Economy & Budget

Our only option is to cut spending

The federal government will be running a deficit in excess of $1 trillion for the third year in a row in 2011. While many argue that raising taxes, particularly on high-income households, is necessary to reduce the deficit, the only real option in balancing our budget is to dramatically cut spending.

Over the past three years, the annual deficit as a percent of GDP has averaged 9.5%, and this is attributable to massive increases in spending and a dramatic reduction in revenues due to the Great Recession. However, the revenue reduction is only temporary. Even if the Bush-era tax cuts are allowed to continue, CBO projects that revenues will exceed the post-World War II average of 18% of GDP by 2021.

One of the most frequently discussed tax increases is raising the cap on Social Security taxes, which is currently set at $106,800, but there are several reasons why this is bad policy.

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Credit unions are coming – and you’ll see and hear them

During the week of Feb. 28 – March 4, more than 4,500 credit union people are coming to Washington as part of the Credit Union National Association’s (CUNA) annual Governmental Affairs Conference.

If you work on Capitol Hill, you’ll be seeing them; if you work on K Street, you’ll be hearing about them.

It’s one of the biggest crowds we’ve ever had at our annual meeting. The overall message they will deliver: Credit unions are the as consumers’ best option for conducting financial services.

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Moving forward on FAA reauthorization bill

We have big challenges we need to address to help American businesses, large and small, remain competitive in an increasingly global economy.

One of the biggest challenges we face is our declining infrastructure. Business needs a safe, reliable transportation infrastructure to keep the flow of commerce moving.

But, as President Obama mentioned in his State of the Union address, when American engineers took a look at our transportation infrastructure, they graded it as a “D”.

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Keeping American jobs in America

For decades, the United States has been the world leader in medical innovation. Individuals come from around the world to receive the best and latest care. What was experimental just a few years ago becomes common medical practice saving and improving American lives.

Unfortunately, we are quickly losing this lead. There may soon come a day when wealthy Americans jet off to Europe or the Caribbean to get the latest surgeries while poor and middle class Americans suffer as bureaucracy delays life-saving medical devices.

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Don't penalize qualified, responsible homebuyers

The United States is weathering the worst housing market since the Great Depression. It is a market meltdown that has left neighborhoods across America with high mortgage delinquency rates, far too many foreclosures, and far too many homeowners struggling with negative equity in their homes.

Regulators, legislators and housing stakeholders are now working to right these wrongs and restore integrity and confidence in our housing finance system.

We started last year with the Wall Street Reform and Consumer Protection Act of 2010 to improve supervision of our nation’s banks, increase transparency and enhance consumer protections for home mortgages. This bill by Senator Chris Dodd and Rep. Barney Frank gave clear direction to regulators how to restore prudence and security in mortgage lending.

It is my hope regulators will distinguish between responsible borrowers and lenders versus those who would repeat the mistakes of the past.

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The future of NextGen

The House and Senate have each declared passage of a new FAA Authorization bill a top legislative priority, very welcome news after more than three years of short-term extensions. Air transportation is a proven economic engine; passage of this bill is an investment in our nation’s economic recovery.

The U.S. air transportation system has been the world’s gold standard for more than half a century. But to remain so, we need to bring our system into the 21st Century. Air service demand will return to pre-recession levels, but along with the return of that demand will come the return of gridlock—you can count on it.

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Deception at the Fed

For the past three decades, the Federal Reserve has been given a dual mandate: keeping prices stable and maximizing employment. This policy relies not only on the fatal conceit of believing in the wisdom of supposed experts, but also on numerical chicanery.  

Rather than understanding inflation in the classical sense as a monetary phenomenon – an increase in the money supply – it has been redefined as an increase in the Consumer Price Index (CPI). The CPI is calculated based on a weighted basket of goods which is constantly fluctuating, allowing for manipulation of the index to keep inflation expectations low. Employment figures are much the same, relying on survey data, seasonal adjustments, and birth/death models, while the major focus remains on the unemployment rate. Of course, the unemployment rate can fall as discouraged workers drop out of the labor market altogether, leading to the phenomenon of a falling unemployment rate with no job growth. 

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Stop putting off structural budget decisions

The president’s proposed budget makes significant cuts to several important federal efforts.

The Low Income Home Energy Assistance Program (LIHEAP) would see funding drop from $5.1 billion to $2.5 billion, which has rightly prompted concerns about why families struggling to keep warm in winter are being asked to shoulder more financial burden than Wall Street executives. 

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An unserious budget

Senate Republican Leader Mitch McConnell delivered the following remarks on the Senate floor Monday regarding President Obama’s budget:

Earlier today, President Obama showed the American people just how he intends to spend their tax dollars, and how much more he intends to borrow, to fund his vision of the future. And it’s a huge disappointment to those in both parties who were hoping the president would take this opportunity to address the grave and imminent fiscal crises we face. The president's budget is the clearest sign yet he simply does not take our fiscal problems seriously.

It is a patronizing plan that says to the American people that their concerns are not his concerns.

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Obama’s budget is just more of the same

Last year when I was running for Congress, I spoke at length about the need to rein in runaway government spending. As a grandmother of six, I told voters that I did not want the government to mortgage future generations to pay for a federal spending spree.

Throughout the 6th District of Tennessee, people are outraged that the national debt has skyrocketed to over $14 trillion. They believe that Congress needs to stop the endless cycle of "borrow and spend," and that’s why they sent me to Washington.

After watching the reckless spending spree of the past few years, I knew getting our nation’s finances in order would be difficult. But now that I’m here in Washington examining how the government spends our money, I can honestly say the situation is worse than I ever imagined. Today, with the release of the President’s budget, it is clear that this Administration is still unwilling to make the tough choices necessary to get America back on track.

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