The Treasury’s cash balances have reached a dangerously low point. Henceforth, the Treasury Department cannot guarantee that the federal government will have sufficient cash on any one day to meet all of its mandated expenses,”
“The full consequences of a default — or even the serious prospect of default — by the United States are impossible to predict and awesome to contemplate.
“Denigration of the full faith and credit of the United States would have substantial effects on the domestic financial markets and on the value of the dollar in exchange markets,”
“The nation can ill afford to allow such a result.”
Rep. Eric Cantor (R-VA) has been a bit of a pain in the arse lately. He has acted as one of the chief spokemen for the GOP in the debt ceiling talks and rumor has it that Rep. Bonher is less than happy with him. Cantor’s main problem seems to be combating that old problem of just looking mean. According to the Daily Beast:
As Monday’s White House budget talks got down to the nitty-gritty, Eric Cantor proposed a series of spending cuts, one of them aimed squarely at college students.
The House majority leader, who did most of the talking for the Republican side, said those taking out student loans should start paying interest right away, rather than being able to defer payments until after graduation. It is a big-ticket item that would save $40 billion over 10 years.
President Obama responded:
“I’m not going to do that,” Obama said. “I’m not going to take money from old people and screw students,” not without some compromise on the tax-increase side.
And screwing students is exactly what that move would be. How can a student pay interest when he or she is still in school and in all probability does not have a job? Where is the common sense here? Does Cantor just speak to hear himself talk? There are some very realistic cuts that can be made in the economy. Student loans aren’t the place to start curbing the deficit. Do these people really believe half that comes out of their mouth?
Governor McDonnell squawked loudly for Virginia and crowed about lower unemployment numbers and Virginia’s growth. VRS compares very favorably to most other pension plans but needs some tweaking to stay solvent, according to McDonnell.
McDonnell needs to be reminded that the VRS is not the state’s personal ATM. It was very solvent for many years, since 1908 to be exact. Funny how the Republicans discover its woes after all these years. Could it be that Mrs. Cantor wants to shift the burden of payment off the state and and the localities? Isn’t that the Republican way? Maybe the state should keep paying and the employee chip in a little more. That would should good faith. I sure don’t want to hear the Republicans chest thumping about how much money they saved the state in a few years.
To express the sense of the Senate on shared sacrifice in resolving the budget deficit.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
Section 1: SENSE OF THE SENATE ON SHARED SACRIFICE.
(a) Findings- Congress makes the following findings:
(1) The Wall Street Journal reports that median pay for chief financial officers of S&P 500 companies increased 19 percent to $2,900,000 last year.
(2) Over the past 10 years, the median family income has declined by more than $2,500.
(3) Twenty percent of all income earned in the United States is earned by the top 1 percent of individuals.
(4) Over the past quarter century, four-fifths of the income gains accrued to the top 1 percent of individuals.
(b) Sense of the Senate- It is the sense of the Senate that any agreement to reduce the budget deficit should require that those earning $1,000,000 or more per year make a more meaningful contribution to the deficit reduction effort.
Yea 51 Nay 49
Harry Reid needed 60 votes to pass this resolution. He didn’t have it. What he did get was 49 Republicans saying no to millionaires having any sense of responsibility towards making a more meaningful contribution to help reduce the budget deficit. Who is to say what ‘meaningful contribution’ means. It could mean each of them paying $100 more a year towards budget reduction. The wording was vague. Yet all 49 of the Republican Senators voted NO.
The vote speaks volumes and will continue to speak volumes for many years. Republicans need to rethink their protection of the very rich.
The VRS had a great year. It had an 18.5% return as of June 30 for last year. It has nearly returned to its all-time high water mark in 2007, before the crash of 2008. The trust fund now has approximately $55 Billion dollars. However, the VRS board of directors warn that its still not big enough to keep promises made to teachers and local and state workers.
After the crash, the fund dipped to $38.9 billion dollars in March 2009. According to Roanoke.com:
But with more government workers and teachers retiring, the investment gains don’t erase the need for lawmakers to increase contribution rates, pension administrators told the Joint Legislative Audit and Review Commission. Pension obligations represent just one of the pressures facing Gov. Bob McDonnell and lawmakers who must shape a new two-year budget next year.
“The fund is aging and will increasingly face the prospect of negative cash flows in years ahead as benefit payments exceed payments from payroll contributions,” said Diana Cantor, the chairwoman of Virginia’s retirement board.
The retirement system has nearly 340,000 active members, including state and local workers, teachers, judges and law enforcement officers. It pays out benefits to more than 156,000 retirees, a number that is increasing. Cantor noted that 5,368 teachers retired in July 2010, a 48 percent increase over the number reported the previous year.
“Recent investment gains notwithstanding, we continue to believe that contribution rates will have to rise to meet our pension obligations over the long term,” she said.
The retirement board will recommend new contribution rates after meeting with an actuary this fall. The state has underfunded the plan, routinely paying rates less than those recommended by the Virginia Retirement System’s governing board over the past two decades.
In his New York Times column Tuesday, entitled The Mother of All No Brainers, David Brooks talks about the new breed of cat mentioned by Joe Biden, although he didn’t call them that. He spoke of the new Republican since the last election. Brooks contends that the Republicans have extracted trillions of dollars in concessions out of the Democrats:
In negotiations with Democrats on the debt ceiling, Brooks says that Republicans have already extracted large concessions: trillions of dollars in spending cuts, including cuts to Medicare and Medicaid, so long as Republicans agree to raise taxes for the wealthiest Americans and give fewer tax breaks to oil companies.
It’s the “the deal of the century,” Brooks writes, and “if the Republican Party were a normal party, it would take advantage of this amazing moment.”
There’s the catch. Is the Republican Party normal now? Brooks thinks not and continues to pontificate:
If the Republican Party were a normal party, it would take advantage of this amazing moment. It is being offered the deal of the century: trillions of dollars in spending cuts in exchange for a few hundred billion dollars of revenue increases.
A normal Republican Party would seize the opportunity to put a long-term limit on the growth of government. It would seize the opportunity to put the country on a sound fiscal footing. It would seize the opportunity to do these things without putting any real crimp in economic growth.
The party is not being asked to raise marginal tax rates in a way that might pervert incentives. On the contrary, Republicans are merely being asked to close loopholes and eliminate tax expenditures that are themselves distortionary.
Could this red-white-and-blue weekend augur red ink for Virginia?
Default by the federal government, unless the debt ceiling is raised by Aug. 2, has potentially devastating effects for state government.
The flow of dollars from Washington to Virginia — No. 1 in federal spending per capita — would slow to a trickle. Federal workers wouldn’t be paid, driving up unemployment and choking off income-tax revenue. Medicaid, the federally financed, state-managed health-care program for the poor that is Virginia’s fastest-growing expense, would go begging.
To keep the budget in balance as required by law, Gov. Bob McDonnell would have to start cutting.
Also, transportation dollars would evaporate, potentially slamming the brakes on a defining feature of McDonnell’s just-passed road-building program: debt. He is planning to issue $1 billion in bonds backed by an anticipated federal handout.
After President Obama said he wasn’t going to second guess the Supreme Court Justices, Treasury Secretary Tim Geithner was not as shy to put on his constitutional law professor hat:
At a Politico Playbook breakfast on May 25, Geithner was asked by host Mike Allen about the negotiations over default and the debt ceiling.
“I think there are some people who are pretending not to understand it, who think there’s leverage for them in threatening a default,” Geithner said. “I don’t understand it as a negotiating position. I mean really think about it, you’re going to say that– can I read you the 14th amendment?”
Geithner was responding to a letter Johnson sent President Barack Obama in May, signed by 22 other Senate Republicans, that argued the government would have enough revenue to continue functioning if the government hit the debt ceiling and suggested the White House should make contingency spending plans for that event.
Geithner said in his letter that many members of the GOP, including Speaker of the House John Boehner, acknowledge that raising the debt ceiling is the responsible thing to do, and he quoted Boehner saying, “I think raising the debt limit is the responsible thing to do for our country, the responsible thing for our economy … if we were to fail to increase the debt limit, we would send our economy into a tail spin.”
Geithner also noted that Senator Jim DeMint (R-S.C.), a favorite of the Tea Party, said in 2010: “You don’t have much choice if you charge something on your credit card. You have to pay for it, and that’s effectively what this debt limit is … we’ve already spent the money. The question is now, do we shut down the government or do we fund what we’ve already done?
Even conservative icon President Ronald Reagan spoke out against playing with the debt limit, according to Geithner. Reagan wrote in 1983: “This country now possesses the strongest credit in the world. The full consequences of a default — or even the serious prospect of default — by the United States are impossible and awesome to contemplate. Denigration of the full faith and credit of the United States would have substantial effects on the domestic financial markets and on the value of the dollar in exchange markets. The Nation can ill afford to allow such a result. The risks, the costs, the disruptions, and the incalculable damage lead me to but one conclusion: the Senate must pass this legislation before the Congress adjourns.”
Why is this a political issue? I don’t want to hear something stupid Obama supposedly said 5-6 years ago. It doesn’t really matter. In fact, it is irrelevant. Let’s put politics aside and do what needs to happen for the good of the country. The money has already been spent. If every American gave $5 bucks a month, think how we could reduce the debt. Why shouldn’t we pay for it? It is we who reaped the benefits.
Sen. Mark R. Warner, D-Va., said Friday that he feels like someone walking around Washington with a sign that says, “The end is near. We’ve got to act.”
During a stop in Richmond, Warner expressed disappointment that budget deficit talks led by Vice President Joseph R. Biden Jr. had collapsed Thursday when House Majority Leader Eric Cantor, R-7th, and Sen. Jon Kyl, R-Ariz., walked away, blaming differences over taxes.
“People are still playing political games,” Warner said. “The idea that we can solve this on one side of the balance sheet is a fundamental lack of basic Econ 101.”
Warner, who has for months been working toward a solution with a bipartisan group of senators known as the “Gang of Six,” said Thursday’s developments gave new urgency to that effort, which has languished since Sen. Tom Coburn, R-Okla., departed weeks ago.
“We’ve still got a few items outstanding, but if we can’t get those finalized, we ought to at least present what we have,” Warner said, adding he hopes they can do so in the next week. Read more…
Sometimes efforts to cut spending have a price tag we don’t like. Virginia was recently denied FEMA relief by the Obama administration. Ouch! Here’s what went down. Governor McDonnell declared Virginia a disaster area so several countries ripped apart by tornadoes in April. Virginia saw more than 30 tornadoes last month.
The Obama administration has rejected Virginia’s request for federal disaster aid for rural counties hit last month by tornadoes that killed 10 and destroyed or damaged more than 1,000 homes. The state might appeal the decision.
In a letter Friday to Gov. Bob McDonnell, the Federal Emergency Management Agency said that it was turning down Virginia because it concluded that the state could handle the cleanup on its own.
In January 2001, with the budget balanced and clear sailing ahead, the Congressional Budget Office forecast ever-larger annual surpluses indefinitely. The outlook was so rosy, the CBO said, that Washington would have enough money by the end of the decade to pay off everything it owed.
Voices of caution were swept aside in the rush to take advantage of the apparent bounty. Political leaders chose to cut taxes, jack up spending and, for the first time in U.S. history, wage two wars solely with borrowed funds. “In the end, the floodgates opened,” said former senator Pete Domenici (R-N.M.), who chaired the Senate Budget Committee when the first tax-cut bill hit Capitol Hill in early 2001.
Now, instead of tending a nest egg of more than $2 trillion, the federal government expects to owe more than $10 trillion to outside investors by the end of this year. The national debt is larger, as a percentage of the economy, than at any time in U.S. history except for the period shortly after World War II.
The News and Messenger reports the over-all tone of the Manassas City public hearing for FY2012 budget. The City is attempting to pass a $304 million dollar budget. Those who attended the public hearing appeared to be split 50-50 pro/ con. Of course, that number just counts those attending the budget hearing.
Citizens were divided over BPOL tax and its impact on business within the City. Others appeared to be concerned over adding police and fire personnel and equipment. The average tax bill was not projected to go up that much. Single family homes overall were projected to raise the property tax on that home by $2.00.
The Tea Party was vocal and its leaders spoke of people falling on hard times. Many homeowners are still under water.
Our very own Raymond Beverage put all of this in terms most of us can understand. The tax increase for most families added up to a 6 pack and 2 bottles of Sam Adams.
Another citizen summed things up nicely:
Mark Hempen said he wanted to make sure the city was safe, clean and well run, and he supported the budget.
“It isn’t just the tax rate. I think that we have to look at the whole picture. I think the city has done a good job in a lot of ways and I’d hate to see us not accept this budget and reduce the police force and reduce other services that are greatly needed to keep the city running and to keep the city growing and thriving and flourishing,” the Manassas man said.
What do our readers have to add on the subject? Let us know what you think. All too often we leave off what you guys think. The City has had some horrific crime and at least 1 very bad multi-home fire. These events have been punctuating some of the budget discussion.
It seems that PWC has a financial windfall this budget season. That is good news, or is it? According to insidenova.com:
On Tuesday, the overwhelming majority of the eight supervisors were in agreement with Chairman Corey A. Stewart’s tax rate and spending proposals during the annual budget markup. At $1.204 per $100 of real estate property, Stewart’s tax rate would allow for a host of long-sought-after trail projects that the Park Authority has been unable to achieve due to lack of funding.
The proposed tax rate would increase the average tax bill by $62.
More than $600,000 of the $4.73 million in additional revenue from Stewart’s plan would be headed to the Park Authority to spend on improvements or additions to a number ofprojects, including the Neabsco Creek Trail, Broad Run Trail, Catharpin Creek Trail, the Potomac Heritage National Scenic Trail, Lake Ridge Eastern End Trail and the Old Bridge to Minnieville Loop.
Stewart also expects an additional $2.5 million from the annual carryover session in late summer, as well another $1.4 million in proffer funding that can be used for trails and park projects. These include the creation of the Fuller Heights Community Park and Occoquan Riverwalk Park, and the addition of fields at Catharpin Park.
As the county slowly recovers from a devastating crash in the housing market, and thus, a greatly reduced tax base, employees will finally get a much deserved raise of 2% cost of living. They have not had a raise in 2 years, yet they have been asked to work longer and harder, often doing the work of others.
