END OF JANUARY NEWS UPDATE

-Senate Rejects Deficit Commission: President's Budget Panel Voted Down
-The Congressional Budget Office report
-Senate permits gov't to borrow an additional $1.9T
-Senate rejects near-freeze on spending



Senate Rejects Deficit Commission: President's Budget Panel Voted Down

The Senate rejected a plan, backed by the President, to create a bipartisan task force to tackle the deficit. A special deficit panel would have attempted to produce a plan combining tax and spending adjustments that would have been voted on after the midterm elections. But the plan garnered just 53 votes in the 100-member Senate, not enough because 60 votes were required. Anti-tax Republicans joined with Democrats, wary of being forced into Social Security and Medicare cuts, to reject the idea.

The White House is under increased pressure to demonstrate they are serious about cutting deficits (or at least preventing them from growing). Obama endorsed the idea after being pressed by moderate Democrats. The proposal was an amendment to the $1.9 trillion hike in the government's debt limit to finance its operations. The red ink hit a record $1.4 trillion last year, and polls show voters increasingly concerned.


The Congressional Budget Office report

The Congressional Budget Office report predicts a $1.35 trillion deficit for this year as the sluggish economic recovery and continued high deficits continue to present political disaster for President Barack Obama and his Democratic allies. The report sees slow growth of the economy (just over 2 percent), with unemployment unchanged (averaging 10.1 percent) this year. It would grow only slightly more next year with an unemployment rate of 9.5 percent. The figures arrived just hours before the Senate rejected a White House-backed plan to establish a bipartisan task force to address the deficit.

The latest report estimates a $1.35 trillion deficit for the current budget year, dropping to $980 billion next year – but only if a host of tax cuts enacted under President George W. Bush are allowed to expire. The 2010 deficit figure is in line with previous estimates and would be a slight decline from last year's $1.4 trillion shortfall. The deficit would slide to $480 billion by 2015, CBO says, but only if tax cuts on income, investments, and large estates are allowed to expire at the end of this year. Most budget experts see deficits as far higher once tax cuts and other policies are factored in.

It's continued evidence of the fundamental imbalance of the federal government's budget that came just days before Obama's Feb. 1 budget submission. The White House says Obama will propose a three-year freeze on domestic agency budgets, though the savings would barely make a dent. The spending freeze, proposed by Obama during the State of the Union address on Wednesday, would apply to only a small portion of the federal budget, affecting a mere $477 billion of a $3.5 trillion budget. Some of those agencies could get increases, others would have to face cuts; such programs received a 10 percent increase in the previous budget. It has not said whether Obama will proposes tax hikes or cuts to soaring health and pension benefit programs. But plans for a new jobs bill and a coming request for war funds would likely negate any savings.

Republicans blame recent generous spending bills enacted by the Democratic-controlled Congress for driving up the debt. Those measures, however, are just one small part of the complex issue. The sharp drop-off in government tax revenues due to the recession, as well as higher expenses, since more people are taking unemployment benefits and food stamps are also large contributors.


Senate permits gov't to borrow an additional $1.9T

Senate Democrats needed all the 60 votes at their disposal Thursday to weasel through legislation allowing the government to go $1.9 trillion deeper in debt. The massive increase in the debt limit will allow Democrats to avoid another debt vote until after the midterm elections this fall.

"Why $1.9 trillion?" said Sen. Judd Gregg, R-N.H. "So that Congress doesn't have to face up to the debt ceiling until after the next election. We ought to face up to it before the next election because the people in this country have a right to know whether or not this Congress is going to do something about controlling ... the debt.

To win the votes of moderate Democrats in the Senate, the President promised to appoint a special task force to come up with a plan for dealing with the soaring debt. And to get the support of moderate "Blue Dog" Democrats in a House vote next week, the measure includes "pay-as-you-go" budget rules to make it harder to run up the deficit with new tax cuts or federal benefit programs.

The current $12.4 trillion debt ceiling is expected to be reached in mid-February. The measure now puts the government on track for a national debt of $14.3 trillion (about $45,000 for every American) and it serves further reminder of the United States' dire fiscal straits.

Congress has never allowed the United States to default on its obligations, which would roil markets and likely cause the government to lose its AAA credit rating.


Senate rejects near-freeze on spending

Just days after President Barack Obama endorsed a partial freeze on domestic spending, his Democratic allies in the Senate have rejected a plan attempting to do pretty much the same thing.

Democrats were the driving force in killing the bipartisan legislation, sponsored by Alabama Republican Jeff Sessions and Missouri Democrat Claire McCaskill. Their plan was slightly modified version of Obama's that would have permitted domestic agencies an increase of just about 1 percent, with slightly higher boosts for the Pentagon.

A 56-strong majority of senators supported the plan but it failed because 60 votes were required. The vote came the morning after Obama threatened to veto spending bills that would exceed his proposed domestic spending freeze.

-The Conservative

http://www.theconservativerant.com