Month: July 2018

OMB Director Mick Mulvaney Says CBO Was Right After All

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This is definitely a man-bites-dog federal budget story.

Since becoming Donald Trump’s Office of Management and Budget director, Mick Mulvaney has viciously attacked the Congressional Budget Office as a highly partisan and substantively inept organization. He has repeatedly questioned its economic assumptions, its budget analysis and the politics of its analysts.

And that makes it more than a little newsworthy that OMB, the federal agency Mulvaney himself directs and in his mind is a paragon of bipartisanship and objectivity, released a report last Friday that not only shows that CBO’s numbers were substantively good, it also shows that the organization Mulvaney had attacked for being too partisan was more optimistic about where the federal deficit is headed the next few years than Donald Trump’s own budget director.

OMB Director Mick Mulvaney owes the Congressional Budget Office a huge apology.

CBO said in its Long-Term Budget Outlook report released last month that the 2018 deficit will be $793 billion; OMB said in its just-released Mid-Session Review of the president’s budget that it will be $890 billion. For 2019, CBO said the deficit will be $973 billion while OMB said it will be $1.085 trillion. For 2020, CBO said $1.003 trillion compared to OMB’s $1.076 trillion.

It’s important to note that OMB’s numbers are based on what we already know is a complete myth: that the spending cuts included in the Trump fiscal 2019 budget sent to Congress earlier this year will be enacted. For the second year in a row, the GOP Congress has shown no interest whatsoever in adopting the spending cuts the president proposed.

As a result, the disparity between CBO’s relatively optimistic deficit estimates and OMB’s comparatively pessimistic projections is most likely to get larger.

To be fair, CBO and OMB diverge in the opposite direction from 2022 through 2028. But, also to be fair, everyone’s budget forecast beyond three years is far more guesswork than substantive analysis given that its multiple congressional and presidential elections and countless natural and man-made disasters will occur, and long-term forecasts of how fast the economy will grow (or not) are often just wishful thinking or straight-line extrapolations.

In the meantime, however, OMB Director Mick Mulvaney owes the Congressional Budget Office a huge apology.

There’s much more here:

House, Senate GOP Should Use This Year’s Appropriations To Stop Trump On Russia
Yes…Trump Will Shut Down The Government This Fall
Pruitt And Kennedy Leaving Increases The Chances Of Government Shutdown To Over 50%
The House and Senate Appropriations Committee Are A Total Disgrace
The Definitive Larry Kudlow Take Down
You’ve Been Warned: Trump’s Trillion Dollar Budget Deficits Are Here To Stay

 

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House, Senate GOP Should Use This Year’s Appropriations To Stop Trump On Russia

Politico Playbook reported this morning that, in the immediate aftermath of President Trump’s dismal and embarrassing performance at yesterday’s summit with Russian President Vladimir Putin, congressional Republicans have thrown up their hands helplessly. As Politico writers Jake Sherman, Anna Palmer and Daniel Lippman put it, GOP lawmakers and their staff are asking, “What the hell do you want us to do?”

House and Senate Republicans are correct only in one sense: the president does have enormous discretion in foreign policy and, as he did yesterday, can act without congressional involvement or approval.

But they’re absolutely wrong that there’s nothing they can do. Congress has the upper hand when it comes to appropriations and can and should use them at least to send the Trump a very strong message.

Here are just five examples of how House and Senate Republicans could immediately use the 2019 appropriations process to get Trump’s attention on Russia:

  • Hold a steady series of hearings with the heads of all the U.S. intelligence agencies to ask how they could better deal with Russian election meddling if they had more funds and better direction from the White House.
  • Increase the appropriation for all U.S. intelligence agencies as a way of telling Trump who they believe when it comes to Putin.
  • Increase the appropriation for Deputy Attorney General Rod Rosenstein’s office to demonstrate that they want to Mueller investigation to continue.
  • Refuse to pass or reduce the appropriation for the White House and the rest of the executive office of the president.
  • Refuse to fund the wall Trump wants to build between the U.S. and Mexico until Trump’s posture toward Russia changes.

None of the 12 fiscal 2019 appropriations have yet been enacted. Therefore, at this moment, Congress has maximum leverage over the White House on all spending issues.

In other words, contrary to what they told Politico Playbook, congressional Republicans actually have a large number of options.

The real question is whether they have they testicular fortitude to do any of them.

There’s much more here:

Yes…Trump Will Shut Down The Government This Fall

Pruitt And Kennedy Leaving Increases The Chances Of Government Shutdown To Over 50%

The House and Senate Appropriations Committee Are A Total Disgrace

The Definitive Larry Kudlow Take Down

You’ve Been Warned: Trump’s Trillion Dollar Budget Deficits Are Here To Stay

 

Extending The Individual Tax Cuts Will Cost $425,000 PER JOB!

No, that’s not a typo in the headline.

According to an analyis released this week by the the Tax Foundation, extending the individual tax cuts enacted last year beyond their current 2025 expiration will cost somewhere between $384,000 and $425,000 per job created.

According to the analyis, extending the individual tax cut will produce 1.5 million new jobs but will result in a substantial loss in federal revenue — $638 billion on a “static” basis and $576,000 using dynamic scoring.

Divide the revenue loss by the number of projected new jobs and the cost per job is $425,333 using static modeling and $384,000 using dynamic scoring.

Yes…Trump Will Shut Down The Government This Fall

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The specific issue that will trigger yet another federal government shutdown showdown this September will be Donald Trump’s seemingly pathological obsession with building a wall between the United States and Mexico.

Trump wants $25 billion to fully fund it, the GOP-controlled Congress so far has refused multiple times to provide it and the two sides are going to face off again about it in September when, because of the very slow action on the fiscal 2019 appropriations, a continuing resolution will be needed to keep the government operating.

Trump so far has backed down every time he previously threatened to shut the government over this issue. All it took was a vague promise by the Republican leadership that full funding for his wall would be considered next time or pressure from within his own administration to sign a bill without the funds to get the president to go along.

That’s why the common political wisdom is that Trump will back down again given that he so far has been the anti Teddy Roosevelt by speaking loudly but carrying a small stick.

And with the current GOP House and Senate majorities at risk, the White House theoretically shouldn’t want to keep the Republican representatives and senators running for reelection in Washington when they could be home campaigning and holding fundraisers. After all, much of Trump’s political success will depend on continued Republican majorities in both houses of Congress.

But there are 4 main reasons why what happens with Trump and the shutdown this time could be very different from what has come before.

First, Trump may see this as his last opportunity to get funding for his wall. If the Democrats win the majority this November, the chances of the wall being funded over the next two years will be close to zero.

The common political wisdom is that Trump will back down again given that he so far has been the anti Teddy Roosevelt by speaking loudly but carrying a small stick.

Second, a Trump-induced shutdown this September over full funding for the wall may be perceived by the White House as the best immigration issue to inflame his base just before the midterm election and, therefore, counter the enthusiasm gap about voting between Democrats and Republicans. If higher Trump-voter enthusiasm translates into continuing GOP House and Senate majorities, this year won’t be the last chance to get funding for the wall.

Third, Trump may look at the GOP congressional leadership’s strong desire to get its members home to campaign as increased leverage to get the full $25 billion because there will be an immediate negative impact — having to stay in Washington — if they don’t do what he wants.

Fourth, especially if his Supreme Court nominee is confirmed by the Senate and the economy remains strong, Trump may be feeling politically invincible this fall. To him, that would make this the perfect time to shut down the government because he will be able to blame others for it.

There’s much more here:

Pruitt And Kennedy Leaving Increases The Chances Of Government Shutdown To Over 50%

The House and Senate Appropriations Committee Are A Total Disgrace

The Definitive Larry Kudlow Take Down

Congress Could Use The Budget Process To Stop Trump’s Child Separation Policy

You’ve Been Warned: Trump’s Trillion Dollar Budget Deficits Are Here To Stay

 

Pruitt And Kennedy Leaving Increases The Chances Of Government Shutdown To Over 50%

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Supreme Court Justice Anthony Kennedy’s announcement two weeks ago that he will retire and Scott Pruitt’s resignation last week as administrator of the Environmental Protection Agency has greatly increased the chances of a federal government shutdown this fall.

We were already barreling toward yet another government shutdown before the events of the last few weeks transpired to make it even more likely. As I’ve been posting for months (look here and here, for example), the very limited congressional action so far this year on the fiscal 2019 appropriations had already made it likely that Congress would again have to pass and the president sign a single funding bill — a continuing resolution — to keep the federal government open when the fiscal year began on October 1.

Trump’s inflexibility on the wall will likely get even worse this fall if he continues to need immigration-related issues to inflame his base.

But Congress adopting that CR was always going to be the relatively easy part. The more difficult would be getting President Trump to sign the bill. Trump has been insisting he won’t do it unless the House and Senate appropriate $25 billion for the wall he wants built between the United States and Mexico.

Over the past two years, the Republican-controlled Congress has refused to fund Trump’s wall multiple times and each time Trump has backed down.

At this point, however, Trump appears to be more adamant about carrying through on his veto threat, and Trump’s inflexibility on the wall will likely get even worse this fall if he continues to need immigration-related issues to inflame his base.

Congress was already facing an extreme time crunch on appropriations. Even with Majority Leader Mitch McConnell’s (R-KY) announcement that he was going to cancel the August recess this year, the Senate only had a very limited number of legislative days left before October 1.

But McConnell’s decision to cancel the August recess was made long before there was a need for the Senate to confirm a new Supreme Court justice and a new administrator for the Environmental Protection Administration. At that point, McConnell just wanted the Senate to deal with other pending (especially judicial) nominations and…wait for it…fiscal 2019 appropriations.

Kennedy/Pruitt totally changes this equation. Although approving a new EPA administrator can be delayed until the all-but-certain lame duck session of Congress in November and December, confirming the Supreme Court nominee before the election is now Trump’s and McConnell’s highest legislative priority.

That pushes the fiscal 2019 appropriations down to no better than third with the Kennedy replacement and other nominations both higher in the pecking order. They could even be fourth if the new EPA administrator confirmation is also considered a must-be-done-before-the-election activity.

All of this will make it much less likely that any of the individual 2019 appropriations will be adopted by the start of the fiscal year and, therefore, that a CR will be needed to keep the government open.

And that will play directly into Trump’s hands by making his weapon of choice — a veto of a CR — more powerful.

Had Congress made the 2019 appropriations a priority before Kennedy/Pruitt, it would have already reduced the value of the Trump veto threat.

But because the GOP House and Senate leadership didn’t do that, the Kennedy retirement and Pruitt resignation means that a CR and the chance of a Trump veto over funding for the wall is much more likely.

That makes the chances of a shutdown this fall at least 50 percent now, and likely to go up even further in the days ahead.

Coming This Thursday

Yes, Trump Absolutely Will Shut Down This Government This Fall

There’s much more here right now:

The House and Senate Appropriations Committee Are A Total Disgrace

The Definitive Larry Kudlow Take Down

Congress Could Use The Budget Process To Stop Trump’s Child Separation Policy

You’ve Been Warned: Trump’s Trillion Dollar Budget Deficits Are Here To Stay

The House & Senate Appropriations Committees Are A Total Disgrace

This post is dedicated to and was inspired by Norm Ornstein, one of the most highly respected congressional scholars in the world who has written some of the most influential and prescient books ever published on Congress (here, here and here for example).

One of Norm’s chief complaints since the start of the Trump administration has been that the GOP House and Senate majorities have been enabling what the White House has been doing.

Norm’s most scathing criticism has been when its obvious that one or more cabinet departments or agencies and their secretaries, administrators or directors have been violating federal law and Congress has done nothing. (Just think about Scott Pruitt’s multiple scandals at the Environmental Protection Agency and the complete lack of meaningful congressional oversight and you get the picture.)

Here’s one of Norm’s recent devastating tweets on the lack of GOP congressional oversight:

Given that I typically focus on the federal budget, my main Ornstein-inspired complaint not surprisingly is with the GOP-controlled House and Senate Appropriations Committees: They aren’t just enabling Trump but, by refusing to do their jobs, have to be considered complicit in this administration’s nefarious activities.

Serving on appropriations used to be considered a high honor with great power and responsibility. As a member of the committee with the power of the purse, your job was to make sure that tax dollars were spent wisely and legally. As an elite member of an equal branch of the government, you were there to be a check on the president — that is, on every president — whose typical tendency is to try to get around congressional priorities and restrictions.

No more.

Since the start of the Trump administration, the House and Senate Appropriations Committees have abandoned their traditional responsibility as a check on the executive branch. Because of their refusal to do anything that smells like oversight, the Trump White House and its cabinet departments and agencies have run amok when it comes to following appropriations law.

Here are just four examples.

Scott Pruitt at the Environmental Protection Agency is obviously exhibit A. He may now be gone, but that doesn’t excuse the appropriations committees from not repeatedly demanding that he explain in detail how his agency’s spending on everything from first class airfare to ridiculous increases in personal security to a “Get Smart” cone-of-silence (see below) in his office complied with EPA’s existing 2018 appropriation.

The committees should also be including language in the fiscal 2019 appropriation specifically prohibiting any funds to be used for these and other similar purposes…But they’re not.

Exhibit B is all the money being spent on implementing the Trump administration’s policy to separate children from their parents at the border. The Departments of Health and Human Services and Homeland Security as well as the Pentagon are almost certainly spending way more than was appropriated to them for this purpose but, so far at least, the only thing we’ve heard from the committees about this is the congressional equivalent of crickets.

In the past, the appropriations committees almost always required the departments to get their permission to shift funds between accounts and required that they at least informally approve all significant transfers away from previously requested and enacted priorities.

Exhibit C is Department of Housing and Urban Development Secretary Ben Carson’s excessive shopping spree for new office furniture. Where’s the appropriations’ outrage?

Exhibit D is the House and Senate Appropriations Committees looking the other way when the State Department refused to spend the funds provided to it to investigate Russian meddling in the U.S. elections. As I first explained back in March, this was an action that under the Congressional Budget and Impoundment Control Act absolutely required House and Senate approval.

But the appropriations committees did nothing.

There’s also the committees’ enabling Trump to shut down the federal government this fall.

By slow-walking the fiscal 2019 spending bills rather than demanding they be a priority, the appropriations committees are virtually guaranteeing that a continuing resolution that funds most or all departments and agencies will be needed. That will give Trump substantial additional leverage to get the $25 billion he wants (but the House and Senate have repeatedly refused to provide) to build a wall between the U.S. and Mexico and, with a single veto, shutdown the government.

All of this is total departure from how the appropriations committees used to act.

Allowing the White House to unilaterally spend more or less than is allowed or required makes a mockery of the appropriations process.

Continuing resolutions were always something the committees desperately tried to avoid rather than use as a plan B. Instead, enacting individual appropriations was always their prime goal.

Reprimanding a cabinet official when he or she was repeatedly violating appropriations law was the committees’ standard operating procedure so that the other heads of the other departments and agencies didn’t dare consider doing the same thing.

Norm Ornstein used the “word” disgrace in his tweet above. It’s not a stretch to think that he would agree with my assessment that, these days, it also amply applies to the House and Senate Appropriation Committees.

There’s much more here:

The Definitive Larry Kudlow Take Down

Congress Could Use The Budget Process To Stop Trump’s Child Separation Policy

You’ve Been Warned: Trump’s Trillion Dollar Budget Deficits Are Here To Stay

Fasten Your Seat Belts: It’s Going To Be A Very Bumpy Rest Of The Year In Washington

The Definitive Larry Kudlow Take Down

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As long as any of us has known there was someone named Larry Kudlow, we’ve repeatedly heard him say the same thing: tax cuts will increase economic growth and economic growth will reduce the federal budget deficit.

Whether he was Office of Management and Budget Director David Stockman’s chief economist at the start of the Reagan administration or a television/radio host at CNBC, Kudlow has always had the same unyielding, if theoretical, mantra.

So it was anything but a surprise when Kudlow last week again repeated the same thing when he was interviewed on Fox Business Network.

After all, this is the same Kudlow who has been publicly preaching for close to four decades that tax cuts are the magic elixir for whatever ails you.

And this was Fox Business.

And Kudlow is now a very high-level member of the Trump administration for which facts aren’t as important or required as blind belief.

But this latest recitation of the Kudlow tax cut mantra was different from all those that came before because it disagreed with what the rest of the Trump administration is saying. In making his statement, Kudlow effectively said that the work produced by current Office of Management and Budget Director Mick Mulvaney (a Trump favorite who is again being mentioned as a possible replacement for chief of staff John Kelly) was some combination of shoddy, incompetent, ideologically impure and totally wrong.

Take a look at Table 1.1 from the Historical Tables document that Mulvaney published as part of the Trump’s fiscal 2019 budget released earlier this year. It shows the deficit rising precipitously over the next few years — from $585 billion in 2016 to very close to $1 trillion in 2019 and 2020 — rather than, in Kudlow’s words, “coming down rapidly.” It’s only in 2021 that Mulvaney projected it would start to fall, and that’s based on spending cuts that the Republican Congress has already mostly rejected.

Mulvaney made these projections assuming substantial annual economic growth of about 3.0 percent.

In other words, Kudlow was off the Trump reservation saying that Mulvaney’s growth estimates, which were made after the tax bill was enacted, were way too low. Because of that, Mulvaney’s projected deficits were way too high.

This too is not a surprise position for Kudlow to take. He basically did the same thing during the Reagan administration when he was part of the economic team that produced the “Rosy Scenario” that allowed the White House to lie about the positive deficit impact of the that year’s tax cut so it could be enacted more easily.

Kudlow’s statement is even more absurd when compared to the latest Congressional Budget Office forecast (take a close look at Table B-1) that shows both much lower growth and, as a result, annual deficits of close to or way above $1 trillion every year from 2019 through 2028.

Of course, Kudlow would say that CBO’s economists aren’t true believers so its numbers can’t be trusted. Apparently, he thinks the same thing about the rest of the Trump administration as well.