Hey Democrats -- To Cut Spending You Actually Have to Cut Spending (ContributorNetwork)

COMMENTARY | When will Democrats learn that cutting spending means they have to cut spending?

Congress is playing chicken with a stopgap funding bill that will continue to fund the Federal Emergency Management Agency and other disaster-relief agencies through the end of the fiscal year, which ends on Sept. 30. Competing bills offered in each house differ in the amount of supplemental funding as well as whether that funding should be paid for with spending cuts in other areas or whether it should be simply added to the debt.

Senate Majority Leader Harry Reid, D-Nev., has crafted a $7 billion package and moved it through the Senate with the help of several conservative Republicans. Whether he will be able to count on their support as the Congress reconciles the differences between Reid's bill and the House-approved measure is uncertain, but Reid appears ready to rumble with his political opponents over it.

"We're not going to cave in on this," Reid said according to an Associated Press report.

Nice approach to compromise there, senator.

Disasters cannot be predicted, of course, and the federal government has an obligation to assist whenever possible, but the spending cannot come without cost. Whether the level of supplemental funding is $3.5 billion as proposed by the House or $7 billion as the Senate suggests is irrelevant. Congress always will appropriate whatever is needed in times of disaster. The point here is that it should not be added to the deficit to accomplish it.

For too long, the federal government has just borrowed money whenever needed with no consideration to how it would be paid back. This "$3 billion here, $7 billion there" attitude over the decades has painted us into the debt corner we are faced with today. The days of making the easy decision to simply borrow the money are over. It's time for the difficult choices.

There is definitely a need for additional disaster funding, especially after the wide-spread catastrophes that hit Joplin, Mo., earlier this year, plus the hurricane damages that struck the East Coast and Gulf regions. Whatever added funds Congress may add to disaster relief need to be offset in some other area of the federal budget. It's what the American people have to do when they face an unexpected expense and it's high time to federal government learns to do the same.

View the original article here

GOP quandary: Is a vote to eliminate tax breaks actually a tax hike? (The Christian Science Monitor)

An expected Senate vote on ethanol subsidies Tuesday represents a test of a larger issue: Can Republicans embrace a view of tax loopholes that finds common ground with Democrats?

If so, that shared viewpoint could help build broader consensus on fiscal reforms designed to bring down federal budget deficits over time. If not, getting to a bipartisan "yes" on any major deficit-reduction would be much harder.

The point at issue goes beyond ethanol and the debate over whether corporations should reap a tax credit for putting the corn-based fuel into US gasoline. The deeper issue is a philosophical one: If Congress takes away a tax subsidy, should that count as a tax hike?

IN PICTURES: Why America won't raise taxes

Many Republicans argue that any move that allows more tax revenue to arrive at the US Treasury is a tax increase. Killing the ethanol subsidy is a great idea, many say, but it should be done in a "revenue-neutral" manner, with new tax cuts designed to offset the change.

Others in Congress – including some Republicans – argue that rolling back this kind of spending is a good thing, even if the resulting boost to federal revenues is not offset by new tax cuts.

The poster children of this great tax debate are antitax lobbyist Grover Norquist and Sen. Tom Coburn (R) of Oklahoma.

Mr. Norquist, of the lobbying group Americans for Tax Reform, is pushing Republicans not to allow any new tax revenue to arrive in Washington. The rationale: The basic problem in the federal budget is too much spending, not too little taxes. And if more revenue flows in, Congress will spend it.

Senator Coburn is no lover of high taxes, but he’s backing a bill that would phase out the ethanol subsidies, and thus allow federal tax revenues to rise.

The ethanol vote is just one battle in a much larger budget war: Will fiscal discipline eventually be achieved by spending cuts, tax hikes, or a mix of both. Or not at all.

Currently, federal spending is running at historic highs, with only about 60 cents of tax revenue arriving for every dollar of spending.

But it will be very hard to fix America's long-term fiscal imbalances without a bipartisan deal. Democrats are wary of signing off on any plan to close the whole budget gap through spending cuts, as many Republicans would like to do.

If Republicans move toward the Coburn view and away from Norquist, it could help create conditions for a possible compromise, along the lines of a package proposed by President Obama's bipartisan fiscal commission last year.

That commission called for stabilizing the nation's debt over the next decade, with roughly $4 trillion worth of reductions in projected deficits. The plan included roughly $1 dollar in new tax revenue for every $2 in spending cuts.

Public opinion polls show a public that is not enamored of the budget policies of either party. American voters are willing to see some of both spending cuts and tax hikes as part of an effort to put the nation on sound footing for the future, a number of polls have found, including one new one by the Pew Research Center.

While the two parties have different opinions on economic policy and the size of government, leaders in both parties agree on the to cut spending. They also agree in general on the need to streamline the tax code.

That points to the elimination of tax breaks as a potential bipartisan solution.

"It seems like both sides want to do that," says Diane Lim Rogers, chief economist at the Concord Coalition, a group that supports controlling the national debt. "The big difference is the Republicans are stuck with this no new taxes pledge, the Grover Norquist pledge."

Such choices aren't easy for either side to make. But the alternative may be protracted gridlock – and the risk that the rising public debt sparks a crisis of confidence among investors.

The danger is that every year "our interest payments grow, the risk of a crisis grows," says Maya MacGuineas, who heads the nonpartisan Committee for a Responsible Federal Budget.

In the recent Pew poll, roughly three-quarters of Americans say the budget deficit is a major problem that the country must address now. In addition to cutting spending, a sizable majority say they would support reducing the deficit by raising taxes on high-income Americans and eliminating tax breaks for large corporations.

IN PICTURES: Why America won't raise taxes

View the original article here