We look to be headed for a government shutdown -- and maybe two of them. The first is slated to happen at the end of the week. Talks between House Republicans and Senate Democrats have broken down. The entire Republican leadership has released statements saying that $33 billion in cuts -- which is $1 billion more than they initially proposed -- is insufficient as a compromise. The White House has told top agency officials to begin preparing for a shutdown, and John Boehner has begun distributing information to his members detailing their responsibilities in the event the federal government closes its doors.
It’s in this context that Paul Ryan is unveiling the Republican’s 2012 budget proposal. Credit where it’s due: He didn’t dodge. His budget privatizes and voucherizes Medicare, dismantles Medicaid and turns it into a system of block grants, reforms the tax code, sets caps on federal spending, and much more. Like many such plans, it says more about how much government can spend than about how it will get spending down to that level while still providing the promised services, but it is, nevertheless, a dramatic proposal that will define the budget debate for the rest of the year.
It’s also completely, almost gleefully, unacceptable to Democrats. Some thought that the introduction of Ryan’s 2012 budget would make it easier for the GOP to compromise on funding for the rest of this year. I’m doubtful. By raising the stakes on next year’s battle, it’s just as likely to leave both sides less willing to show weakness on this year’s battle. And then there’s the question of how Republicans and Democrats will avoid a shutdown when 2012 rolls around: Republicans are committing themselves to, and getting their base excited about, a truly radical series of changes to the federal government. That’s going to make it very difficult to agree on a more modest budget when the time comes. Federal officials who’re getting information today on what to do in the event of a shutdown might want to hang onto that pamphlet. I suspect they’re going to be consulting it a lot over the next few years.
Five in the morning
1) A budget deal is needed by tonight, report Paul Kane and Jon Cohen: “There is general agreement that the two sides must work out a deal by Tuesday night if it is to work its way through both chambers and reach President Obama’s desk before the government runs out of money Friday. Late Monday, a senior White House aide told top agency officials to begin preparations for how to handle a shutdown, a move that was echoed in a statement by Speaker John A. Boehner (R-Ohio) to House leaders. However, Boehner also announced his intention to offer Obama and Senate Democrats another stopgap funding measure that would keep federal funding flowing for an additional week. But, according to senior GOP aides, that offer would come with conditions: Democrats would have to agree to $12 billion in further spending cuts and to fund the Defense Department for the remainder of the year.”
2) John Boehner has flatly rejected $33 billion in cuts as insufficient, reports Russell Berman: “Speaker John Boehner (R-Ohio) said Monday that Vice President Biden’s offer of $33 billion in spending cuts is ‘not enough,’ suggesting the chances of a government shutdown are increasing. Boehner, who delivered the GOP’s radio address on Saturday, issued his most definitive rejection of the level of cuts that Democrats had for days claimed were the basis of a bipartisan accord...In a coordinated move, Boehner and the entire House Republican leadership team, including the chairman of the Appropriations Committee, Rep. Hal Rogers (Ky.), issued statements indicating that an agreement to fund the federal government beyond Friday’s deadline was not close at hand.”
3) Republicans will formally outline their 2012 budget plans today, report Philip Rucker and David Fahrenthold: “Ryan’s budget calls for strict caps on federal spending. In his op-ed article, Ryan said that some savings could come from reforming agricultural subsidies, shrinking the federal workforce through attrition and accepting military spending cuts suggested by Defense Secretary Robert M. Gates. Ryan’s calculation of $6.2 trillion in spending cuts over a decade would be achieved in part by repealing the coverage provisions of Obama’s health-care law. On taxes, Ryan’s budget would consolidate brackets and lower tax rates; the top individual and corporate rates would drop to 25 percent. The plan also would remove deductions and loopholes that Ryan writes ‘distort economic activity and leave some corporations paying no income taxes at all.’”
4) Rep. Paul Ryan previews his 2012 budget: “The president’s recent budget proposal would accelerate America’s descent into a debt crisis. It doubles debt held by the public by the end of his first term and triples it by 2021. It imposes $1.5 trillion in new taxes, with spending that never falls below 23% of the economy. His budget permanently enlarges the size of government. It offers no reforms to save government health and retirement programs, and no leadership. Our budget, which we call The Path to Prosperity, is very different. For starters, it cuts $6.2 trillion in spending from the president’s budget over the next 10 years, reduces the debt as a percentage of the economy, and puts the nation on a path to actually pay off our national debt. Our proposal brings federal spending to below 20% of gross domestic product (GDP), consistent with the postwar average, and reduces deficits by $4.4 trillion.”
Real talk: Ryan’s op-ed includes a Heritage Foundation analysis promising his budget will “create nearly one million new private-sector jobs next year, bring the unemployment rate down to 4% by 2015, and result in 2.5 million additional private-sector jobs in the last year of the decade.” I’m tempted to add: “And a pony for every child!” Anyone else want to see the methodology behind that study?
Paul Ryan also took to YouTube to present his budget: http://bit.ly/fIYsv6
5) House Democrats plan to offer their own alternative to Ryan’s budget, reports Mike Lillis: “House Democrats are ‘likely’ to propose a 2012 budget bill to counter the much-hyped GOP blueprint set for release Tuesday, according to a House Budget Committee aide. Rep. Chris Van Hollen (Md.), the senior Democrat on the budget panel, is still weighing his options, the staffer emphasized, but is leaning toward offering an alternative to the plan Chairman Paul Ryan (R-Wis.) will unveil this week...The aide said Democratic leaders are waiting to gauge the public reaction to Ryan’s plan, which would reduce projected federal spending by more than $4 trillion over the next decade, largely by cutting payments to Medicare and Medicaid.”
Live session interlude: Camera Obscura play “French Navy”.
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Still to come: The debt limit needs to be raised before July; some early reactions to the Ryan budget; prices are rising faster than wages; whatever happened to the “fierce urgency of now”?; the Senate is finally slated to repeal the 1099 tax reporting provision of health reform; immigration rights activists are planning a push to get Obama to change course; the administration denies it has worked out a deal with BP on drilling; and a dog plays board games.
The debt limit needs to rise before July, reports Brady Dennis:: “Treasury Secretary Timothy F. Geithner said that even if he uses “extraordinary measures” to prevent the United States from defaulting on its obligations, lawmakers will need to raise the legal limit on government borrowing by July 8. Current projections show the United States will reach its $14.3 trillion cap on borrowing ‘no later than May 16,’ Geithner wrote in a letter Monday to leaders on Capitol Hill. He said that he would ‘use all measures available to me’ to delay additional borrowing above that cap. But with the national debt rising on average by $125 billion a month, those financial maneuvers would buy less than eight weeks for Congress to act...The periodic debt limit increase traditionally has been a noncontroversial, almost pro-forma vote.”
Prices are rising faster than wages, reports Neil Irwin: “Inflation is back, with higher prices for food and fuel hammering American consumers, and this time it really hurts. It’s not just that prices are rising -- it’s that wages aren’t. Previous bouts of inflation have usually meant a wage-price spiral, as pay and prices chase each other ever upward. But now paychecks are falling further and further behind. In the past three months, consumer prices have been rising at a 5.7 percent annual rate while average weekly wages have barely budged, increasing at an annual rate of only 1.3 percent. And the particular prices that are rising are for products that people encounter most frequently in their daily lives and have the least flexibility to avoid.”
The House GOP is distributing shutdown plans, reports Jonathan Allen: “Republican leaders are preparing the House for a government shutdown, as they plan to distribute a pamphlet about the mechanics of a partial congressional work-stoppage to all lawmakers’ offices Tuesday morning, according to several senior House aides. It’s the strongest signal yet that House Speaker John Boehner believes the White House and Congress could fail to strike a deal on a long-term funding bill before the government’s authority to spend money runs out on Friday. Talks came to a standstill Monday, amid amplified partisan recriminations.”
GE does, in fact, pay income taxes, report Allan Sloan and Jeff Gerth: “Did GE get a $3.2 billion tax refund? No. Did GE pay U.S. income taxes in 2010? Yes, it paid estimated taxes for 2010, and also made payments for previous years. Think of it as your having paid withholding taxes on your salary in 2010, and sending the IRS a check on April 15, 2010, covering your balance owed for 2009. Will GE ultimately pay U.S. income taxes for 2010? After much to-ing and fro-ing -- the company says it hasn’t completed its 2010 tax return -- GE now says that it will pay tax. Why should you care about this? Because we all have a stake in how this plays out. Thanks to the uproar over GE, we now risk ending up with legislation that targets GE but produces all sorts of unintended consequences. Public rage can make for bad law.”
We shouldn’t blame GE for trying to minimize its tax burden, writes Joe Nocera: http://nyti.ms/h8PnE7
Paul Ryan’s budget saves money through sharp cuts, not health-care reform: “ what saves money is not the reform. It’s the cut. For Medicare, the cut is that the government wouldn’t cover the full cost of the private Medicare plans, and the portion they would cover is set to shrink as time goes on. In Medicaid, the block grants are set to increase more slowly than health-care costs, which is to say, the federal government will shoulder a smaller share of the costs than it currently does. The question for both plans is the same: What happens to beneficiaries?”
Paul Ryan’s budget plan sets a new standard of seriousness, writes David Brooks: “The Ryan budget will please governors of both parties by turning Medicaid into a block grant -- giving states more flexibility. It tackles agriculture subsidies and other corporate welfare. It consolidates the job-training programs into a single adult scholarship. It reforms housing assistance and food stamps. It dodges Social Security. The Republicans still have no alternative to the Democratic health care reform, but this budget tackles just about every politically risky issue with brio and guts. Ryan was a protégé of Jack Kemp, and Kemp’s uplifting spirit pervades the document. It’s not sour, taking an austere meat ax approach. It emphasizes social support, social mobility and personal choice.”
Paul Ryan’s proposed cuts are an attempt to dismantle progressive government, writes EJ Dionne: “The Ryan budget’s central purpose will not be deficit reduction but the gradual dismantling of key parts of government. Remember that Ryan wants both to preserve the Bush tax cuts and, over the long run, to enact more breaks for the wealthy, including the elimination of the capital gains tax. Ryan’s plan reportedly will include steep Medicaid cuts, disguised as a proposal to turn the program into a ‘block grant’ to the states. The net effect would be to leave even more Americans to the mercies of the private insurance market...Put the two parts of the Ryan design together -- tax cuts for the rich, program cuts for the poor -- and its radically redistributionist purposes become clear. Timid Democrats would never dare embark on class warfare on this scale the other way around.”
The Obama administration has lost its way, I write: “Something has gone wrong in the Obama administration. And the candidate we need to step forward and point it out isn’t whichever Republican manages to limp shamefacedly out of the primaries after agreeing to call Obama a Kenyan anti-colonialist who kowtows to big business and Karl Marx and believes in both radical Islam and dogmatic atheism. It’s the Barack Obama who ran in 2008. The one who believed in ‘the fierce urgency of now,’ rather than ‘After the election, we hope.’”
Adorable children being good at sports interlude: A 4-year-old at a driving range hits a golf cart repeatedly.
The Senate will vote today on repealing the tax reporting provision of health reform, reports Felicia Sonmez: “Both the Senate and the House have already voted this year to repeal one of the most unpopular provisions of the national health care law. But this week, if things go according to plan, the Senate will hold a second (and final) vote on the issue, sending President Obama the first measure officially repealing part of his signature health care legislation. On Tuesday, the Senate is slated to vote on repealing the 1099 tax-reporting provision of the health care law, which is, yes, every bit as exciting as the name suggests: the provision requires businesses to report to the Internal Revenue Service all purchases of $600 or more.”
Health care companies are facing increased antitrust scrutiny: http://wapo.st/dWW1vC
Ryan’s Medicare plan doesn’t include real cost control, writes Merrill Goozner: “Just because the government slowed its spending doesn’t mean that old people and the poor wouldn’t have the same health care bills they had before. Health care for these vulnerable populations absent some other force in the marketplace would continue growing at rates significantly faster than the Ryan plan’s GDP+1 formula, just as it has for decades...One option for physicians and hospitals under a capped Medicare premium support system would be to step up what they have always done when faced with inadequate Medicare reimbursement. They could shift even more costs to private, non-Medicare payers, that is, employers and their covered employees.”
A new prize contest aims to produce ideas for cutting health costs, writes Annie Lowrey: http://slate.me/fVQKem
Jon Cohn profiles the Republican health-care thinkers who don’t seem entirely comfortable opposing the Affordable Care Act: “The conservative orbit, it seems, no longer has much use for the complicated takes on health care reform that were promoted by this trio for so long. Today, Wilensky seems too busy with her other endeavors, like working on global health, to care whether Roger Ailes has her on speed dial. ‘It’s not like I don’t know how I could look more attractive to the loudest voices in the Republican Party right now, in terms of making more extreme statements,’ she says. ‘I just don’t think that’s ultimately how to be most helpful in trying to solve issues.’”
A new campaign is set to pressure Obama to ease up on immigration, reports Julie Mason: “Since failing to fulfill his promise to overhaul immigration policy, President Barack Obama has repeatedly asked Latino voters for patience as the economy, health care reform and other issues dominated his early agenda. But the president may soon have to grapple with the issue, amid budget negotiations with Congress, U.S. military operations in Libya and the launch of his reelection campaign. A coalition of immigration activists and lawmakers has challenged Obama to use his executive powers to change U.S. immigration policy. The campaign, called Change Takes Courage, will consist of events nationwide, including in Obama’s home state of Hawaii, in the coming months.”
Obama has threatened to veto a repeal of the FCC’s net neutrality rules: http://politi.co/heOwDE
A federal court ruled in favor of the administration’s net neutrality rules, reports Cecilia Kang: “A federal appeals court threw out complaints by Verizon Communications and Metro PCS aimed at knocking down Internet access rules by the Federal Communications Commission, saying the lawsuits were filed too early. But the decision, on a technicality, may be a short-lived victory for the FCC. Verizon Communications said it plans to file another complaint against the agency’s so-called net neutrality rules, once the regulations are officially introduced in the Federal Register. In an order Monday, the U.S. Court of Appeals for the District of Columbia dismissed the legal basis the companies used to file.”
A conservative Supreme Court majority okayed state support for religious schools: http://wapo.st/fFsJ7D
Adorable animals playing games interlude: A dog plays Snakes and Ladders.
The administration denies there’s a deal with BP on offshore drilling, reports Darren Goode: “Interior Secretary Ken Salazar emphatically said on Monday that there is no deal or special talks with BP regarding the company’s efforts to resume drilling projects in the Gulf of Mexico. ‘There is absolutely no truth to the rumor that there is some agreement with BP,’ Salazar told reporters on a conference call. ‘We treat every company’ that drills offshore ‘with the same set of standards that we would treat everybody else.’ Asked whether there might be a deal between BP and the Interior Department by this summer, Salazar again stressed that BP would have to go through the same process and meet the same criteria as other companies looking to receive permits to drill...The Bureau of Ocean Energy Management, Regulation and Enforcement also looked to clear the air Monday.”
GOP Senators won’t back an increase in the gas tax: http://bit.ly/ftjQjg
Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews and Michelle Williams.