Posts tagged budget
Posted by Robert Wenzel
Uncle Sam’s Growing Ownership of Student Loans
Donald Marron writes:
The federal government has been borrowing rapidly to finance recent budget deficits. But that’s not the only reason it’s gone deeper into debt. Uncle Sam also borrows to issue loans, build up cash, and make other financial investments.
Those financial activities have accounted for an important part of government borrowing in recent years. Since October 2007, the public debt has increased by $6.9 trillion. Most went to finance deficits, but about $650 billion went to expand the government’s investment portfolio, including a big jump in student loans. Before the financial crisis, Uncle Sam held less than $500 billion in cash, bonds, mortgages, and other financial instruments. Today, that portfolio has more than doubled, exceeding $1.1 trillion:
By CBC News
Venezuela’s government announced Friday that it is devaluing the country’s currency, a long-anticipated change expected to push up prices in the heavily import-reliant economy.
Officials said the fixed exchange rate is changing from 4.30 bolivars to the dollar to 6.30 bolivars to the dollar.
The devaluation had been widely expected by analysts in recent months, though experts had been unsure about whether the government would act while President Hugo Chavez remained out of sight in Cuba recovering from cancer surgery.
It was the first devaluation to be announced by Chavez’s government since 2010, and it brought down the official value of the bolivar by 46.5 percent against the dollar. By boosting the bolivar value of Venezuela’s dollar-denominated oil sales, the change is expected to help alleviate a difficult budget outlook for the government, which has turned increasingly to borrowing to meet its spending obligations.
Planning and Finance Minister Jorge Giordani said the new rate will take effect Wednesday, after a two-day banking holiday. He said the old rate would still be allowed for some transactions that already were approved by the state currency agency.
Venezuela’s government has had strict currency exchange controls since 2003 and maintains a fixed, government-set exchange rate. Under the controls, people and businesses must apply to a government currency agency to receive dollars at the official rate to import goods, pay for travel or cover other obligations.
While those controls have restricted the amounts of dollars available at the official rate, an illegal black market has flourished and the value of the bolivar has recently been eroding. In black market street trading, dollars have recently been selling for more than four times the official exchange rate of 4.30 bolivars to the dollar.
The announcement came after the country’s Central Bank said annual inflation rose to 22.2 percent in January, up from 20.1 percent at the end of 2012.
The oil-exporting country, a member of OPEC, has consistently had Latin America’s highest officially acknowledged inflation rates in recent years. Spiraling prices have come amid worsening shortages of some staple foods, such as cornmeal, chicken and sugar.
Seeking to confront such shortages, the government last week announced plans to have the state oil company turn over more of its earnings in dollars to the Central Bank while reducing the amount injected into a fund used for various government programs and public works projects.
Giordani said the government had also decided to do away with a second-tier rate that has hovered around 5.30 bolivars to the dollar, through a bond market administered by the Central Bank. That rate had been granted to some businesses that hadn’t been able to obtain dollars at the official rate.
It was the fifth time that Chavez’s government has devalued the currency since establishing the currency exchange controls a decade ago in an attempt to combat capital flight.
Republished with permission
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Each week while the General Assembly is in session, updates will be posted here. These updates are not written by BC Public Record. No opinion on these updates is expressed here. For news and commentary on legislation please read the articles on our home page.
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CAPITOL HILL REVIEW
A weekly wrap-up of legislative news
General Assembly hears State of the State Address
Governor unveils budget proposal
Governor BillHaslam delivered his annual State of the State Address to a joint convention this week, unveiling his budget for the 2013-2014 fiscal year. Haslam addressed multiple issues during the State of the State, the most prominent of which include job recruitment and workforce development, investments in both K-12 and higher education, lowering taxes, and a continued push to make government more efficient and effective.
House lawmakers were pleased with the governor’s priorities, and look forward to moving his agenda forward through the legislature. Among the key points in the governor’s speech was a focus on balanced budgets, low taxes, and fiscal responsibility. As Washington, D.C. and other states are mired in partisan gridlock with out of control spending, the governor emphasized that Tennessee has made responsible decisions that will continue to ensure the state is positioned to be a top leader in the country on jobs.
Job Recruitment and Workforce Development
Building on the success of legislation passed during the 107th General Assembly, Governor Haslam’s $32.6 billion balanced budget makes major investments in job recruitment and workforce development, including:
- $16.5 million budgeted to provide technology and equipment related to workforce development programs for community colleges and technology centers across the state.
- A new technical education complex at NortheastStateCommunity College in the Tri-Cities to help train for manufacturing related jobs.
- A much-needed lab building at Nashville State Community College to help train the next generation of students in Middle Tennessee.
- A new state-of-the-art technology center in Smyrna that will be managed in conjunction with Nissan to provide training for area businesses looking for high-skilled employees.
In addition, the Governor’s budget includes strategic capital investments statewide that will help fund programs to ensure Tennesseans have the skills needed to obtain well-paying, 21st century jobs after graduation.
K-12 and Higher Education Investment
A large portion of Monday’s State of the State Address was committed to improving education, an issue that both the Governor and legislators have made a priority. The budget proposal calls for:
- 100% funding for the Basic Education Program (BEP) formula.
- A $76.9 million increase in K-12 public school funding, including salary increases for K-12 teachers.
- A school choice program that will allow low-income families who have kids in the lowest-performing schools to attend other schools.
- $307.3 million committed for capital improvements (buildings and infrastructure) at our higher education institutions.
- The investment in an online university focused on improving affordability and access to higher education for the more than 800,000 Tennesseans that have obtained some college credit but have not yet graduated.
In addition to these education proposals during the State of the State, Governor Haslam also announced a strategic initiative called “Drive to 55”. This new initiative, the goal of which is to ensure Tennessee has the best-trained workforce in America, will seek to increase the number of Tennesseans that have earned an Associates degree or higher from 32% to 55% by the year 2025.
Multiple tax cuts were passed during the 107th session of the General Assembly, including eliminating the gift tax, lowering the sales tax on food, and phasing out the death tax. Similar to last year, the Governor’s 2013-2014 budget includes additional tax cuts for Tennesseans, including:
- A further reduction of the sales tax on groceries to a flat 5%.
- A cut to the Hall Tax which will raise the income exemption level from $26,000 to $33,000 for individuals and $37,000 to $59,000 for joint filers.
- A plan to fully fund the property tax relief program to help low-income seniors, veterans, and the disabled.
- A further reduction of the death tax that raises the income exemption level from $1.25 million to $2 million.
These tax cut proposals by Governor Haslam reflect an agreement with lawmakers to prioritize the needs of Tennesseans in a fiscally responsible manner that encourages job growth statewide.
Other Budget Highlights
Other highlights of Governor Haslam’s 2013-2014 budget include:
- A plan to spend $48 million in Corrections to compensate our local jails for housing more state prisoners.
- A proposal to streamline and better utilize the Criminal Gang Enhancement law, making our streets safer.
- A commitment to add $100 million to the state’s Rainy Day Fund.
- A proposal for worker’s compensation reform that will focus on fairness in the system for both the employee and the employer.
- Upgrading nearly 200 case manager positions in the Department of Children’s Services.
- $4.3 million for the MontgomeryCounty veteran’s home.
- $8 million for a statewide tourism fund to support the work of the tourism commission.
The week ahead…
On January 3, 2013 Congressman Paul Broun, Jr. (R-GA) introduced HR 73, The Federal Reserve Board Abolition Act. The thrust of the legislation is to “abolish the Board of Governors of the Federal Reserve System and the Federal reserve banks, to repeal the Federal Reserve Act, and for other purposes.” It looks like Ron Paul’s consistent cries for dealing with the Federal Reserve have not fallen on deaf ears, nor has the idea dissipated from elected representatives since he left office.
This piece of legislation was not the only one to be introduced. House Resolution 77, the Free Competition in Currency Act of 2013, was also introduced by Rep. Broun. This legislation seeks “to repeal the legal tender laws, to prohibit taxation on certain coins and bullion, and to repeal superfluous sections related to coinage.”
But Broun wasn’t about to stop there. He also introduced two other pieces of legislation: HR 24, the Federal Reserve Transparency Act of 2013, which is put forth “To require a full audit of the Board of Governors of the Federal Reserve System and the Federal reserve banks by the Comptroller General of the United States,” and HR 33, the Audit the Fed Act of 2013, which purpose is “To amend title 31, United States Code, to reform the manner in which the Board of Governors of the Federal Reserve System is audited by the Comptroller General of the United States and the manner in which such audits are reported.”
All of these pieces of legislation are very similar to those proposed by former Congressman Ron Paul.
The Federal Reserve is a huge problem from America and this is not some recent news. It has been going on since the early 20th century.
Felix Bronstein wrote a piece in which he cited a piece on proposals to help cut the Federal budget written for The Heritage Foundation in 1986 by Warren T. Brooks. Bronstein writes,
Brookes began by stating that “conservatives need to understand that without basic monetary reform there is no way to balance the U.S. budget, with or without tax increases and budget cuts, and even with the most optimistic GNP growth projections.” He then offered a 3 part solution:
(1) “the nation must return as quickly as possible to gold-based money and debt” (Heritage’s Policy Review published another piece endorsing a return to the gold standard as a key component of balancing the budget, in the next issue, by the late Congressman, HUD Secretary and Vice Presidential candidate — Jack Kemp, My Plan To Balance The Budget, Spring 1986)
(2) we should allow “free exchange of gold and silver, both public and private, setting up a parallel monetary system on a free market basis, allowing the public to choose,” (Heritage’s Policy Review published another piece endorsing the idea of Hayekian currency competition or privatization, also in the next issue — Richard W. Rahn, Time To Privatize Money?, Spring 1986) and
(3) “the Federal Reserve would be phased back to its original role as a bank-owned clearing house, thus eliminating its huge and costly presence in the money markets where its open market operations now run as high as $1 trillion a year.”
With all of the talk about the “fiscal cliff” and raising the debt ceiling yet again, it is clear that the problems of the Federal budget and debt, and especially the cost of servicing the Federal debt, have certainly not gotten any better since Warren Brookes’s [sic] solutions were published (and ignored) in 1986.
So far we have seen that Washington is not serious about the fiscal cliff or the debt ceiling. So now, we’ll see how serious they are about dealing with the Federal Reserve. So far, each of the bills have been referred to committee. It would behoove us to inform our representatives about these pieces of legislation and to push them through committee for a vote on the House floor.
Hat tip: American Vision News
Published on Jan 26, 2013 by Eduardo89rp
Ron Paul giving the Carl Davis Distinguished Lecture on “The Libertarian Future”
Posted by Lew Rockwell
Despite claims that the Administration and Congress saved America from the fiscal cliff with an early morning vote today, the fact is that government spending has already pushed Americans over the cliff. Only serious reductions in federal spending will stop the cliff dive from ending in a crash landing, yet the events of this past month show that most elected officials remain committed to expanding the welfare-warfare state.
While there was much hand-wringing over the “draconian” cuts that would be imposed by sequestration, in fact sequestration does not cut spending at all. Under the sequestration plan, government spending will increase by 1.6 trillion over the next eight years. Congress calls this a cut because without sequestration spending will increase by 1.7 trillion over the same time frame. Either way it is an increase in spending.
Yet even these minuscule cuts in the “projected rate of spending” were too much for Washington politicians to bear. The last minute “deal” was the worst of both worlds: higher taxes on nearly all Americans now and a promise to revisit these modest reductions in spending growth two months down the road. We were here before, when in 2011 Republicans demanded these automatic modest decreases in government growth down the road in exchange for a massive increase in the debt ceiling. As the time drew closer, both parties clamored to avoid even these modest moves.
Make no mistake: the spending addiction is a bipartisan problem. It is generally believed that one party refuses to accept any reductions in military spending while the other party refuses to accept any serious reductions in domestic welfare programs. In fact, both parties support increases in both military and domestic welfare spending. The two parties may disagree on some details of what kind of military or domestic welfare spending they favor, but they do agree that they both need to increase. This is what is called “bipartisanship” in Washington.
While the media played up the drama of the down-to-the-wire negotiations, there was never any real chance that a deal would not be worked out. It was just drama. That is how Washington operates. As it happened, a small handful of Congressional and Administration leaders gathered in the dark of the night behind closed doors to hammer out a deal that would be shoved down the throats of Members whose constituents had been told repeatedly that the world would end if this miniscule decrease in the rate of government spending was allowed to go through.
While many on both sides express satisfaction that this deal only increases taxes on the “rich,” most Americans will see more of their paycheck going to Washington because of the deal. The Tax Policy Center has estimated that 77 percent of Americans would see higher taxes because of the elimination of the payroll tax cut.
The arguments against the automatic “cuts” in military spending were particularly dishonest. Hawks on both sides warned of doom and gloom if, as the plan called for, the defense budget would have returned to 2007 levels of spending! Does anybody really believe that our defense spending was woefully inadequate just five years ago? And since 2007 we have been told that the wars in Iraq and Afghanistan are winding down. According to the Congressional Budget Office, over the next eight years military spending would increase 20 percent without the sequester and would increase 18 percent with the sequester. And this is what is called a dangerous reduction in defense spending?
Ironically, some of the members who are most vocal against tax increases and in favor of cuts to domestic spending are the biggest opponents of cutting a penny from the Pentagon budget. Over and over we were told of the hundreds of thousands of jobs that would be lost should military spending be returned to 2007 levels. Is it really healthy to think of our defense budget as a jobs program? Many of these allegedly free-market members sound more Keynesian than Paul Krugman when they praise the economic “stimulus” created by militarism.
As Chris Preble of the Cato Institute wrote recently, “It’s easy to focus exclusively on the companies and individuals hurt by the cuts and forget that the taxed wealth that funded them is being employed elsewhere.”
While Congress ultimately bears responsibility for deficit spending, we must never forget that the Federal Reserve is the chief enabler of deficit spending. Without a central bank eager to monetize the debt, Congress would be unable to fund the welfare-warfare state without imposing unacceptable levels of taxation on the American people. Of course, the Federal Reserve’s policies do impose an “inflation” tax on the American people; however, since this tax is hidden Congress does not fear the same public backlash it would experience if it directly raised income taxes.
I have little hope that a majority of Congress and the President will change their ways and support real spending reductions unless forced to by an economic crisis or by a change in people’s attitudes toward government. Fortunately, increasing numbers of Americans are awakening to the dangers posed by the growth of the welfare-warfare state. Hopefully this movement will continue to grow and force the politicians to reverse course before government spending, taxing, and inflation destroys our economy entirely.
Photo added to original post.
Representative Ron Paul (R-TX) Joins CNBC’s Money in Motion to discuss the impending fiscal cliff.
By CHRISTOPHER BUTLER
County and local officials throughout Tennessee will have to find a way to fund more government services with less taxpayer money in the near future, according to a new report from the state Comptroller’s Office.
In many instances, these county officials do not have the option of making budget cuts in services such as education, health, and public safety — that is because state and federal officials mandate that they provide such services. This happens at the same time demand for these services are on the rise, according to State Comptroller Justin Wilson.
In a new report that focuses on the current financial condition of county governments, Wilson said county officials throughout Tennessee ran up a combined deficit of approximately $490 million during the most recent fiscal year.
Meanwhile, total county-related debt in Tennessee increased $1.4 billion between 2007 and 2011 — even as county officials continue to put off their responsibilities toward paying their debts.
“This debt indicates that many county governments are deferring debt principal payments and other obligations to future years,” Wilson wrote.
Many of these counties received federal stimulus money in 2009.
Making matters worse, health insurance premiums and other liabilities are growing for employees who have already left public service.
“In addition, new accounting standards will require the recognition of significant long-term pension costs. These costs, which previously have not been recorded on the financial statements when they were incurred, will dramatically impact large and small governments alike.”
Furthermore, many county governments do not have staff members who know how to properly handle such complicated financial issues, Wilson wrote.
Christopher Butler is the editor of Tennessee Watchdog and the Director of Government Accountability for the Beacon Center of Tennessee. Contact him at firstname.lastname@example.org
Actual U.S. debt lies hidden, exceeds $86.8 trillion
The full extent of the [debt] problem has remained hidden from policy makers and the public because of less than transparent government financial statements. How else could responsible officials claim that Medicare and Social Security have the resources they need to fulfill their commitments for years to come? …
The U.S. Treasury “balance sheet” does list liabilities such as Treasury debt issued to the public, federal employee pensions, and post-retirement health benefits. But it does not include the unfunded liabilities of Medicare, Social Security and other outsized and very real obligations. …
The actual liabilities of the federal government — including Social Security, Medicare, and federal employees’ future retirement benefits — already exceed $86.8 trillion, or 550% of GDP. For the year ending Dec. 31, 2011, the annual accrued expense of Medicare and Social Security was $7 trillion. Nothing like that figure is used in calculating the deficit. In reality, the reported budget deficit is less than one-fifth of the more accurate figure. Read the original article at The Wall Street Journal