Saturday, June 27, 2009

Reality Based Financing

While it is diverting to listen to born-again fiscally responsible wingnuts piping up on the floor of the House to insist social programs are going to break the bank, it's actually happening among the leaders. Working its way through obscure official channels rather than in the dog and pony shows the freakish right wing keeps throwing, Pay-Go legislation is being put in place to give actual underpinnings to our national government.

After the 'throw money at rich folks' approach the wingers employed over eight years in total power over spending, this works back toward sound finances. Soundness is much needed, as those burned by our catastrophic behavior in world finance are beginning to look at replacing the almighty dollar with a currency not subject to winger whimsy.

A bipartisan group of lawmakers grilled White House Budget Director Peter Orszag at a hearing Thursday over the administration’s flexibility on a new pay-as-you-go law that would allow for trillions of dollars in exemptions.

The administration is asking lawmakers to pass legislation that would require any new federal program to be paid for either by cutting spending or raising taxes. But the White House has agreed to exempt a few big-ticket items that have added to the nation’s budget deficit.

During the House Budget Committee hearing, Rep. Xavier Becerra (D-Calif.) noted the exemptions will cost more than $3 trillion over 10 years. Policies that won’t be subject to pay-go restrictions under Obama’s bill include the extension of middle-class tax cuts enacted during the Bush administration, funds to keep the Alternative Minimum Tax from hitting middle-income Americans and Medicare payments to physicians.

“If we don’t extend a number of these [exemptions], we could see an increase in the reduction of the deficit,” said Becerra, the vice chairman of the House Democratic Caucus.

Orszag said items were exempted because neither lawmakers nor the White House have come up with ways to pay for them. Those policies also have broad support from both Democrats and Republicans in Congress.

But Rep. Lloyd Doggett (D-Texas) suggested lawmakers consider letting more of the tax cuts, championed by President George W. Bush, expire, and not just the ones for those Americans making more than $200,000.
House Majority Leader Steny Hoyer (D-Md.), who has called on the House to take up the bill in July, said the pay-go law is necessary to stem the increase in debt.

“By reducing the amount of money spent on interest payments on the debt, we will be better able to make investments in areas that make our economy strong, such as healthcare, energy and education,” he said.

The measure has less support in the Senate; though Majority Leader Harry Reid (D-Nev.) has backed it, Sen. Kent Conrad (D-N.D.), whose Senate Budget Committee would mark up any pay-go bill, has criticized the measure for exempting expensive items.

But Hoyer and House Speaker Nancy Pelosi (D-Calif.) have pledged not to consider any new tax bills from the Senate unless the upper chamber takes up pay-go legislation. The House leaders’ pay-go promise came in response to the $3.6 trillion budget resolution, which called for discretionary spending levels higher than Blue Dog Democrats wanted.

Reality won't get much attention in the media, but reality bites when the actual practice is profligacy. Returning to sound finances is overdue. When our society suffers real losses as it has in school spending, infrastructure, and collapse of our health system, we are required to get hold of the process of spending again.

The slow, steady progress of return to sanity is being accomplished by leadership while the opposition scurries about trying to light the fires faster than they can be put out.

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