending this money in Haiti, we should be taking care of our own first. I disagree and agree. I believe our foreign aid budget, less than 2% of the toal budget, is money well spent and I do not begrudge anyone receiving humanitarian assistance from the U.S., paid for with my tax dollars. I do feel we could do more for our own, and we have the money to do for our own, if we would cut he Pentagon's budget, now more than 60% of the total budget. We would have a lot more to spend on job training and employment, healthcare, education, housing and food assistance if we were not paying out hundreds of millions of dollars to military contractors for "services" the military used to provide on their own at a fraction of the cost AND if we were not paying the hundreds of millions in cost and debt on George W Bush's illegal and immoral war in Iraq AND if we required the Pentagon to justify weapons systems and hold contractors accountable for cost over-runs and production delays that cost the taxpayers hundreds of millions of dollars. If anyone feels they have a complaint about the government not taking care of our own then their comments, and hopefully actions, will be directed at their Senators and Representative and the President to demand an end to business as usual with the military-industrial complex.

CUT THE DEFICIT-CUT MILITARY SPENDING from SOJO 4FEB10

President Obama’s 2011 budget, submitted to Congress this week, totals $3.8 trillion and projects a deficit of $1.6 trillion. And while analysts have had only two days to dissect the massive document, the president’s priorities are clear: jobs and the military. The biggest problem he faces is the rapidly growing deficit.
With the economy still in recession and unemployment still at 10 percent, the domestic priority is clearly job creation. The budget includes a $100 billion jobs program, with substantial amounts targeted to tax breaks for small businesses in order to stimulate job creation. Also included are tax credits that assist lower-income workers with expenses such as child care, which make it more possible for them to find employment.
And despite the administration’s plan to enact an overall freeze on discretionary domestic spending, it appears programs that focus on low-income and poor people were increased. Bob Greenstein of the Center for Budget and Policy Priorities said in a statement on the budget that “Contrary to fears expressed last week that the President’s proposed freeze on total non-security discretionary funding would provide inadequate support for education, for vulnerable Americans, and the like, the budget actually does well in these areas.” It appears that major programs in nutrition, housing, education, TANF, etc. all are higher than last year.
But as usual, the sacred cow that cannot be touched is the military. First, a thanks to the administration for having the honesty to include the funding for the wars in Iraq and Afghanistan in the budget, rather than waiting several months and then coming back with requests for supplemental funding as has been the practice in past years. Let’s at least know up front what we’re dealing with. In round numbers, the military budget includes an operating budget of $549 billion, plus funding for the two wars at $192 billion (including an already planned request for $33 billion this spring), for a total of $741 billion.
I, too, am concerned about the rapidly growing deficit. While some degree of deficit spending is necessary in a time of severe recession, it is growing so fast that it threatens our future and our children’s futures. Last night, I ran into David Walker on the Amtrak train coming home from Philadelphia. We are both on book tours, and his new book is Comeback America: Turning the Country Around and Restoring Fiscal Responsibility. David and I had talked over the holidays, but now we had the chance to sit down and have a long train conversation about this topic. He is also concerned that the deficit not be cut on the backs of our poorest people and that the most vulnerable be protected. And he also thinks cutting excessive and wasteful military spending must be part of the solution. So here’s a suggestion: Let’s start with the military.
In a preliminary analysis of this budget, Lawrence Korb, former assistant secretary of defense under Ronald Reagan, and other defense experts said that:
A close analysis of the FY 2011 defense budget reveals that it does not go far enough to impose real fiscal discipline on our defense spending ... There are a number of reasonable cuts that could be made to this portion of the budget without sacrificing national security or undermining our troops.
Congressman Barney Frank was also at Davos and told me that he is proposing a 25 percent cut in the military budget. He said he will need help from the faith community. I support his effort, and we will be saying more about it as details emerge.
The wars we have been fighting are a huge part of the massive deficit we now face, wars that I have also challenged on many other grounds. It’s time to stop subsidizing the shameful profits of the “military industrial complex” that former President Eisenhower warned us about long ago. I personally would favor spending more on the returning veterans who are too often abandoned when their service is over. But cut the defense contractors who serve their own profits much more than any true idea of national security. Protect the veterans, cut the contractors. Now there is one way to attack the deficit.
We in the faith community say we subscribe to the biblical injunction to “beat our swords into plowshares.” So let’s be in the middle of the budget deficit debate and push hard for the right priorities. As David Walker and I agreed last night on the tracks between Philadelphia and DC, this is a moral question.

CENTER ON BUDGET AND POLICY PRIORITIES
http://www.cbpp.org/cms/index.cfm?fa=view&id=3073
CBPP Statement: February 1, 2010
For Immediate Release
Statement: Robert Greenstein, Executive Director, on the President's 2011 Budget Proposal
The President’s budget reflects both the short-term priority of boosting the economy and creating jobs and the longer-term priority of bringing deficits under control while meeting important national needs.

There is a strong case for more medium- and long-term deficit reduction than the budget contains. But the budget likely goes as far in this area as today’s toxic political environment will allow, even if the President pushes forcefully for his policies. Indeed, many of his proposals that provide fiscal restraint, from closing unproductive tax loopholes to scaling back agricultural subsidies for wealthy farm operators, may prove to be beyond what a polarized Congress, facing continuous roadblocks and with one eye on the fall election, will produce this year.

Of particular note, the budget proposes to save $750 billion over 10 years through three significant steps on the tax side. First, it would narrow tax subsidies — which budget analysts call “tax expenditures” or “tax entitlements” because they essentially represent government spending that’s delivered through the tax code, and that are now approaching $1 trillion a year in cost — such as for oil and gas companies, multi-national corporations that shift profits abroad to avoid paying their fair share of taxes here, and high-income households that receive much bigger subsidies than other Americans for the same tax-deductible expenditures. Second, it would reform financial institutions, such as by instituting a fee on large banks to cover the costs of bail-outs and discourage excessively risky behavior. Third, it would take other steps to reduce tax avoidance. Of this $750 billion in tax savings, the budget would allocate $284 billion for new tax cuts, primarily for middle- and lower-income families and for businesses, and save the rest for deficit reduction.

Enacting these and other proposals in the budget will be very difficult, given the penchant among some lawmakers to rail against deficits but vote against most measures to reduce them. Had the President proposed major additional budget cuts and revenue increases, not only would Congress almost certainly have rejected them, but the inevitable harsh attacks on them could have “poisoned the well” and made them even harder to achieve in the future if and when a more bipartisan atmosphere makes greater budgetary progress possible.

Budget’s Effect on Deficits and on Spending Growth
The budget would reduce deficits by $1.25 trillion over 10 years, compared to what they would be by continuing current policies. This does not count “savings” from eventual reductions in spending for operations in Iraq and Afghanistan, which are extremely difficult to measure.

This is a positive accomplishment. Yet deficits would still total $8.5 trillion over the next 10 years. Of this $8.5 trillion, $5.8 trillion would consist not of expenditures for any program, but of interest payments on the debt.

These high interest costs largely reflect the impact on the debt of policies that the President inherited — particularly the compounding budgetary effects over time of two very large tax cuts, a costly new drug benefit under Medicare, and the wars in Afghanistan and Iraq, none of which was paid for — as well as the mounting budgetary effects of ever-rising health care costs and the aging of the population. The costs of recent and proposed measures to rescue the economy have an impact as well, but a smaller one because these measures will end and, so, the costs will fade after a few years.

The Budget’s Fiscal Policy Principles
In terms of fiscal policy, the budget gets three basic things right.

First, it sets an appropriate target — stabilizing the debt as a share of the economy after the economy has recovered, and achieving this goal by reducing the deficit to 3 percent of Gross Domestic Product and balancing the “primary budget” by 2015 — although the President and Congress will need to take substantial steps beyond those detailed in this budget to actually reach that goal. A growing number of fiscal policy experts from across the political spectrum agree that the essential fiscal policy goal is to keep the debt from rising faster than the economy (after the economy has recovered) and thereby prevent the cost of interest payments on the debt from exploding.

Second, it reaffirms the President’s commitment to enacting comprehensive health care reform. This is the single most important step that policymakers can take this year to start addressing long-term deficits. Rising health care costs are, by far, the main driver of the long-term fiscal imbalance. The House and Senate health bills contain most of the reforms that health policy experts have identified as promising ways to slow health care cost growth over time. They also establish an array of research and demonstration projects to identify a new generation of cost-containment strategies and create mechanisms so promising strategies can be implemented without running the gauntlet of special-interest lobbying pressures on Capitol Hill.

Third, it would allow the Bush-era tax cuts for high-income Americans to expire on schedule at the end of the year. Extending these tax cuts, as some Members of Congress propose, would add $678 billion to the deficit over the next 10 years even before counting the associated interest costs, according to the budget, while doing little for the economy. When the Congressional Budget Office (CBO) recently examined a number of spending and tax options for boosting the weak economy and creating jobs in the years immediately ahead, it rated continuation of the Bush-era tax cuts for people with incomes over $250,000 dead last. See http://www.cbpp.org/cms/index.cfm?fa=view&id=3068.

CBO’s analysis and the work of other economists such as Mark Zandi of Moody’s Economy.com suggest that putting resources now into well-designed tax and spending measures to boost the economy and create jobs, while keeping those measures temporary and letting the high-income tax cuts expire on schedule, would help the economy both in the short term (by boosting growth) and the long term (by keeping long-term deficits lower than they would otherwise be). This is essentially the course that the President's budget charts; it proposes $266 billion in temporary tax cuts and expenditure increases now to help ensure that the economy averts a double-dip recession and sustains a reasonable rate of economic and job growth, while saving 2½ times that much over the decade as a whole by letting the tax cuts for the wealthiest 2 percent of Americans lapse.

Some news outlets have reported that the budget proposes $100 billion in such temporary, economy-boosting measures. It does, in fact, propose $100 billion for a new “jobs initiative.” But, it also proposes $166 billion in other efforts to boost the economy, largely by temporarily extending certain expiring provisions of last year’s American Recovery and Reinvestment Act. They include $76 billion in temporary tax cuts — much of which would go for a one-year extension of the Making Work Pay tax credit — and $90 billion in temporary increases in mandatory programs, most of which would go to extend unemployment benefits and fiscal relief to state governments. The $266 billion total is much closer to what the weak economy requires. Zandi and other experts have called for additional measures of about $250 billion.

Domestic Spending Freeze Does Not Preclude High-Priority Investments
Contrary to fears expressed last week that the President’s proposed freeze on total non-security discretionary funding would provide inadequate support for education, for vulnerable Americans, and the like, the budget actually does well in these areas. While capping overall domestic discretionary spending at a little below the 2010 level, it would increase funding in 2011 in high-priority discretionary areas such as education, clean energy, infrastructure, and basic research and development. At the same time, it would reduce or terminate funding for lower-priority programs, such as certain projects of the Army Corp of Engineers and NASA’s current program to return astronauts to the moon.

For policymakers to achieve the savings from freezing this category of spending without impairing the government’s ability to meet crucial national needs, however, Congress will need to follow the President’s lead and reduce funds for low-priority discretionary programs to pay for increases in high-priority ones.

Policy Reforms to Promote Work, Productivity, and Savings
Finally, the budget includes several significant reforms and new investments to promote work, increase worker productivity, and boost national savings — all of which would benefit the economy over the long term — while also increasing opportunities for struggling families and individuals. Specifically, the budget would strengthen tax credits and programs that help low- and middle-income families with child care costs, which should enable more parents to work or to work more. It would substantially strengthen financial assistance so more students can afford college; a better educated workforce is a more productive one. And it would help low- and middle-income families save for retirement. These measures would have multiple benefits: they would reduce the squeeze on family budgets, strengthen work effort, boost educational attainment, or increase national saving. Due to those and other proposals, Americans of modest means, many of whom are now facing major strains, would fare well under this budget.

Of particular note is the budget’s large initiative to increase retirement saving among low- and middle-income families. The budget includes five related proposals here. It would: 1) provide for employers who do not sponsor a retirement plan to automatically enroll their employees in a direct-deposit IRA plan (while enabling employees to opt out); 2) make it easier for firms that do offer retirement plans to enroll their workers automatically (while, again, giving workers an opt-out option), an approach that, experience shows, sharply increases the use of retirement saving vehicles; 3) double the tax credit for start-up costs that small employers incur in setting up a retirement plan for their workers; 4) enlarge a tax credit, known as the saver’s credit, under which the Treasury essentially matches retirement contribution (up to a limit) by low- and many middle-income households and thereby encourages them to save more for retirement; and 5) institute measures to improve the transparency and adequacy of 401(k) plans.

Taken together, these proposals should induce significant increases in retirement saving. Such an increase in saving would both help families in old age and strengthen U.S. long-term economic growth by increasing the pool of national savings that can be tapped for private investment in new plant and equipment.

These retirement savings initiatives will likely attract bipartisan support. But that does not mean they will be easy to enact. They will have to be paid for, presumably by closing some of the tax loopholes that the President’s budget targets. If powerful lobbying pressures and campaign contributions convince lawmakers neither to close these loopholes nor find comparable savings elsewhere — as may well occur — the retirement saving initiative will fall by the wayside, and both ordinary families and the economy will fare less well.

Indeed, this trade-off reflects the larger dilemma that this budget — and fiscal policy in general — now face: whether policymakers can, in the months and years ahead, set priorities and make the needed hard choices. This budget represents a promising first step in that direction and will face tough challenges as a result. And it is only a first step; policymakers will need to take many more such steps in the not-too-distant future.
The Center on Budget and Policy Priorities is a nonprofit, nonpartisan research organization and policy institute that conducts research and analysis on a range of government policies and programs. It is supported primarily by foundation grants.

CENTER FOR AMERICAN PROGRESS
http://www.americanprogress.org/issues/2010/02/defense_budget.html
Slimming Down the Defense Budget
By Lawrence J. Korb, Laura Conley, Sean Duggan | February 2, 2010
The Obama administration’s newly released fiscal year 2011 defense budget request continues to provide real increases to the historically high level of defense spending that the Bush administration initiated after September 11. The $708 billion budget, which includes the cost of the wars in Iraq and Afghanistan, represents an increase of nearly 3.4 percent from the FY 2010 baseline budget, or a 1.8 percent real increase over inflation.

The budget does not rebalance the defense budget to meet the national security challenges of the 21st century as the Pentagon should have done as a result of the Quadrennial Defense Review—a planning and strategy document also released on Monday that defines our military’s force structure and thus shapes its upcoming budget plans. The FY 2011 defense budget instead tinkers at the margins of reallocating resources to urgent priorities and fails to scale back or eliminate poorly performing or unnecessary weapons programs that are based on threats from a bygone era.

Our troops in Iraq and Afghanistan and their families here at home must receive every dollar needed to keep them well equipped and safe. But the federal government can and should do more to rein in spending on the investment portion of the defense budget, which still includes a number of outdated, over budget weapons systems.

The Center for American Progress applauds President Barack Obama’s stated emphasis on fiscal responsibility. In order to reign in the large and growing federal deficit, the president has announced that he will initiate a spending freeze on a number of domestic spending programs. But if President Obama is serious about controlling spending, he can’t exempt more than $200 billion in the investment accounts in the defense budget, or the ballooning costs of the military health care system.

Pentagon spending is responsible for a large and increasing share of the federal budget’s discretionary portion, and giving defense spending a pass will mean that the spending freeze will have only a marginal effect. A close analysis of the FY 2011 defense budget reveals that it does not go far enough to impose real fiscal discipline on our defense spending.

Spending on future weapons systems has outpaced spending on our troops over the last 10 years. As the Center for Strategic and Budgetary Assessments has pointed out, the operations and support portion of the base defense budget—which includes costs for recruitment, training, military and civilian personnel pay, and operating and maintaining equipment—has increased by an annual rate of 3.5 percent above the rate of inflation. Yet it has risen less in real terms than the investment portion of the budget, which includes procurement, research and development, and construction that grew at a real annual rate of 4.6 percent. There are a number of reasonable cuts that could be made to this portion of the budget without sacrificing national security or undermining our troops.

The administration’s latest defense budget request includes some of these steps. The budget closes the production line for the C-17 and ends the Navy’s EP(X) intelligence aircraft program. And Secretary Robert Gates is right to hold the line against production of the second engine for the F-35 Joint Strike Fighter. These cuts and reprioritizations are fiscally and strategically smart.

Other moves are cause for concern. Secretary Gates’s newly announced initiative to restructure the Joint Strike Fighter program is a welcome development, but the secretary’s decision to increase the buy of Joint Strike Fighters from 30 planes in FY 2010 to 42 units in FY 2011 is risky given the program’s history of being over budget and behind schedule. The Pentagon should stop production of the plane and keep it in R&D mode this year until it can determine whether the restructuring efforts are adequate to reform the program. It should also remove the one plane slated to be funded through the Overseas Contingency Operations budget. This could save up to $200 million per plane.

Other budget changes that Congress should consider are:

■Canceling the Marine Corps’ expeditionary fighting vehicle
■Halting further production of the MV-22 Osprey
■Slowing down spending for missile defense while maintaining funding for its continued research and development
■Keeping the Virginia-class attack submarine production steady at one per year
■Cutting FY 2011 funding for the Army’s Future Combat Systems by one-third
■Slashing the U.S. strategic nuclear arsenal to 600 deployed warheads and 400 in reserve
■Implementing an across-the-board reduction in research, development, test, and evaluation funding
It is also critical that Congress work with the Pentagon this year to control the steadily increasing cost of military health care. As Secretary Gates noted in yesterday’s budget briefing, premiums for TRICARE, the military’s health care system, have not been raised in 15 years, despite the Department of Defense’s repeated efforts to institute a modest increase.

But the Pentagon needs a more responsible partner in Congress in order to make these necessary cuts and adjustments. Congress has in the past often sought to continue expensive, strategically unmerited programs such as the F-22 Raptor for political, rather than national security, reasons. Members of Congress should not seek to resurrect what few programs have been eliminated in the president’s defense budget request to curry favor in their districts.

A productive partnership between Congress and DOD this year can help to bring both the investment portion of the defense budget as well as the costly health care portion of the operations and support budget under control.

Lawrence J. Korb is a Senior Fellow at the Center for American Progress, Laura Conley is a Special Assistant for National Security and International Policy, and Sean Duggan is a Research Associate for National Security at American Progress.