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Posted at 4:00 PM ET, 01/21/2011

Friday question

By Jennifer Rubin

This week, Sen. James DeMint (R-S.C.) and the Republican Study Committee put forth a plan to slash $2.5 trillion in spending between now and 2021. The immediate cuts of $125 billion don't seem all that radical. In fact, you wonder why many of them haven't been enacted already. Dave Weigel of Slate groups them by category, explaining, "The proposal does what Republicans have been talking about for two years -- 'repeal' of remaining stimulus funds (now $45 billion), privatizing Fannie and Freddie ($30 billion), repealing Medicaid's FMAP increase ($16.1 billion), and what they estimate at $330 billion in discretionary spending cuts."

So the question for readers: How much of this will become law, and does it shift the onus to the White House to match that figure? All answers must be in by Sunday at 6:00 p.m. ET.

By Jennifer Rubin  | January 21, 2011; 4:00 PM ET
Categories:  Friday question  
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Comments

So the question for readers: How much of this will become law,/NONE

and does it shift the onus to the White House to match that figure?/No

Very Weird Question JR considering the Dems control the Senate,and there's no way to oveturn a veto

Posted by: rcaruth | January 21, 2011 4:38 PM | Report abuse

I just hope the Corporation for Public Broadcasting Subsidy of $445 million annually is axed, and along with it its tax deductible status.

For many years now giving money to NPR and PBS has been like giving money to marketing arm of the Democratic Party, which essentially has a tax deductible charity working for it.

Posted by: nvjma | January 21, 2011 4:57 PM | Report abuse

You could come up with a worse idea than privatizing Fannie and Freddie right now, but you would have to think really long and really hard.

Posted by: johnmarshall5446 | January 21, 2011 5:44 PM | Report abuse

Sounds good but not exactly a poster display of action to the people on the part of the new House. Attempting to lead by example shouldn't the example be bold. Why not pass a bill eliminating or restricting Medical related torts, and propose a ban on groups which act in the capacity of a lobby from any access to the Capital and a bill changing the rules to eliminate lobby contributions to sitting politicians or their political campaigns. Why not set a list of earmarks already passed for immediate repeal in another bill. Let the Senate vote for them or explain why each item should be voted down and let the President who may find a free hand to eliminate pork barrel spending without the line item veto show his support for them or explain what value they represent to the country another way to save. If the Department of Homeland Security recently voted to eliminate the work on the border fence unless this is a good idea why not pass a bill calling for the Department of Homeland Security to immediately see to it that we get a border fence. How about a specific bill calling upon the Justice Department to drop its lawsuit against the State of Nevada and give them every cooperation. If the Senate does not want to vote for it let them stand up and be accountable. What use is the bully pulpit if we launch into accounting gibberish basically concede to the status quo on all these other issues.

Posted by: almorganiv | January 21, 2011 5:45 PM | Report abuse

None and no -- they're not real cuts, they GOP talking points designed to keep the Tea Party happy while GOP congresspeople try to figure out how to keep their home state programs funded.

When they cut $200 billion out of defense, leaving us with what will still be the largest defense budget in the world, by far, then I'll believe they're serious.

Posted by: summicron1 | January 21, 2011 6:06 PM | Report abuse

"Very Weird Question JR considering the Dems control the Senate,and there's no way to oveturn a veto"

Posted by: rcaruth | January 21, 2011 4:38 PM | Report abuse

Be that as it may, Republicans have, over the last 30 years, starting with President Reagan's supply side economics, through now, continually engaged in fantasies that make their base feel good.

With John Boehner's recent statement that the American health care system is the "best in the world", the fantasy spinners are running out of people that will be inclined to believe them.

(Eventually, you have to stop blaming mothers who are driving welfare Cadillacs, fantasy voter fraud involving Acorn, immigrants and just plain liberals for all of the problems in this country.)

I've been following Ms. Rubin's writing since she joined the Post's staff, and it's kind of interesting. She's a smart person and a good writer, yet she is constrained in her thinking by the tenets of the current Republican party. The base is so all powerful that EVERYONE's got to toe the line, including Ms. Rubin.

Posted by: JohnDinHouston | January 21, 2011 6:52 PM | Report abuse

As Susan Eisenhower recently pointed out, her grandfather President Eisenhower was correct to warn in his Military Industrial Complex speech 50 years ago that "a permanent armaments industry of vast proportions" with the potential to acquire - whether sought or unsought - "unwarranted influence" in the halls of government. Take for example the F-35 fifth-generation, single-seat, single-engine stealth multirole fighter program. Every time Lockheed builds an F-35, a second engine is being built (in case one goes bad or is lost I guess). House Speaker Boehner had a nontrivial role in engineering Congressional approval for the second engine program given that these engines are built near Boehner’s Congressional District. The Pentagon wants to stop building second engines ($485 million this year and billions more later) and the Obama Administration prefers using $285 million for overdue National Guard equipment purchases and $200 million to help pay down deficits. Will the Republican controlled House eliminate superfluous spending like the F-35 second engine program thereby eliminating make-work private sector jobs or will Republicans give in to the well-heeled defense lobby consortium of General Electric and Rolls Royce (second engine builders) and opt instead for accepting campaign contributions for their campaign reelection coffers?

Posted by: ljpipes | January 21, 2011 7:17 PM | Report abuse

Which will become law? The last time I remembered it takes two houses and a President's signature for anything to become law.

The GOP only controls one House, so I would say your questions is missing a few words: Slim to None.

Posted by: wlockhar | January 21, 2011 7:26 PM | Report abuse

Let's be real about the budget, cut the military contracts the Pentagon no longer wants. Get rid of military contractors who run over their budgets, and get out of Iraq and Afghanistan, before you start taking the debt out of the hides of Americans.
When you decide that federal workers can do without a wage increase, or need to get pink slips (increasing unemployment) - think through the proposal, do you want government work left to whoever "couldn't get another job?" Remember the argument about why the financial sector needs to give the record bonuses, that is the only way you get the best workers?
In the real world you get what you pay for. If the pay is much more below the norm for similar background and experience you'll have the same problem you have in education - good teachers have to leave the field so they can put their kids through college.
As we see police, firemen, teachers, basically anyone who is in public service as the target for budget cutters, think through the future you are logically creating.
There is no magic dollar figure for cutting the budget that will solve our current situation. We need a realistic evaluation of what we must afford (education for our children - can you tell I'm a teacher? - remember children are the workforce of our old age) and what price we must pay, in cuts in service and increases in taxes. I get a second job when my budget calls for it. I don't know anyone who looks at a budget in the red and decides to take a pay cut. Why should our government?

Posted by: robison1948 | January 21, 2011 7:34 PM | Report abuse

I vote for cutting preferential tax treatment for the rich. Funny thing, so do they.

I vote to cut my insurance company's ability to order the more expensive tests instead of the preliminary stuff, then stick me with a $600 bill.

I vote for cutting all corporate tax loopholes, since they sent the jobs to China anyway.

I vote we cut out unqualified, ideological judges and return the courts to the people.

I vote we cut any and all campaign contributions that do not come form individuals, thus eliminating corporations' ability to buy the right-wing Congress they want.

I vote we cut the national debt by forcing the presidents and their parties to pay for the overspending they caused.

I vote we cut the exorbitant school tuitions and ban college professors from spending more time researching than teaching.

Posted by: PoliticalPrisoner2012 | January 21, 2011 7:35 PM | Report abuse

Years of dumping bad assets into Fannie/Freddie has them with 75% of all belly up mortgages (they sold 70% of the portfolio) with BofA having a good part of the rest. Looking at what happened to BofA this quarter only tells me 30 billion is not a realistic figure to sell a sow's ear.

Posted by: jameschirico | January 21, 2011 7:38 PM | Report abuse

Perusing the RSC text, it's plainly an unserious document.

- For instance it proposes eliminating 250 million annually to Egypt. That should make them more amenable to your request for more democracy there.

- Another call is for elmination of the USDA Sugar Prgram. Hmmmm you can tell they didn't ask Rubio about that.

-End the subsidy for the Metro and for DC in general, I guess they figure they won't be in DC for the 4th of July anyway, and generally speaking live within walking distance of the capital so to hell with the rest of the city.

-318 million saved from Family Planning (I guess if there are unwanted children born, that won't cost any money to the government)

-eliminate Amtrak subsidies (they would very soon find out that it ain't the poor Democrats that ride Amtrak!)

-end funding for the NEA, NEH, and CPBS can't argue with that, an overdue idea!

-eliminate one million in Mohair subsidies (only one million? that must encompass one Congressional District with a representative that nobody likes!)

-eliminate high-speed rail grants (amen on that one!)

and so on and so forth.

The worst idea of all is the elmination of Fannie and Freddie, because they're not actuallly proposing to eliminate the guarantees, just the the government running the program.

In effect, it would be the same as the repeal of Glass-Steagal. You will recall that that bill (Gramm-Leach Blilley) insured at least one part of the meltdown of 2007 because it gave banks access to FDIC insured money for speculative investment purposes. The government was on the hook for insurance purposes, but had no say in how the money was invested. This bill would do the same thing. It wouldn't eliminate the Federal government's guarantee of the mortgages but it would hand the administrative control over to private companies to reap huge rewards in fees etc.

NOBODY is proposing eliminating the actual guaranteed mortgage market because if that happened the 30 year fixed rate would shoot up to, nobody can say for sure, but probably a minimum of 2.5% over current market rates.

Posted by: johnmarshall5446 | January 21, 2011 7:48 PM | Report abuse

Be careful about that "Democrats control..." statement. We are talking ideology lines here, not Party lines. We have too many DINOs in Congress or the 111th Congress would have been successful.

Now that more out-in-the-open right-wingers occupy the Senate they have a majority. Plus there are enough DINOs in the House to give the regressives the majority votes.

It would be so muxh simp0ler if you could make the right-wingers play by some rules. But they won't. Anarchy is their goal, something without rules, something outside the definition of "civilization."

And we have to put up wit it since they made sure the mobs they angered are better armed than the police.

France is starting to sound real good with right-wingers in control.

Posted by: PoliticalPrisoner2012 | January 21, 2011 7:55 PM | Report abuse

jameschirico:

You know nothing about F&F obviously but hey contribute anyway!

At the very worst peak in around 2004 FF held around 48% of subprime loans. By 2006, they had cut that total to about 24% with the other 75% of that market being held privately.

That was part of the you know what hitting the fan because the private secondary market unlike FF is regulated by the 50 states individually, so effectively speaking nobody was minding the store.

Posted by: johnmarshall5446 | January 21, 2011 8:00 PM | Report abuse

politcalprisoner2012 & johnmarshall5446 when can we do lunch. I agree with you both!!!

Posted by: MY3BOYS4 | January 21, 2011 8:21 PM | Report abuse

Jen,

I like this question because everyone is thinking there is going to be some type of showdown between Obama and the GOP over budget cuts, just as there was in the 90s.

But I don't think Obama can afford a showdown on these trivial cuts if he wants to have anything to say about his efforts in reducing government spending in 2012. He may feign a fight on these cuts but as you pointed out these cuts are modest but give a large enough headline number to appear significant.

When you consider the budget outlook over the next ten years, where you can project annual budget deficits of at least $500 billion, these are modest cuts. At best these cuts would halve the the amount added to the national debt. If $500 billion is the average, then $5 trillion is projected to be added to the debt and the GOP proposal cuts $2.5 trillion. Would the White House rather do nothing and add $5 trillion, since nothing will be done on the tax front due to the tax compromise?

On second thought they may indeed put up a fight and of course the Democrats still control the Senate. The problem I see is that the Democrats continue to bet the economy is going to save the day and make this whole exercise unnecessary. What they fail to understand or what they underestimate, is how the debt-private and public-is causing the economic malaise we are in right now.

So I can see the White House's proposal being a little more modest. I can see a reduction in discretionary spending ($330 billion), but I don't think they will pull back the stimulus money, cut Medicaid, or privatize Fannie and Freddie.

What's more likely is that the White House will devise a scheme to raise taxes in exchange for budget cuts. Their proposal will be a moderate version of that offered by the debt commission, reforming Social Security in the long run in exchange for more revenue in the short and long run.

Posted by: stevendufresne | January 21, 2011 10:37 PM | Report abuse


The Refi Plus program will waive the normal credit score requirement for a refinance; it will have reduced documentation standards for proof of income; and it will allow for computer-based appraisals, which tend to inflate the value of a home and make it easier to qualify for a refinance. Search online for 123 mortgage refinance they are the best and fast.

Posted by: Jericasills | January 22, 2011 4:22 AM | Report abuse

I vote we cut any and all campaign contributions that do not come from IDENTIFIED individuals, thus eliminating corporations' AND UNIONS’ ability to buy the Congress they want.

Fixed it for you.

Posted by: nvjma | January 22, 2011 9:56 AM | Report abuse

First off, let’s call a spade a spade. The proposed Spending Reduction Act is basically a Republican position paper. This is not meant to be an indictment against the GOP, as the Democrats have been known to play that game as well. But not even the Republicans expect it to become law. They are simply carving out their stance in advance of the State of the Union address.

As to the meat of the bill:
---In general, efforts to freeze spending at a particular level don’t work in the long run. Pressure to grant exceptions inevitably causes the rigid nature of spending freezes to break down.
---Even if spending freezes held for a few years, there is nothing in this document that proves the deficit will be reduced because it doesn’t address the revenue side of the equation. Republicans are wont to give money back to taxpayers in the form of tax cuts instead of paying down America’s debt. This is another indication of the political nature of the Act. If the Republicans wanted to demonstrate they’re serious about the debt, they would have addressed both revenues and expenditures and renamed their proposal The Deficit Reduction Act.
---There is weasel-room around several so-called spending cuts as to make the projected savings illusory. For example, eliminating automatic pay increases for federal civilian workers can be largely ignored by substituting merit-based increases or one-time bonus payments.
---Since defense is excluded, there’s nothing to prevent the cuts in non-defense spending from showing up on the defense side of the ledger.

My point is that President Obama and the Democrats understand this. They will propose a budgetary vision of their own, after which there will be much gnashing of teeth and pointing of fingers over which party has the more responsible vision. The Democrats need not match the Republicans’ dollar figure, and probably won’t since they generally favor spending federal dollars on a myriad of social programs.

Despite all the fancy position papers and speeches, I see very little action on true deficit reduction coming out of this Congress. Too many on both sides of the aisle are still firmly attached to federal money and the power it gives them to lead a lifestyle to which they have become accustomed.

Posted by: MsJS | January 22, 2011 10:34 AM | Report abuse

I suspect when all is said and done, the only thing that will actually happen is the cut in the travel budget.

Ag subsidies may be another possibility - in case anyone hadn't noticed, we have a serious case of agflation at the moment, and farmers are doing just fine, thank you.

The leftover stimulus money is going to go to state and local governments when they hit the wall later this year.

If "privatizing fannie and fred" means selling some of our stock back to the public, then yes that will probably happen.

If "privatizing fannie and fred" means removing the explicit government guarantee from their paper, then the answer is noway nohow.

But eliminating AMTRAK subsidies, the CPB, the NEA, etc are wish list items that will never get past the democrats.

Posted by: sold2u | January 22, 2011 12:24 PM | Report abuse

For an interesting take on the Fannie Freddie controversy read the below from Rick Santelli of CNBC. Rick is an avid "let the chips fall" kind of guy. His position is an ideologically based total sell of FF WITHOUT any government guarantees. I think reading it however give at least as much ammunition to those who believe the opposite.

Rick is a totally free market guy, in a non-free market world but he earns points for consistency, honesty, and the lack of sugar coating on his positions.


http://www.cnbc.com/id/41193899

Posted by: johnmarshall5446 | January 22, 2011 7:22 PM | Report abuse

It is not as extreme a figure and all is realizable, even with a 53-47 advantage in the Senate. Returning to the pre 111th/Obama spending levels does not seem to be a stretch. They wisely refuse to touch entitlement reform third rail. Fannie and Freddie and Federal employees are hardly sacred cows. I would like a few sacred cows thrown in like ethanol and aggie subsidies, but its a start.

The larger issue is Obama's response. If he does not counter at the SOTU, he'll be seen as unserious about the deficit. If he takes the johnny-one-note approach of solely cutting defense in a time of war, while soft pedaling domestic spending cuts, he can jeopardize his efforts to triangulate. He is hoping to avoid touching the entitlements third rail, but defense cannot carry the full burden of deficit reduction. Then you have Paul Ryan (a deficit commission member and possible Presidential candidate)who will waiting to give the SOTU rebuttal. He'll probably articulate a better deficit reduction plan than Demint and Company. Obama's position is far more dicey than his liberal allies will admit. I predict the President will try to split the differences and please no one, except the bobbleheads in the media.

Posted by: TheStatistQuo | January 22, 2011 10:23 PM | Report abuse

MsJS makes a pretty good case for the proposition "Woe unto us. All is vanity." However, I'm a little more optimistic. I think the Republicans will get some minor symbolic cuts on unpopular spending.

The real key is to keep spending frozen at current levels (plus inflation and population increase) and to block spending on new programs. If they can do that, even for a couple of years, then the trillions of dollars currently sitting on the sidelines due to fear of Obama will start moving back into the economy, and Republicans will be able to claim credit for the improving jobs picture.

Posted by: Larry3435 | January 23, 2011 8:45 AM | Report abuse

larry3435 wrote:

"If they can do that, even for a couple of years, then the trillions of dollars currently sitting on the sidelines due to fear of Obama will start moving back into the economy,"

Ok I'm on my best behavior so I'll ask politely Larry. Exactly where are those "trillions" today (they only use sidleines in a football game) because they have to be invested somewhere right now, and what would they subsequently be invested in after some mythical budget gets passed?

Posted by: johnmarshall5446 | January 23, 2011 10:03 AM | Report abuse

johnmarshall,

It is in cash, or treasuries. Some in gold. Money market funds reached their peak in February 2009 at $3.29 trillion, but that number has only come down 16% since the peak. Financial institutions hold the cash rather than lending or investing it. This is all very well documented in the financial press. "Sidelines" is the metaphor most commonly used, but pick another word if you like.

To be productive, this money has to be invested in productive businesses, either in equities or bonds.

Thanks for being polite.

Posted by: Larry3435 | January 23, 2011 12:36 PM | Report abuse

larry:

Would have loved to have gotten into this discussion, but I love football more!

Thanks for the reply, we'll do it again on another thread.

Posted by: johnmarshall5446 | January 23, 2011 8:32 PM | Report abuse

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