A fading passion _ debt, deficits recede from view

Feb. 21, 2014 3:31 AM ET A fading passion _ debt, deficits recede from view By JIM KUHNHENN, Associated Press THE ASSOCIATED PRESS STATEMENT OF NEWS VALUES AND PRINCIPLES Obama budget to drop benefit cost-of-living trims Feb. 20, 2014 7:14 PM ET More aid for Greece to be decided 'after summer' Feb. 17, 2014 1:17 PM ET Obama signs debt ceiling measure into law Feb. 15, 2014 6:28 PM ET Debt limit saves GOP from political showdown Feb. 13, 2014 1:28 PM ET Tea party tees off on McConnell after debt vote Feb. 13, 2014 3:19 AM ET WASHINGTON (AP) — Just four years ago, deficits and debt were an explosive political combination, propelling Republicans to control of the House and fueling the budget fights that would ensue over the next three years. Today, they are an afterthought — a dying ember in Washington's political and policy landscape. The nation's annual deficit, the amount the government spends beyond what it receives in revenue, has been cut by nearly two-thirds from its 2009 high, thanks to a combination of tax increases, an improving economy and mandatory across-the-board cuts in programs from defense to transportation to education. And lawmakers, fatigued by their budget battles, have called a truce and abandoned the brinkmanship that led to unnerving default threats and a partial government shutdown. As a result, the impulse to cut will be decidedly weaker when President Barack Obama's submits his latest budget plan to Congress early next month. The White House drove home the point Thursday when it said Obama's budget would drop his past offer to cut spending on federal benefits with lower cost-of-living increases for beneficiaries. "It's hard to deny that there is less political momentum at this moment, in the year 2014, for the type of extensive budget negotiations we saw in 2011 and 2012," said Gene Sperling, the director of the White House's National Economic Council and a close Obama adviser. That doesn't mean the problem has been solved. Far from it. The nonpartisan Congressional Budget Office projects deficits will rise again in a couple of years, pushed up by an aging population, rising health care costs and anticipated increases in interest on the nation's debt, the amount accumulated over the years by deficit spending. But the public has shifted its anger. The 2008-2009 bank bailouts and the stimulus spending that Obama set in motion in 2009 sparked the revolt in 2010 as swing voters — those who might vote for either Democratic or Republican candidates — demanded more fiscal accountability. With another midterm election this year, swing voters appear more concerned about their own personal economic circumstances, and Republicans are focused on making the election a referendum on Obama's health care law. A Gallup poll last week showed public preoccupation with debt and deficits falling as concerns over jobs took over as the top worry for Americans. Health care continued to rank among the top problems cited by those surveyed, though it has dropped slightly from its high in November during the botched enrollment rollout of the law. "Deficits and debt remain salient with the Republican base, but the middle has moved on," Republican pollster Wes Anderson said. "They were there in 2010, but now they are pretty strongly focused on Obamacare, with the economy as an issue picking up steam." Indeed, Republicans are now not only attacking the health care law but shifting from calling for cuts to complaining about them. House Republican leaders drew attention to the health care law's reductions in spending for Medicare Advantage, an option available to older Americans who are eligible for Medicare. In a letter to Obama, House Speaker John Boehner and other top House Republicans complained that the cuts, which Republicans themselves have included in past budgets, would result in higher health care costs for those who enroll in the program. "Now is not the time to shortchange seniors' choices," the Republicans wrote in a not-so-veiled appeal for the over-65 vote. That fundamental shift in attention may well be both a blessing and a curse. If the cease-fire over budgets holds, the economy no longer will be convulsed by eleventh-hour negotiations, missed deadlines, threatened shutdowns and fears of jeopardizing the nation's credit. The new 2014 projection from the Congressional Budget Office — $514 billion this year from a $1.4 trillion high 2009 — means this year's deficit would be about 3 percent of the nation's economic output, good news in that it would virtually match the average percentage of the past four decades. But the nation's debt continues to grow, the CBO says, ever rising as a share of the nation's gross domestic product. The CBO estimates that the federal debt will equal 74 percent of GDP at the end of the year, the highest since 1946, and it projects that based on existing laws, it will rise to 79 percent in 2024. The main drivers of the debt are the government's biggest benefit programs — Social Security, Medicare and Medicaid. The government revenue stream is simply not keeping up with the aging population and with the increases in the cost of care. The CBO also predicted that after 2016, the health care law also will lower total working hours as many employees choose to cut back on work to qualify for federal insurance subsidies. Such a reduction would contribute to lower tax revenues and thus higher deficits, CBO director Doug Elmendorf said. That conclusion has become yet another piece of Republican ammunition against the law. White House officials say the revenue projections in the president's budget won't be as pessimistic as CBO's, in part because they will factor in deficit reduction from their immigration overhaul plan. Under White House projections, deficits as a share of the economy will be below 2 percent after the 2023-2024 fiscal year. The CBO says they will rise to about 4 percent. In 2011, Obama and Boehner came tantalizing close to striking a "grand bargain" that would have increased taxes and contained some of Medicare and Social Security costs. But the deal didn't hold. It's difficult to imagine a set of circumstances anytime in the near future that would bring both parties that close to a significant deal again. Instead, the $1.1 trillion budget agreement struck by House Budget Chairman Paul Ryan, R-Wis., and Senate Budget Chair Patty Murray, D-Wash., eased across-the-board mandatory spending cuts and defused any chance of an election-year shutdown. "They kind of did a grand bargain — they agreed not to do anything," said Robert Bixby of the budget watchdog group The Concord Coalition. "The Ryan-Murray budget was basically an agreement to stop fighting." The past three years of confrontations have focused almost exclusively on those aspects of the budget that require annual approval — the "discretionary" portion of the budget. Untouched have been the huge benefit programs, which are most responsible for the debt. "The tragic part of it is, all the anguish we're going through isn't dealing with two-thirds of the American budget," said former Sen. Alan Simpson, the Wyoming Republican who co-chaired a presidential debt commission created in 2010. Politically, Social Security and Medicare are much tougher to tackle. While the public does demand fiscal discipline, it often rebels when spending reductions affect them. Consider the GOP letter demanding restoration of Medicare Advantage cuts. Or a recent letter from 16 Senate liberal Democrats calling for Obama not to include in his budget any provision that would reduce increases in Social Security benefits to future retirees. As it turns out, Obama will not. "You're never going to hit anybody because they'll roll in and roll you over," Simpson said. ___ Associated Press writer Donna Cassata contributed to this report.

Factbox: New U.S. budget panel, same problems on taxes, spending

Factbox: New U.S. budget panel, same problems on taxes, spending Thu, Oct 17 15:53 PM EDT WASHINGTON (Reuters) - Another U.S. budget deal, another special committee in Congress to find future budget savings. The creation of this latest panel is a fundamental part of the emergency law signed by President Barack Obama early on Thursday to end a 16-day federal government shutdown and avoid a default on Washington's debt. Reminiscent of the 2011 "supercommittee" that failed to agree upon one penny's worth of deficit-reduction - much less the $1.2 trillion in savings over 10 years it was tasked to identify - this newly formed group is hoping to arrive at a happier outcome. Some lawmakers have suggested a modest compromise of perhaps a few hundred billion dollars is achievable, but there is still skepticism about its chances of success. The Republican and Democratic negotiators from the House of Representatives and Senate have less than two months to bridge deep divisions over taxes and spending that have been festering for years. The new law requires the panel to report a budget plan by December 13. For those who are superstitious, it is worth noting that is a Friday. Government funding runs out again on January 15, providing a new shutdown threat as an incentive. Here are some of the deficit-cutting ideas the committee is likely to consider: ENTITLEMENT REFORMS AND OTHER SPENDING The long-term costs of Social Security, Medicare and Medicaid are rising sharply as an aging U.S. population increasingly draws benefits from these retirement and healthcare programs, ballooning projected deficits in the next decade and beyond. A major hang-up of past budget fights: Many liberal Democrats fought entitlement savings, saying they will hurt the elderly and poor. Obama has argued that if the poor and middle class shoulder some of the deficit reduction burden, so should the rich through higher taxes, which Republicans oppose. Obama's budgets have proposed hundreds of billions of dollars in relatively modest savings that were never taken up by Congress. House Budget Committee Chairman Paul Ryan, a member of the new negotiating panel, has his own more dramatic proposals for savings. Among ideas that have been floated: using a less generous inflation measure to hold down benefits growth, means testing to require the wealthy to contribute more towards their elderly health coverage, paring doctors' payments, reducing military medical and retirement benefits as well as prescription drug coverage. Farm subsidies and some higher education grants have also been discussed as cuts from automatic spending programs. TAX REFORMS Tax-writing committees of Congress have been looking at comprehensive reforms for years. Republicans want to simplify the tax system. By eliminating deductions and credits and using the savings to reduce individual and corporate tax rates, they hope to spark an explosion in growth that will fill federal coffers and eliminate deficits. Democrats back the overall approach, but many say that Washington needs to collect more taxes from the wealthy, on top of the tax increase on individual income above $400,000 and on capital gains that they won in last January's fiscal cliff fight. In past negotiations between Obama and House Speaker John Boehner, the two talked about additional tax revenues of around $800 billion. But that was before the January tax increase. Since then, Boehner has insisted on no more revenue increases. Eliminating all sorts of tax breaks could be debated, from imposing new taxes on healthcare benefits to ending deductions and credits for corporate jets and oil drilling to home mortgage interest. The U.S. tax code, last revamped in 1986, is an outdated, sprawling behemoth riddled with "loopholes" and it is unlikely this committee can accomplish a total rewrite in two months. But some hope the special panel can provide some directions that the Senate Finance Committee and House Ways and Means Committee could build upon early next year. AUTOMATIC SPENDING CUTS Democrats hate automatic spending cuts. So do some influential Republicans such as House Appropriations Committee Chairman Harold Rogers and those who support strong military spending. Tea Party activists love them. The $1.2 trillion in across-the-board cuts over 10 years started phasing in early this year because of the failure of the supercommittee to find more targeted savings. Among ideas that have circulated: Give federal agencies more flexibility in carrying out the automatic cuts; exempt the military from some or all of the cuts; replace them with savings from mandatory programs or tax increases discussed above. OBAMACARE After Republicans failed in their efforts to use the government shutdown and debt limit deadlines to delay core parts of Obama's signature healthcare reform law, some are looking to the budget panel as the next round in their fight against Obamacare. They argue that it is an expensive new federal benefit with $1 trillion in new outlays over a decade, and is already costing jobs and raising insurance premiums, hurting economic growth. Democrats claim that the program is already contributing to a slowdown in the growth of healthcare costs and point to Congressional Budget Office estimates that, overall, it will reduce deficits by $165 billion over 10 years and by more than $1 trillion in the subsequent decade. Problems with the launch of new Obamacare insurance exchanges will influence the debate. ECONOMIC GROWTH, INTEREST COSTS Senate Democrats have proposed new spending on infrastructure projects as a means to jolt an anemic economy into a higher level of job growth. Creating more jobs will generate more tax revenues to shrink deficits, but Republicans are in no mood for more stimulus. Democrats are more likely to argue in favor of solutions that emphasize near-term growth, such as turning off the sequester spending cuts, which the CBO projects will cost around 600,000 jobs through the end of 2014. Interest costs remain a wildcard in any budget solution to be considered by the committee. House Budget Chairman Ryan notes that unless some serious new budget cuts are achieved, Washington could get socked with higher interest costs that blow up deficits and spiral out of control in future years as the interest rates rise from historically low levels. These rates would have shot up much higher, much faster had a failure to lift the debt ceiling thrown the U.S. Treasury into default. (Reporting By Richard Cowan and David Lawder; Editing by Karey Van Hall and Cynthia Osterman)

Laura Hallam I think the global economic decline spear headed by the States is wonderful stuff. First and foremost it will stop rampant consumerism, ensure that be get back to our base values and live within our means. Will also stall the raping and pillaging of our planet, stop the absolute reliance on the dollar and level the playing field that other global players can see their day. Frankly, it allows all of us to become decent human beings who live our lives with empathy - something that is very lacking currently. So I sit and smile and wait for when the cards come tumbling down for the States. America was a country that I always aspired to live in, at least for a couple of years. Now... no thank you!!