The House of Representatives approved Wednesday, 285-144, a three-month extension of the debt limit. Included in that bill was a "no budget, no pay" provision, which requires members of Congress to pass a budget, or they will not receive a salary. Some of the lawmakers who voted against the bill say that the "no budget, no pay" provision violates the 27th Amendment to the U.S. Constitution.
The 27th Amendment states: "No law, varying the compensation for the services of the Senators and Representatives, shall take effect, until an election of Representatives shall have intervened." This amendment essentially says that if Congress changes its salary, or any other parts of its compensation, those changes will not go into effect until after the next election.
Since the "no budget, no pay" law would change the compensation for lawmakers, by making it $0, it would violate this amendment, opponents claim. more >>
The idea to mint a $1 trillion coin as a way to avoid raising the debt limit should be given serious consideration, Nobel prize winning economist and liberal pundit Paul Krugman believes. He advised comedian Jon Stewart to take the idea more seriously or risk "ruining his brand."
Krugman, professor of economics and international affairs at Princeton University, has advocated, on his New York Times blog, "Conscience of a Liberal," the $1 trillion coin idea if Congress does not raise the debt limit.
In a Jan. 7 post, Krugman argued that minting the coin would not cause any economic harm and not increasing the debt limit would be "far more ridiculous" than the $1 trillion coin. more >>
Due to its antiquated methods of forecasting, the Social Security Administration vastly underestimates how long it will be before the Social Security trust fund runs dry, warned Gary King, professor of government and director of the Institute for Quantitative Social Science at Harvard, and Samir S. Soneji, a demographer and assistant professor at the Dartmouth Institute for Health Policy and Clinical Practice.
Social Security began running a deficit in 2010. Before that, when Social Security was running a surplus, the surplus was used to purchase treasury bonds. (One part of the government lent money to other parts of the government, essentially.) That debt now comprises about $2.7 trillion of the U.S. government's roughly $16.4 trillion debt. Now that Social Security is no longer running a surplus, it will cash in those treasury bonds, which means that Social Security will be partly funded by general revenue or by borrowing more money.
The SSA currently estimates that those treasury bonds will cover Social Security shortfalls until 2033. This estimate, King and Soneji argue in the journal Demography and in a Sunday editorial for The New York Times, is off by about $800 billion by 2031. more >>
One of the reasons that President Barack Obama and Speaker of the House John Boehner had difficulty agreeing to a "grand bargain" on deficit reduction and avoiding the "fiscal cliff" was that both men disagreed on the nature of the debt problem. Boehner believes that government spending is the problem while Obama believes the problem is the rising costs of health care, not government spending.
During those negotiations, Obama repeatedly told Boehner that "we don't have a spending problem," Boehner recalled in an interview with The Wall Street Journal's Stephen Moore.
A similar disagreement can be heard frequently on political talk shows. "We don't have a revenue problem, we have a spending problem," Republicans repeat often. "We don't have a spending problem, we have a health care problem," Democrats often counter. more >>
The law passed by Congress to avoid the "fiscal cliff" represents the beginning of a decline for liberalism in America, conservative Washington Post columnist George Will believes.
"I think people will look back on this deal as where liberalism passed an apogee and went into decline," Will said Sunday in a panel discussion on ABC's "This Week."
The reason, Will explained, is that Democrats supported making the Bush-era tax cuts in the fiscal cliff bill for all but the wealthiest Americans, but liberalism requires high taxes on the middle class in order to have the expensive government programs that liberals prefer. more >>
The "fiscal cliff" bill, or the "American Taxpayer Relief Act of 2012," increased taxes, President Barack Obama says. Many Republicans say the bill lowered taxes. As a corollary, Obama says the bill will lower budget deficits. But the Congressional Budget Office says the bill will require even more government borrowing. Who is right?
In a video posted to his campaign website Wednesday, Obama said, "the agreement we reached this week will reduce the deficit even more by asking the wealthiest two percent of Americans to pay higher taxes for the first time in two decades. So that's progress."
The fiscal cliff law "further reduces the deficit by $737 billion," Obama claimed in his weekly radio address Saturday, "making it one of the largest deficit reduction bills passed by Congress in over a decade." more >>