Do we really have a spending problem?

                  Republicans have been insisting that U.S. has a major spending problem. They have been saying that through the whole economic recovery, in fact their obstructionist tactics have even been said to slow down the recovery. House Republicans offer a budget that contains Draconian levels of spending cuts to domestic spending, some Republicans including Rand Paul asked for larger spending cuts.

                According to the CBO, excluding wars and disaster relief funding, Americas discretionary spending has grown at a slower rate than inflation since 2097 and now makes up a smaller share of the economy that it did before the Great Recession. CBO Director Dough Elmenforf wrote; Excluding appropriations for those purposes, discretionary budget authority rose from $892 billion in 2007 to $987 billion in 2013, an increase of about 11%. During that period,  prices (as measured by the CPI for urban consumers) rose by 13%, a nominal GDP increased by 16%. As a result, discretionary appropriations, based on the House passed appropriations for 2013 and excluding funds for overseas contingency operations and hurricane relief- declined by 2.2% in real (inflation adjusted) terms between 2007-2013 and dropped from 6.4% of GDP to 6.2% of GDP over that period.

               Spending levels have plateaued in recent years as Washington has focused on spending and debt reduction. That as I  said earlier has hampered our recovery from the recession. Government spending has typically driven recoveries in the past, this time spending cuts have, of course, hamstrung  our recovery. Further spending cuts to programs that help Americans stay on their feet would only exacerbate the problem. With low borrowing costs and high unemployment, the U.S. has a chance to make investments to help boost growth, therefore creating more jobs. Instead Republicans are focused on spending and a manufacturer debt crisis.

              Despite the hand wringing from conservatives and media types about the federal debts and defecits, any research will make it clear that Americas problem isn’t that the government is spending too much. Rather, it is the government isn’t spending enough. Investments into infrastructure, education, teachers, public workers and other programs could boost the economy. Instead by cutting spending Washington turned its full attention to spending cuts and the results had been dire. Republicans clamor for austerity,  even if it is predictable to anyone who has read about the plight of the European economy over the last few years, where austerity is king.

              The only way to truly balance the budget is to have a balanced plan with spending cuts and increased revenue I.e taxes. Democrats and Patty Murray offered such a plan which was meant with conservative disdain. Our current course may not very as bad as Republicans say.

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Chain CPI is essentially a spending cut.

           Chained CPI or Consumer Price Index is a time series measure of price levels of consumer goods and services created by the Bureau of Labor Statistics. This index is not currently used by any U.S. programs, but is often discussed as a possible reform because many economist believe it better measures inflation and reduces the federal defecit through a combination if spending cuts and increased revenues. The Chained CPI is used to measure Cost of Living Adjustments (COLA), overestimating inflation leads to a higher than actual living adjustment.

            The shift to a Chained CPI would harm low income children and the elderly the most. A long list of means tested benefits currently use non-Chained CPI, to adjust eligibility standards or benefit amounts. According to the Congressional Research Service in addition to Social Security these other programs rely on non-Chained CPI; Medicaid, SSI, the Earned Income Tax Credit, the Child Tax Credit, SNAP or food stps and child nutrition programs including school meals. According to the CRS more than 50 other programs tied to the federal income poverty guidelines use unChained CPIs.

                    The government currently calculates Social Security COLA each year based on how inflation effects urban wage earners and clerical workers. Known as CPI-w. This index measures changes in the prices of a fixed basket of goods that are deemed to be representative of regular purchases by wage earners. The Chained CPI assumes that as prices increase consumers make substitutions in what they purchase.

            It would hurt people her arent in a position to switch to other goods and services when prices rise. Medicare premiums and out of pocket expenses eat up much of the elderlys budgets, this would force them to go without medical care that they dont have money for. It is food or medical care. Simpson-Bowles recomendations on Social Security attempted to soften the impact on elderly by proposing a minimum Social Security income . If it fell below the minimum because of the Chained CPI you would be paid this minimum income. Thus is not being proposed for other programs.

              The fact that Democrats and Republicans fight over this shows the different political philosophies. One, Democrats, is to protect the poor and elderly and the other, Republicans, hurt the poor and elderly to protect wealthy from paying higher taxes. The sad truth is that the wealthy can buy better protection than the poor, which lets you know why nothing gets done in Congress. With so many other places we can make cuts and get revenue this should be left alone.

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Paul Ryans budget, more of the same.

              The Republican budget proposal for fiscal year 2014 purports to balance the budget  in 10 years. With a stronger economy and new revenues from the fiscal cliff deal, the task of balancing the budget is somewhat easier. This budget is eerily similar to other budgets proposed by Paul Ryan. It of course attacks the poor and seniors, while giving more to the wealthy and corporations.

              In February the CBO released a baseline projection for the next decade. The fiscal cliff agreement allowed tax rates on the highest incomes to revert to Clinton era levels. In the process this helped reduced future deficits. Paul Ryan voted against that deal.

              The new budget proposal hits all GOP talking points, less spending, lower taxes and a rejection if most of President Obamas health reforms (ACA). Balancing the budget, Ryans proposal doesnt detail all of the assumptions about economic growth or when some of his proposals go into effect. Ryans plan leaves the countrys accrued debt at just under 55% of GDP by the end of the decade. The CBO estimates it as 77%. The CBO wont analyze Ryans or Patty Murrays budget proposals since each simply propose actions and does not detail legislative changed for hitting those targets. Ryan estimates his proposal will grow spending at 3.4% per year, not the projected 5% His plan would put spending at $985 billion below CBO estimates by 2023.

               He wants to reform Medicare. Starting after 2024 it would become a,premium support system. Future seniors could choose between traditional fee-for-service Medicare and the premium support system. This would offer seniors a fixed amount of money to buy private insurance. Ryan proposes converting federal Medicaid funding for states into block grants and repeals health reform laws expansion of the program to low income , non elderly adults. Block grants could increase the burden on states, but gives the states more autonomy about how to set up Medicaid programs. Ryan would also convert food stamps to block grants to states and change eligibilty by imposing time limits on participation and work requirements.

           Ryan would raise the sane amount of tax revenue as the CBO, it would total $40.241 trillion. Ryan would simplify the tax code , reducing the individual income tax brackets to 2 ( 10% & 25%), repeal the Alternate minimum tax, lower the top corporate tax rate to 25% and change roles for international taxation. The 25% upoer tax bracket is about 13% less than they are paying now. This equals to another tax cut for the wealthy.

                   Like Ryans other budget it relies on spurrious budget trickery. His past budgets have also included lofty rhetoric on spending cuts, but little details. He assumes the repeal of Obamacare, but uses the savings from it to balance the budget. This typical Republucan tomfoolery, there us nothing serious about this proposal, they know it cant pass. They set tge numbers so far right that even meeting them in the middle gives the party that lost the ekection the power. The Democrats, mainstream media and the Democrat party have to stop this crazy train in its tracks.

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Medicare, why do Republicans want to kill it?

                                     Since Medicares inception in 1965, Medicare has been a government run insurance program that directly pays medical bills for the elderly per need (defined benefit). Republicans want to turn it in to a partially privatized system that pays seniors a fixed amount to buy their own health insurance (defined contribution). Paul ryan trotted out his budget bill again showing his Medicare voucher system under a different name.                      The CBO found that the plan wil raise seniors out of pocket medical expenses by thousands of dollars. The Republican platform claims that the competition caused by privitization will lead to major cost savings, though little evidence exists to support this arguement. According to another CBO analysis privatizing health care would actually spark a dramatic increase in how much the nation spends on Medicare. The Republicans would protect everyone 56 and older, they would see no change in benefits.

                          Most people on Medicare cannot afford to pay more. Half of all Medicare recipients live on annual incomes of $22,000 or less and have less than $53,000 in personal savings. People on Medicare already contribute a significant amount towards their health care costs. Medicare households spend an average of 15% of their total income on health care. 3 times the amount of no Medicare households. Recent analysis show that Medicare costs are slowing dramatically, far below that of private health care spending. The U.S. Department of Health and Human services confirms that slowed growth over the last 3 years is unprecedented in the history of the Medicare program. As a result of this deceleration, the CBO reduced its 10 year estimates on expected Medicare spending by almost $140 billion.

                              Health care costs are a major problem, many believe Medicare is the solution. Steadily rising health care costs are a true threat to our economic health, not Medicare. Over the next 10 years Medicare costs are expected to grow 3.1% as opposed to 5% for private health care. The CBO says that we could save $137.4 billion by 2022, but because many in Congress are afraid to upset the Pharmaceutical apple cart, we wont. Pharmaceutical companies charge more for Medicare drugsthan what the government pays to supply drugs for the Department of Veterans Affairs and Medicaid. The Pharmaceutical companies oppose proposals that would allow the government to negotitate lower prices,as does Americas Health Insurance Plans, the trade group that represents the companies that provide the subsidized drug benefits known as Medicare Part D to 295 million people. Together the Pharmaceutical and Health Insurance companies have spent nearly $4.4 billion lobbying Congress and federal agencies since 1998 on Medicare and other issues.

The Republicans apperently are recieving quite a bit of the lobbying money, they continue to try to privatize Medicare. President Obama and the Democrats need to stand strong and stop the Republicans from robbing the rest of America. I guess we will see if they stand tall for the 99%.