Economy & Budget

Coming together to get out of debt

Both Republicans and Democrats have said that our country’s staggering $15 trillion debt is a serious issue. Instead of fixing the problem though, we continue to stumble from debt crisis to debt crisis without adopting legitimate, viable solutions. Even the president, who vowed to cut the deficit in half by the end of his first term, could not fulfill this promise.

Our country is now drowning in debt, which was further underscored in the Congressional Budget Office report last week that stated deficit spending in 2012 is slated to be $1.08 trillion - the fourth year in a row in which deficits top $1 trillion. 

Worse yet, our government’s gross debt is now 100 percent of GDP and the CBO is predicting it to remain there. These are serious figures that require serious attention; the time for lip service on our debt and deficit problems is over.

Our country’s debt is not something that can be solved over night. It is going to take hard work and dedication from both parties, both chambers, and the president. Congress cannot continue to play “keep away” with possible solutions. Whether through Cut, Cap and Balance or a balanced budget amendment, we have the capability to bring our deficits under control, but each option presented so far has been rejected.


President Obama's missed opportunity at the Auto Show

Was that President Obama sitting behind the wheel of a new Honda Civic Natural Gas vehicle at this week’s DC auto show, marveling over the only such passenger car made in America?  Nope. Did I see him take a gander at a Volkswagen that rolled off the line at the company’s Chattanooga plant in Tennessee? No, it wasn’t him. The President did make a surprise visit to the event, but he did not pay much mind to the Kia made in Georgia or the Mercedes manufactured in Alabama either.

Instead, the president focused his attention and remarks solely on traditionally defined “American” cars – the Big 3.  And in doing so, missed an opportunity to brag about attracting global companies to the United States. The story of global investment in the United States is part of America’s success story in the auto sector and one that politicians should crow about – especially during an election year.

The U.S. manufacturing operations of global auto companies account for 40 percent of all vehicles made in America.  And the good news is these firms have been increasing their U.S. footprint by growing American employment, investing in U.S. technology and exporting from their U.S. operations. At a time when we are looking to create good–paying jobs here, we should not overlook the very companies who are doing so simply because they are not homegrown.


Removing roadblocks to improved transportation productivity

As America struggles to reignite its flagging economy, a policy debate is raging in Washington, D.C. about how to increase our productivity, create jobs in our economy, and enhance our ability to compete globally. At the forefront of this debate is finding a workable solution to the nation’s surface transportation infrastructure needs, and how that solution can bring productivity gains to all sectors of transportation to the benefit of every business and consumer.
Among the issues being discussed is the use of longer combination vehicles (LCVs), most commonly known as “triples,” on federally designated national highways. In 1991, the federal government passed a provision in the Intermodal Surface Transportation Efficiency Act (ISTEA) that stripped the states of their authority to regulate size and weight limits for trucks traveling on federal highways in their states. This despite the fact that a state’s department of transportation is better qualified to determine which truck/trailer configurations are best-suited for that state’s highways.


Country deserves a real change in the status quo

Last week, we once again heard the president lay out his vision for the future.  In doing so, Americans paused to look at the president’s record and performance to determine if we are poised to leave a more secure and prosperous America to our children and future generations.  While I support some of what the president proposed, such as tax-code reforms, finally getting tough on China, and education initiatives, those proposals will do little to quell our biggest national security problems.

While the Senate has failed to produce a budget in over 1,000 days, our country faces huge threats: high unemployment, economic stagnation, a crushing $15.2 trillion national debt — and a glaring absence of solutions. With the rejection of the Keystone XL pipeline, a project that has the potential to employ 20,000 Americans almost immediately, the president has made clear that he’d rather placate special interest groups than offer real relief to unemployed Americans struggling with rising gas prices. We have waited three years and we must not wait any longer. Workers need results now.  Most people agree, the best place to start is the tax code.


Homeless in America: 636,017; Homeless veterans: 67,495

Shortly, President Obama will present to Congress his budget proposal for fiscal year 2013. In the budget, he will outline his priorities for the year, undoubtedly reflecting some of the ideas he presented in the State of the Union. In the speech, he discussed economic disparities in the country, drawing attention to the divide between, as he noted, Wall Street and Main Street. But even beyond Main Street, there are people and families living at the furthest fringes of our economy.

Data suggests that between 2009 and 2011, a period of historic economic challenges in the nation, homelessness decreased by one percent in the country. This decline was largely due to a significant investment of federal resources to prevent homelessness and quickly re-house people who did become homeless.

The Homelessness Prevention and Rapid Re-Housing Program (HPRP, funded through the Recovery Act) was a $1.5 billion federal effort to prevent a recession-related increase in homelessness. It was built upon ground-breaking work at the federal level and in communities across the nation to improve the homelessness system by adopting evidence-based, cost-effective interventions. In 2010, its first year of operation, it assisted nearly 700,000 at-risk and homeless people.


Financing Fannie and Freddie's failures

The Romney-Gingrich political grudge match over Freddie Mac presents an opportunity to ask a basic question: Why are Fannie Mae and Freddie Mac still operating? Michael Williams’ recent resignation as CEO of Fannie Mae has set up a struggle over the direction of the two mortgage behemoths. It comes just a few months after Freddie Mac’s chief executive Ed Haldeman announced his departure. Will the two mortgage giants continue to muddle along in conservatorship as they have since September 2008, or will these resignations act as a catalyst to put them in receivership and wind down their operations? The latter scenario would enable taxpayers to put the fiscal disaster of these two government-sponsored enterprises behind them.
Back in August 2008 then-Treasury Secretary Paulson pulled a team together to work on resolving the deeply insolvent Fannie and Freddie. As recounted in the Andrew Ross Sorkin book, "Too Big to Fail", Robert Scully of Morgan Stanley laid out a blunt question: “Do you want to kick the can down the road?” Secretary Paulson was emphatic:  “No. I want to address the issue. I don’t want to leave the problem unsolved.” Although it took guts for Paulson in combination with the Federal Housing Finance Agency to take control of Fannie and Freddie and place them in conservatorship, the problem of the two mortgage behemoths is by no means ‘solved.’ In taking control, Paulson highlighted the “flawed business model” underlying the pair.


Small business polls reject anti-regulation rhetoric

With Congress back in session, the Senate will have several bills to consider that seek to make it nearly impossible for federal agencies to implement regulations. The REINS Act, the Regulatory Flexibility Improvements Act and the Regulatory Accountability Act have already passed in the House.

Advocates for these radical measures claim they are primarily needed because regulations are the top reason for small businesses not hiring. But a new nationwide poll of small business owners released today adds to numerous other surveys that refute this position.
The poll conducted by Lake Research for three national business organizations – American Sustainable Business Alliance, Main Street Alliance and Small Business Majority – found that the top problem for small business was weak customer demand, not regulations. In fact, reducing regulations came in fifth when small business owners were asked what needed to be done to create jobs. Eliminating incentives for employers to move jobs overseas came in first.


Putting jobs in the driver's seat

Transportation is essential to our nation’s competitiveness and economy. In the coming weeks, Congress has the opportunity to put job creation and economic development in the fast lane with the American Energy and Infrastructure Jobs Act.
Speaker John Boehner (R-Ohio), Transportation Committee Chairman John Mica (R-FL), and House Republicans have initiated a jobs proposal, the American Energy and Infrastructure Jobs Act, that will build our nation’s infrastructure, reform transportation programs, unlock American energy resources, reduce our dependence on foreign oil, strengthen our economy, and create American jobs.


A safer and stronger Wall Street is already here

In the State of the Union, the president continued to harangue the financial services industry as if nothing had changed over the last four years, saying “It’s time to apply the same rules from top to bottom: no bailouts, no handouts, and no copouts.” 

But the reality is a lot has changed.

The system is safer and stronger than ever.  And the startling truth is that many of these changes have been the result of industry initiative, since 70% of the Dodd-Frank Act has not been implemented yet.

Consider the following:


Tactical desire supplants strategic good in payroll tax cut debate

Prior to the December 1941 attack on Pearl Harbor, Japanese Admiral Yamamoto – the architect of the assault on Pearl – held serious reservations about his ability to continue pressure against the United States, even if Japan scored an early tactical victory. In fact, Yamamoto expressed his anxiety by declaring, “I can run wild for six months ... after that, I have no expectation of success.”  The rest, of course, is history.   

Critical to remember though, is the real lesson of Yamamoto’s prophetic stance: There is always danger in valuing short-term tactical victories over long-term strategic imperatives. Unfortunately, this warning recently went unheeded in Washington DC, whereupon Congress and the administration agreed to extend the Social Security payroll tax cut for two months. Despite the ways in which the tax cut threatens Social Security and despite larger concerns about fiscal responsibility, elected officials passed the extension anyway, basically allowing a short-term gain to overrule the long-term good.  

While many argue that extending the Social Security payroll tax cut is essential to promoting economic vigor, doing so is not without significant cost. In fact, for the first time ever in the history of Social Security, roughly $110 billion from the U.S. Treasury will be transferred to the Social Security trust fund to finance the first payroll tax cut from 2011. An additional $19 billion is now required to cover the two-month extension just passed. What is more, 20 members of a bipartisan conference committee have been chosen to determine how to pay for a potential year-long extension in February when the current two-month vehicle expires.