Pete Davis's blog
Before I sign off, I just wanted to say thanks to Stan for facilitating my entry into the blogosphere. I learned a lot and have heard from readers who did too. I have no plans to blog on my own, but I may send him a comment now and then, particularly on tax reform. I'm very happy to hear from anyone who wants to dialog with me via email. Just use the CG&G contact form as usual. If I get inundated, I may reconsider blogging on my own. Happy New Year, and all the best to Stan!
Late next week, Congress will extend the present law 2% payroll tax cut for another year. This is a good way to sustain our fragile economic recovery. The additional take home pay each pay period is more likely to be spent than a lump sum would. How it's paid for matters too. Rather than borrowing another $120 billion from China and $35 billion to extend unemployment insurance and $38.9 billion to avoid slashing the Medicare physician reimbursement rate by 27%, several items previously agreed to, but never proposed by the Super Committee, will almost pay for them over the next decade. This afternoon, the Congressional Budget Office scored the House Republican version of the payroll tax cut, H.R.3630. It's $25.2 billion short of balance FY12-FY21. It starts out with a deficit increase of $166.8 billion in FY12, $71.6 billion in FY13, and $9.3 billion FY14, a total of $247.7 billion (assuming it's not extended late next year), before reducing the deficit by $222.5 billion over the rest of the decade.
Friday's Hill article that Senator Tom Coburn (R-OK) was planning an amendment to direct the U.S. to vote against any IMF bailouts became a hot topic of conversation among international investors despite Coburn's admission that his amendment had little chance of enactment. On June 29, 2011, on a 44-55 vote, the Senate rejected Senator Jim DeMint's (R-SC) amendment No. 501 to rescind the U.S.'s $100 billion line of credit to the International Monetary Fund to keep it from being used to bail out European Union countries.
I had a report yesterday that a high Treasury official recently told some foreign central bankers not to worry and that the Super Committee could still reach a deal after November 23. I would point out that the Committee had plenty of time from it's appointment in mid-August until its failure to agree on any recommendations yesterday, and it had the benefit of the detailed recommendations of the Bowles-Simpson Fiscal Commission, the Bipartisan Policy Center, the Committee for a Responsible Federal Budget, and others. The Super Committee's failure did not occur because it ran out of time; it occurred because House Speaker John Boehner (R-OH), House Minority Leader Nancy Pelosi (D-CA), Senate Majority Leader Harry Reid (D-NV), and Senate Minority Leader Mitch McConnell (R-KY) decided no deal was better than a deal which risked electoral defeat in 2012 and which offended their partisans with tax increases and entitlement cuts.
Late Monday, the food industrial complex won a big victory in the agriculture appropriations conference report, H.R.2112, with a provision that blocks the Agriculture Department from carrying out a rule to improve school lunches for the first time in 15 years. This New York Times article covers it well. The House is voting in favor of this right now at 4:30 p.m. Thursday, and the Senate will pass it late tonight or tomorrow. We have an obesity epidemic in this country that grows directly from eating too much processed food, too much salt, too much sugar, and way too many calories. Many times, I begged a 180 pound 4th grader I tutored a few years ago to forego the chips and the Chicken McNuggets and the pizza he was being served to no avail. Many times, I've heard from an inner city OB/GYN how hard it is to deliver a health baby from an obese and diabetic 22 year old mother.
