Entries in Spending Cuts (11)


OMB Tells Federal Agencies to Prepare for Potentially Deep Cutbacks

Ingram Publishing/Thinkstock(WASHINGTON) -- It's not just the Pentagon that will go under the knife if automatic spending cuts known as sequestration go through on March 1, barring action by Congress.

The Office of Management and Budget, which assists President Obama in preparing the federal budget, has put federal agencies on alert, warning them that they could be dealt huge job cuts if $85 billion in spending reductions are enacted.

OMB Deputy Director for Management Jeffrey Zients issued a memo to government offices that they need to get ready for the worst, which might come in the form of layoffs, hiring freezes and job furloughs.

Unless the White House and Congress can reach some kind of compromise, the OMB says that federal agencies might suffer budget reductions of up to 10 percent.

The Department of Defense as well as the Department of Agriculture and NASA were pre-warned about the impending cuts last month.

On top of sequestration, there also looms the March 27 expiration date of a stopgap measure to keep funding agencies.  If it isn't renewed, the federal government could start shutting down.

Copyright 2013 ABC News Radio


Reps. Pelosi and Price Offer Their Views of Avoiding Fiscal Cliff

Hemera/Thinkstock(WASHINGTON) -- There were few signs Sunday that Republicans and Democrats are willing to agree on ways to avoid the looming fiscal cliff despite an earlier White House meeting that President Obama called "constructive."

Towing the administration's line to end tax breaks for the wealthy is House Minority Leader Nancy Pelosi, who told ABC's This Week that the president must insist that any raising of revenue has to mean “higher income people have to pay their fair share."

The GOP wants the Bush-era tax breaks extended for all income brackets, a scenario Obama and Pelosi find untenable.  Instead, Republicans maintain that revenue can be produced by closing certain tax loopholes.

Pelosi argued that loopholes won’t raise enough money on their own.  Yet, in spite of the differing proposal, the California Democrat believes that a deal can be struck by the middle of December so that 98 percent of Americans can continue paying lower taxes along with blocking some of the $600 billion in automatic spending cuts due in January.

On CNN's State of the Union, Republican Congressman Tom Price of Georgia was adamant that allowing tax breaks to end for the rich is a non-starter when it comes to avoiding the fiscal cliff.

Price, who sits on the House Ways and Means Committee, said that "Tax increases to chase ever higher spending is a fool’s errand," asserting that small businesses which create jobs will be the real victims. He called for a balanced approach to solve the problem, namely, a combination of reforming the tax code and spending reductions.

Copyright 2012 ABC News Radio


Bob Woodward Book: Debt Deal Collapse Led to 'Pure Fury' from Obama

MANDEL NGAN/AFP/Getty Images(WASHINGTON) -- An explosive mix of dysfunction, miscommunication, and misunderstandings inside and outside the White House led to the collapse of a historic spending and debt deal that President Obama and House Speaker John Boehner were on the verge of reaching last summer, according to revelations in author Bob Woodward's latest book.

The book, The Price of Politics, on sale Sept. 11, 2012, shows how close the president and the House speaker were to defying Washington odds and establishing a spending framework that included both new revenues and major changes to long-sacred entitlement programs.

But at a critical juncture, with an agreement tantalizingly close, Obama pressed Boehner for additional taxes as part of a final deal -- a miscalculation, in retrospect, given how far the House speaker felt he'd already gone.

The president called three times to speak with Boehner about his latest offer, according to Woodward.  But the speaker didn't return the president's phone call for most of an agonizing day, in what Woodward calls a "monumental communications lapse" between two of the most powerful men in the country.

When Boehner finally did call back, he jettisoned the entire deal.  Obama lost his famous cool, according to Woodward, with a "flash of pure fury" coming from the president; one staffer in the room said Obama gripped the phone so tightly he thought he would break it.

"He was spewing coals," Boehner told Woodward, in what is described as a borderline "presidential tirade."

"He was pissed…. He wasn't going to get a damn dime more out of me.  He knew how far out on a limb I was.  But he was hot.  It was clear to me that coming to an agreement with him was not going to happen, and that I had to go to Plan B," Boehner continued.

Accounts of the final proposal that led to the deal's collapse continue to differ sharply.  The president says he was merely raising the possibility of putting more revenue into the package, while Boehner maintains that the president needed $400 billion more, despite an earlier agreement of no more than $800 billion in total revenue, derived through tax reform.

Obama and his aides argue that the House speaker backed away from a deal because he couldn't stand the political heat inside his own party -- or even, perhaps, get the votes to pass the compromise.  They say he took the president's proposal for more revenue as an excuse to pull out of talks altogether.

"I was pretty angry," the president told Woodward about the breakdown in negotiations.  "There's no doubt I thought it was profoundly irresponsible, at that stage, not to call me back immediately and let me know what was going on."

The failure of Obama to connect with Boehner was vaguely reminiscent of another phone call late in the evening of Election Day 2010, after it became clear that the Republicans would take control of the House, making Boehner Speaker of the House.

Nobody in the Obama orbit could even find the soon-to-be-speaker's phone number, Woodward reports.  A Democratic Party aide finally secured it through a friend so the president could offer congratulations.

While questions persist about whether any grand bargain reached by the principals could have actually passed in the Tea Party-dominated Congress, Woodward issues a harsh judgment on White House and congressional leaders for failing to act boldly at a moment of crisis.  Particular blame falls on the president.

"It was increasingly clear that no one was running Washington.  That was trouble for everyone, but especially for Obama," Woodward writes.

For all the finger-pointing now, Obama and Boehner appear to have developed a rapport during the negotiations.  The Illinois Democrat bonded with the Ohio Republican, starting with a much-publicized "golf summit" and continuing through long, substantive chats on the Truman Balcony and the patio right outside the Oval Office.

Tune in to World News with Diane Sawyer and Nightline on Monday, Sept. 10, 2012, to see Diane Sawyer's exclusive interview with Bob Woodward.

Copyright 2012 ABC News Radio


City Budget Problems: San Bernardino, California Files for Bankruptcy

Hemera/Thinkstock(NEW YORK) -- Cities across the country are increasingly facing severe budget problems, and that's leading many of them to cut corners or consider bankruptcy.

On Tuesday, San Bernardino became the third city in California to file for bankruptcy protection in less than a month.  Stockton filed last month and the ski resort town of Mammoth Lakes voted to file last week.

The alternative to bankruptcy can be drastic spending cuts. That's happening in some other cities, like Scranton, Pa.  Municipal unions there are filing a lawsuit after the mayor decided to cut the pay of city employees to minimum wage -- $7.25 an hour.

Copyright 2012 ABC News Radio


Hoyer Calls on Congress to Replace Mandatory Cuts with ‘Big Deal’

US House of Representatives(WASHINGTON) -- House Minority Whip Steny Hoyer of Maryland Monday morning called on Congress to replace $1.2 trillion in automatic spending cuts mandated by law at the end of the year with a balanced package of deficit reduction akin to the grand bargain President Obama and House Speaker John Boehner negotiated unsuccessfully last summer.

Hoyer, the number-two ranked Democrat in the lower chamber, said the country’s “deficits and debt present us with a clear and present challenge.”  He encouraged Congress to strike a deal before the November elections on a new structure of deficit reduction to replace cuts scheduled to take effect in the next decade, split evenly between defense and nondefense discretionary spending, as ordered by the Budget Control Act.

“Simply walking away from sequestration would be waving the white flag in the face of [the Congressional Budget Office's] projection of a dismal fiscal future.  However, sequestration remains an irrational response.  It was the blunt instrument established to force both sides to the table and keep them there," Hoyer told the think tank Third Way during an address on Capitol Hill Monday morning.

“It is not a solution in itself,” he continued.  “It should be replaced, but replaced only by the kind of big, balanced solution the Joint Select Committee was supposed to have produced.”

Hoyer was part of about 100 lawmakers who signed onto a letter in the fall encouraging the Joint Select Committee on Deficit Reduction, also known as the “supercommittee,” to enact deficit reduction through tax and entitlement overhaul.  Hoyer said the same discussion continues to play out with many other congressmen who share that approach.

When the supercommittee failed to strike a deal, that triggered the mandatory sequestration cuts as a Plan B, but Congress wrote a cushion into the law, providing more than a year’s time before the cuts are set to be implemented, and at the same time creating an opportunity to tweak the law.

“Revenue must be part, though not all, of a balanced solution to our debt,” Hoyer, a 16-term representative, said.  “A willingness to reach a comprehensive deficit reduction solution will also mean taking a serious look at the sustainability of our entitlements while ensuring that the most vulnerable among us are protected.”

Democrats prefer to let tax cuts expire for individuals earning more than $250,000, and also support the “Buffet Rule,” which would raise taxes on individuals making more than $1 million per year.

“All options must remain on the table,” Hoyer urged.  “There is no alternative, and we must do what’s right for our country, even when it requires hard choices.  We have a constitutional duty and a moral duty to the American people not to walk away.”

Copyright 2012 ABC News Radio


Deal or No Deal, Downgrade from Moody’s Unlikely

Hemera/Thinkstock(WASHINGTON) -- With the members of the congressional supercommittee teetering on the cusp of failure, many are worried about the potential for a U.S. credit downgrade, but one Moody’s economist says that his firm is not likely to downgrade U.S. debt because it expected Congress to fail from the start.

“You know, it’s all relative to expectations and investor expectations with regard to the committee I think are -- have been and are still very, very low,” Moody’s economist Mark Zandi said on Fox News Sunday.

The committee has until Wednesday to complete and score a final deal, but last minute political posturing and blame games have led many to believe that Congress won’t meet the Thanksgiving deadline.  If that happens, Congress will have one year before supercommittee provisions kick in with $600 billion in automatic cuts from the Pentagon budget and 2 percent across-the-board cuts to Medicare providers’ payments.

Cuts of that magnitude would, in theory, calm the markets enough to prevent financial calamity.

“So this shouldn’t foster a downgrade or a run on the market or anything like that.  The $1.2 trillion in savings occurs one way or the other,” Republican Sen. Jon Kyl said on Meet the Press.

But Zandi also pointed to other looming Congressional deadlines, including an extension to unemployment benefits, a Medicare doctor payment fix, a patch to the alternative minimum tax and an extension to the payroll holiday, all of which would have a significant effect on the economy if Congress failed to act by the end of the year.

Copyright 2011 ABC News Radio


Supercommittee Deadline: Seniors Spared from Bulk of Automatic Cuts

Ingram Publishing/Thinkstock(WASHINGTON) -- With less than three days before its midnight deadline, the 12-member Congressional supercommittee is expected to announce on Monday that they did not reach a deal to cut $1.2 trillion from the federal budget over the next 10 years.

While Congressional aides stress a last-minute Hail Mary pass is still possible, deep divides over taxes are still shaking the foundations of any prospective -- and as of now unlikely -- deal.

This race-the-clock game has already played out twice this year, but this time there is no looming government shutdown or imminent debt default.  Instead, there are $1.2 trillion in automatic, across-the-board budget cuts split evenly between defense and domestic spending that will take effect in 2013 in the absence of a deal.

Defense Secretary Leon Panetta explained on Capitol Hill last week that the cuts will be "devastating" to the U.S. military.

The automatic cuts may not be so devastating on the non-defense spending side of the equation, however. Both Medicaid and Social Security are spared from the funding reductions and Medicare cuts are limited to 2 percent of the entitlement program’s budget.

Budget hawks looking for significant spending reductions herald the automatic cuts as real deficit-reduction.  And entitlement program defenders claim the limited cuts -- which include exceptions for the poor and disabled -- are less damaging than any that are likely to come out of a supercommittee deal.

“I think failure is a success,” said Michael Tanner, a senior fellow at the conservative CATO Institute.  “I think that a supercommittee that does not come to an agreement is more likely to achieve real cuts than one that does.”

Under the automatic cuts, or sequestration, Medicare will lose about $123 billion between 2013 and 2021.  But that entire amount will come out of the pockets of doctors and hospitals, not senior citizens.

That doesn’t mean the many-billion-dollar cuts will be painless.

Tanner said that slashing the amount the federal government reimburses health care providers who care for Medicare enrollees could make it more difficult for senior citizens to find doctors that will care for them.

“About 12 percent of physicians already will not accept Medicare patients and a larger number are not accepting new patients,” Tanner said.  “If you further reduce reimbursements, you’re liable to find additional physicians saying it’s just not worth it.”

Copyright 2011 ABC News Radio


Last Days for Government's Product Safety Database?

SaferProducts [dot] gov(WASHINGTON) -- With lawmakers still debating the deficit and whether to raise the nation's debt ceiling past $14.29 trillion, the only government sponsored online product safety database is near its end.

The U.S. Consumer Product Safety Commission's (CPSC) online database,, just launched in March, but the House Appropriations Committee approved a spending bill late last month decreasing the Commission's budget and eliminating funding for its online database.  The bill, which needs approval of the House and Senate, could be on the House floor as early as the middle of next week, according to Jennifer Hing, communications director of the House Appropriations Committee.

"CPSC's database is an example of a poorly executed regulatory policy that does not protect consumers and hurts business at a time when industries need our help the most," Hing said.

Rep. Jo Ann Emerson, R-Mo., introduced a provision on page 90 of the bill for the fiscal year ending Sept. 30, 2012.  The provision states "none of the funds made available by this act may be used to carry out any of the activities described in section 6A of the Consumer Product Safety Act," saving about $3 million.

The database was mandated by section 6a in 2008, when President Bush signed the Consumer Products Safety Improvement Act, regulating products for children under 12.  That law was an update to the Consumer Products Safety Act in 1972.  In 2008, the law was passed 89-3 in the Senate and 424-1 in the House.

Out of the database's 1,600 complaints, 104 were found to have inaccuracies by the Commission, mostly related to an incorrect manufacturer.

Alex Filip, CPSC spokesman, said the Commission has received strong support for the database from consumers, who submit the majority of complaints.  Another large source of complaints are from medical professionals.

Filip said the Commission vets the complaints before posting them online.  Once a consumer submits a complaint, the Commission has five days to contact the manufacturer.  The Commission then offers 10 days for manufacturers to respond to the complaint.  Consumers must describe the product, identify a manufacturer or private labeler, describe whether there was any injury, and verify that the report is true and accurate to the best of their knowledge.

But lawmakers say the database is flawed and must go.

Rep. Mike Pompeo (R-Kan.) introduced legislation in February prohibiting funds to implement the database.  The bill passed in the House 234 to 187.

Pompeo said there are other more effective means to help protect consumers not funded by the government, such as Consumer Reports or contacting manufacturers directly.  He said the government should not post information online "unless it knows the information to be accurate."

Copyright 2011 ABC News Radio


California Slashes Services: Why Aren't Citizens Up in Arms?

Comstock/Thinkstock(SACRAMENTO, Calif.) -- Within hours of one another this week, legislators in Greece and California both announced plans for fiscal austerity.

In Greece, violent rioting followed immediately.

Public reaction in California remains to be heard, but experts on American politics and society say that though protest is certain, Americans' reaction to austerity measures are usually found at the ballot box, not on the streets.

In Greece, lawmakers moved forward a controversial packet of measures that would cut spending and raise taxes by $40 billion.  Some $70 billion in government services would be privatized.  Police in Athens fired tear gas to defend Parliament as an angry mob hurled rocks, bottles and any other weapons they could find.

In California, after months of wrangling, the legislature passed an $86 billion budget, plugging what had been a $9.6 billion deficit by means of a mix of spending cuts, fees and higher-than-expected tax revenues.  Related legislation would shift state prison costs to local governments and would open the door to more cuts in school and social service budgets, should state revenue projections come up short.  Cuts in March already had slashed billions of dollars from state welfare, Medi-Cal and in-home support services.

Californians of every description voiced their anger.

"Every Californian should be outraged," said Yvonne Walker, local head of the Service Employees International Union, in a formal statement.  The austerity measures, she said, would cut "vital services Californians rely on."

The head of the state's law enforcement association called the new cuts "absolutely astounding," and predicted they would force the elimination of 600 law enforcement positions.  The reduction, he said, would amount to an invitation to drug gangs to invade the California.

At the University of California, which had already seen $500 million in cuts in March that led to higher tuition charges and prompted angry student protests, the president's office said a further $150 million removed from the budget would de-stabilize higher education.

Copyright 2011 ABC News Radio


US to Hit $14.3 Trillion Debt Limit -- First thing this week, the United States will have hit its $14.3 trillion congressionally-mandated borrowing limit and the federal government will be running on fumes.

While the treasury says it can continue funding Uncle Sam's $3.8 trillion annual spending spree by tapping into what is effectively an emergency credit card -- borrowing from government worker retirement funds and cutting off federally-backed state and local bond programs -- many people are wondering what, if any, impact not extending the debt limit might have as the May 16 deadline comes and goes.

Members of ABC News' economic panel said Wall Street and our foreign creditors have bought into Treasury Secretary Tim Geithner's promise that "extraordinary measures" to keep the government funded will work and the ongoing budget talks between the White House and Congressional Republicans will be productive.

Panelists said there likely will be few economic effects seen next week, with much more dire predictions offered up should a deal on the debt limit and budget not be completed in the next few months.

The high-stakes political negotiations will require politicians to reach a deal to bring the nation's long-term debt down by trillions of dollars during the next decade.  But tying a budget deal to the short-term need to borrow to fund the government and pay the interest on existing debt is a risky proposition.

At this point, the stock market seems to believe that Washington is capable of reaching a deal.  Interest rates on government borrowing have not increased in recent months, indicating that investors do not believe it is likely that the U.S. will default.  But, economists said, that could change quickly if negotiations break down or we do not have signs of a deal by mid-summer.

While Vice President Joe Biden and Congressional Republicans will continue a series of budget negotiations in the coming weeks, members of the House Tea Party Caucus say they will not vote to support a deal that would expand the government's credit limits.  Members say doing nothing would fulfill their campaign promises to stop deficit spending and force automatic cuts in federal spending.

Copyright 2011 ABC News Radio

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