Posted by: Debby Durkee | January 13, 2011

Republicans’ upper hand in budget battle.

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Republicans’ upper hand in budget battle.

Peter Ferrara, who is director of entitlement and budget policy at the Institute for Policy Innovation, a policy advisor to the Heartland Institute, a senior fellow at the Social Security Institute and a former member of the Reagan administration in policy development, says there’s a lot this Congress can do about the upcoming budget battle. He said that since there was no budget passed by the previous Congress, the current Congress doesn’t have to write a bill to cut spending. This is from The American Spectator.

…today’s new political realities, as evidenced by the historic 2010 election, sharply constrain the budget positions President Obama and Democrats in Congress can take. Many of these Democrats, including the President, got elected on the pretense that they would control spending better than the Republicans. In a nationally televised debate in 2008, President Obama pledged to the nation that his plan for the budget would involve a “net spending cut.” The federal budget then was $2.982 trillion. President Obama’s budget last year projected spending for the current fiscal year, 2011, to be $3.882 trillion. .. Snip —

where they can’t cut spending because Obama and the Democrats stand in the way, House Republicans should frame the debate for 2012 by passing budget cutting legislation that would be popular in the current political climate and show what Republicans would do with an even more sweeping victory in 2012.  Snip –

…The failure of the omnibus spending bill in the lame duck session means that not even all the appropriations bills for the current fiscal year, over one-fourth of which has now passed, have even been enacted. The government is operating today under a continuing resolution, which expires in early March. This means that much of federal spending even for the current fiscal year can be cut just by not passing appropriations bills authorizing increased spending….

…(House Budget Committee Chairman Paul Ryan) should seize the moment and release the Republican House budget even before President Obama’s dilatory administration gets around to releasing theirs. Because no budget or appropriations bills were passed by the last Congress for this fiscal year, the Ryan budget can effectively be a year and a half budget.

That budget must include a sharp cut in federal spending sufficient to inspire wildly enthusiastic, grassroots, Tea Party support. The touchstone of that budget should be to reduce all federal spending items except Social Security, Medicare, Medicaid, and federal debt interest at least to their levels in 2008. That alone would save $345 billion in the very first year, by my rough calculations, based on Obama’s published budget from last year. Even better would be to take it back to the 2007 budget spending levels. That would save roughly $527 billion in year one alone. Two thousand seven was just four years ago, and America survived fine with those levels of federal spending. That would provide for a much better defense budget as well than Obama’s unilateral disarmament of America defense budget.

Such a budget strategy would inherently involve terminating all unspent funding from the abusive, intellectually indefensible, utterly failed 2009 Obama stimulus. It would also inherently involve ending all further TARP spending, though formal legislation to terminate any further TARP authority may be worthwhile as well.

Some other items should also be zeroed out in the Republican budget. That would include federal funding for National Public Radio (NPR) and public television broadcasting. There is no reason why these operations, to the extent they are worthy, can’t find private sector financing. We can’t be borrowing still more money from the Chinese, and adding still further to our national debt, to fund such unnecessary federal projects. And that should be the test for every line item. Should we borrow money from the Chinese and add still further to the national debt, to finance this?

The House should then swiftly pass that Ryan budget. That budget then becomes the governing document for all House committees, regardless of what the Senate or President Obama have to say about it. That budget does not have to pass the Senate to become effective for the House. Congressional budget resolutions do not even go to the President for his signature or veto.

…House Speaker Boehner should then send that budget to President Obama and Senate Majority Leader Harry Reid…with a cover letter saying simply, “This is the House budget and we are sticking to it.”

Regardless of what President Obama or the Democrat-controlled Senate want, if the House doesn’t pass an appropriations bill spending any particular dollar on any particular program, it doesn’t get spent. No need to negotiate with Obama or Reid on any of this.

Yes, this doesn’t apply to entitlement programs like Social Security and Medicare, which are on automatic pilot. Further entitlement reforms will have to be enacted by legislation to balance the federal budget over the long term…And, of course, it doesn’t apply to federal debt interest, which must be paid in any event. But that still leaves plenty of room to cut. In fact, if they maintain strict limits on all discretionary spending growth for long enough, providing for any essential defense increases by cutting other spending even further, I believe they could even balance the budget for a time within the 10-year budget window, though, again, permanent, long-term balance would require entitlement reforms.  (Which he gets into later in the column).   Snip —

Another great idea from Ferrara is to defund those czars or recess appointed department heads.

President Obama does have the right under the Constitution to make recess appointments, as other Presidents have done in the past. But Congress also has the right under the Constitution to defund their positions. If their positions aren’t important enough for Senate confirmation, then they aren’t important enough to be funded with money borrowed from the Chinese.

These are some great ideas from Mr. Ferrara. Will the Republicans have the nerve to be so bold? That’s a darn good question, but if you care about the country climbing back out of the hole our political elites have dug for us, please read the entire column because there is much more and then send it to your representative. If Canada can dig itself out of its hole (see John Stossel’s report below) then we certainly can. We just need some representatives with guts and enthusiasm to take on the problem. Read it all here:  http://spectator.org/archives/2011/01/12/the-budget-battle-how-presiden

Stop the spending.

John Stossel shows how Canada got past their financial problems in just a few short years by cutting deeply and not regretting it. He wonders whether the will is there for our own butt covering politicians. With the recent report from the Heritage Foundation that the United States has fallen further behind on the Index of Economic Freedom for the second year straight, perhaps this will concentrate the minds of the Congress. This is from http://www.realclearpolitics.com.

Last year, I reported that the United States fell from sixth to eighth place — behind Canada — in the Heritage Foundation/Wall Street Journal’s 2010 Index of Economic Freedom. Now, we’ve fallen further. In the just-released 2011 Index, the United States is in ninth place. That’s behind Hong Kong, Singapore, Australia, New Zealand, Switzerland, Canada, Ireland and Denmark.

The biggest reason for the continued slide? Spending as a percentage of gross domestic product. (State and local spending is not counted.)

The debt picture is dismal, too. We are heading into Greece‘s territory.

Are we doomed? Not necessarily. Economist David R. Henderson points out that our neighbors to the north faced a similar crisis. In 1994, the debt that Canada owed to investors was 67 percent of GDP. Today, it’s less than 30 percent.

What did Canada do? It cut spending from 17.5 percent of GDP to 11.3 percent.

This wasn’t merely a cut in the growth of spending, a favorite trick of congressional committees. These were actual reductions in absolute spending.

“If a cabinet minister wanted a smaller cut in one program, he had to come up with a bigger cut in another program,” writes Henderson in “Canada’s Budget Triumph,” published by the Mercatus Center. All but one of Canada’s 22 federal departments experienced real cuts in spending. While Canada raised taxes slightly, spending was cut six to seven times more.

These supposedly painful cuts didn’t cause terrible pain. In fact, there was much more gain than pain. Unemployment dropped, the economy boomed, and the Canadian dollar — then worth about 71 cents U.S. — today is about equal to the American dollar.

If Canada can do it, we can, too…

Stossel has no confidence in the current politicians, whether Republican or Democrat, to actually cut spending in the ways the country needs. Let’s hope he’s wrong. Let’s hope that Peter Ferrara’s column above can show our current Congress the way. Read all of Stossel here: http://www.realclearpolitics.com/articles/2011/01/13/dc_spending_our_dismal_debt_picture.html

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