What is in the Senate Debt Bill?: More spending, giving up Congress' ability to control the debt ceiling

How much McConnell will really benefit from this additional spending for Kentucky?  From The Hill newspaper:

. . . . The bill includes extra funds to fix flooded roads in Colorado, a $3 million appropriation for a civil liberties oversight board and a one-time payment to the widow of Sen. Frank Lautenberg (D-N.J.), who died over the summer. 

It also includes an increase in authorization for spending on construction on the lower Ohio River in Illinois and Kentucky. The bill increases it to $2.918 billion. . . . . 

Section 115 of the text says government workers who are furloughed because of the shutdown "shall be compensated at their standard rate of compensation, for the period of such lapse in appropriations, as soon as practicable after such lapse in appropriations." 

Section 116 says states that funded a federal program will be compensated as well, and that the government will pay back states for these costs. . . .

I guess that I had hoped for more on the income verification question for Obamacare applicants.

The Senate bill uses H.R. 2775 as a vehicle for all of these changes. That bill was originally a House GOP bill that would have delayed all health insurance subsidies until a system is put in place to verify incomes for eligibility purposes. 

The Senate language does give that issue a nod, by including new rules for verifying household income to determine eligibility for subsidies to buy health insurance under ObamaCare. It specifically requires the government to "certify to the Congress that the Exchanges verify such eligibility." 

The secretary of Health and Human Services would have to submit a report to Congress detailing procedures used by the exchanges, and an inspector general report would be required by July 1. . . .

But the biggest loss is Congress' ability to control the debt limit.

The legislation also includes a McConnell-written proposal that would allow Congress to disapprove of the debt-ceiling increase. Lawmakers will formally vote on rejecting the bump of the borrowing limit - if it passed, it could be vetoed by Obama. . . . 

Politico has a list of the eighteen Republican Senators who voted against the deal.

Senate Minority Whip John Cornyn (R-Texas) opposed the deal . . . Sens. Mike Enzi of Wyoming and Pat Roberts of Kansas . . . The other Republican senators that opposed the bill: Tom Coburn of Oklahoma, Tim Scott of South Carolina, David Vitter of Louisiana, Mike Lee of Utah, Ted Cruz of Texas, Pat Toomey of Pennsylvania, Ron Johnson of Wisconsin, Mike Crapo of Idaho, Marco Rubio of Florida, Richard Shelby of Alabama, Jim Risch of Idaho, Chuck Grassley of Iowa, Jeff Sessions of Alabama, Rand Paul of Kentucky and Dean Heller of Nevada. 

Newest Fox News piece: "What we've learned from the very partial government slimdown"

My piece at Fox News starts this way:

The government slimdown, known in some quarters as the so-called “shutdown” hasn’t lived up to the disastrous predictions.

Federal government spending has been cut by 17 percent from the scheduled increase for the 2014 fiscal year. It is only a 13 percent cut from what was being spent during 2013.

Even the final cut will be much less than these percentages since furloughed workers are extremely unlikely to lose anything.

The overall reduction is not large when considering that during the last 4-and-a-half years government spending has grown by 21 percent. 

In other words, today, even during the temporary and partial government shutdown, we are spending more than when President Obama took office.  Do Americans really believe that their lives are so much better off from the increased government spending? . . .

A benefit of the shutdown: temporary delay in new federal regulations

You delay a few hundred billion a year regulations for even a month or two and you start to get into some real money.  From The Hill newspaper:

The government shutdown has all but turned off the regulatory spigot, reducing the flow of new rules from federal agencies to a trickle. Regulators and proponents of stronger protections warn that rulemaking delays will jeopardize public safety and health. But some conservatives say the reprieve from red tape is welcome, even if it doesn’t last long. 

“We’re very pleased that the Obama administration’s ongoing efforts to wreck the U.S. economy with more and more heavy-handed and colossally expensive regulations has been put on hold,” said Myron Ebell, director of the right-leaning Competitive Enterprise Institute’s energy and environment center. “By and large, the people writing those regulations and trying to get them promulgated are not in the office,” he said. . . .

Evidence that the Obama administration is trying to make the 17 percent cut in spending as painful as possible

Do you think American troops abroad care more about watching the Major League Baseball playoffs or  listening to the American Forces Network news channel?  How about having Alhurra TV, the small government-funded Middle Eastern network, on the air?  From The Hill newspaper:

Such discrepancies are feeding Republican accusations that the administration is deliberately trying to make the shutdown as painful as possible. . . . 

“In general terms, the leeway for what is open and what is not open is largely at the discretion of the president and the heads of the given agencies throughout the federal government,” said John Hudak, a fellow in Governance Studies at the Brookings Institution. “The law says there’s no money for the government to function, but at the same time, the president is also charged with keeping the nation safe with a whole host of activities that he cannot let fall by the wayside.” . . .

Priorities: Amber alert website down during shutdown, but they got funds to let government union reps get paid

You can see the picture for yourself my going here.  At the same time, the Obama administration has its priorities this way.  From the Washington Examiner:

The Obama administration quietly changed its furlough guidance Friday to allow government employees who are also union representatives to return to work and receive a regular paycheck during the government shutdown. 

On the fifth day of the government shutdown the House unanimously passed a a bill approving back pay for 800,000 furloughed federal workers, a rare moment of bipartisan unity, even as House Republicans and Democrats continued their bitter budget standoff. 

The vast majority of those workers do not serve as union representatives and will not receive a pay check as long as the government remains shuttered. But the Office of Personnel Management Friday opened the door for some of their co-workers, those who serve as union representatives, to return to work and get their regular paycheck. . . .

UPDATE: "Justice restores Amber Alert Web page"

The Amber Alert Web page on the Justice Department's online site was restored late Monday morning after a report spread saying the government shutdown had closed the program itself. 

"At no point has AmberAlert system been interrupted during shutdown. to prevent confusion, informational DOJ site has been restored," tweeted Brian Fallon, director of the DOJ's public affairs office. 

Numerous Web pages on federal agencies’ sites have either been shut down or haven’t been updated since the shutdown began Tuesday. Some agency websites don't show up at all. 

A Justice Department page that explains the Amber Alert system had led to an error saying it was “not found." 

“It’s all functioning,” Patti Davis, communications director for the National Center for Missing & Exploited Children (NCMEC), said in an email to The Washington Post. “Only the DOJ (Department of Justice) Web site, which is informational, is down. The states run AMBER Alerts, and NCMEC does secondary alerts. Service has not been impacted.” . . . .

Obama and the media continue to make the false claim that the shutdown will harm the economy

From Obama's Saturday address on September 28th:

It’s also the day that a group of far-right Republicans in Congress might choose to shut down the government and potentially damage the economy just because they don’t like this law. . . . 

Past government shutdowns have disrupted the economy.  This shutdown would, too.  At a moment when our economy has steadily gained traction, and our deficits have been falling faster than at any time in 60 years, a shutdown would be a purely self-inflicted wound.  And that’s why many Republican Senators and Republican governors have urged Republicans in the House of Representatives to knock it off, pass a budget, and move on. . . . 

No one gets to hurt our economy and millions of innocent people just because there are a couple laws you don’t like.  It hasn’t been done in the past, and we’re not going to start doing it now. . . .

From Obama's Saturday address on October 5th:

. . . They don’t get to hold our democracy or our economy hostage over a settled law. They don’t get to kick a child out of Head Start if I don’t agree to take her parents’ health insurance away. That’s not how our democracy is supposed to work. 

That's why I won't pay a ransom in exchange for reopening the government. And I certainly won't pay a ransom in exchange for raising the debt ceiling. For as reckless as a government shutdown is, an economic shutdown that comes with default would be dramatically worse. 

I'll always work with anyone of either party on ways to grow this economy, create new jobs, and get our fiscal house in order for the long haul. But not under the shadow of these threats to our economy. . . . .

From NPR, October 3rd: "Treasury: New Debt Ceiling Fight Could Derail Economy"

The Treasury Department is issuing a warning of dire economic consequences that could rival the Great Recession if Congress is unable to agree on raising the debt ceiling and the nation defaults on its obligations. 

Treasury's report, "The Potential Macroeconomic Effect of Debt Ceiling Brinkmanship," comes as Congress is still wrangling over a short-term spending bill to reverse a partial government shutdown that went into effect Tuesday. Later this month, House Republicans and Senate Democrats will need to agree to raise the $16.7 trillion debt ceiling or face a possible default. 

"[A] default would be unprecedented and has the potential to be catastrophic: credit markets could freeze, the value of the dollar could plummet, and U.S. interest rates could skyrocket, potentially resulting in a financial crisis and recession that could echo the events of 2008 or worse," Treasury said in a statement. . . .

From CNN Money: "Economists fear debt ceiling fight may bring recession"

Forget the current government shutdown. Economists say it's the upcoming debt ceiling impasse that could plunge the nation into a recession. 

About half of the 22 economists surveyed by CNNMoney say a recession will be unavoidable if Congress fails to raise the nation's debt ceiling before the Treasury runs out of cash later this month. . . .

CNBC: "US Treasury warns debt default could be 'catastrophic'" 

The Obama administration said the U.S. economy could fall into its deepest crisis since the Great Depression if Congress does not raise a cap on government borrowing soon and warned it would be impossible to prioritize debt payments over other obligations. 

In a report released on Thursday, the Treasury Department said a U.S. debt default could force up borrowing costs, weaken investment and curb growth. This could inflict damage on the economy that could last for longer than a generation. 

"A default would be unprecedented and has the potential to be catastrophic," Treasury said. . . .

Why all this discussion of default is wrong.

Unless the Obama administration completely mismanages everything, there is no reason for the failure to raise the debt ceiling to result in a default.  Revenue greatly exceeds required payments on interest (in FY 2014 net interest is supposed to be $238 billion out of revenue of $3.069 trillion -- 7.75%, see page 4 of this CBO report).  You don't need to repay principle -- all you have to do is roll that debt over again because total debt is being held constant if the debt ceiling isn't increased.  Now it is true that revenue doesn't come in at a constant rate, but given how much greater revenue is than the interest payments, just a tiny bit of planning is all that is necessary to balance things off.

On CNN on Sunday, Jack Lew made this claim:

Tuesday I wrote to Congress saying I used my last extraordinary measures. I have no more. That means that on October 17th, we'll run out of the ability to borrow. We'll be left with some cash on hand. And, I've told Congress it will be roughly $30 billion. 

And $30 billion is a lot of money. But when you think about the cash flow of the government of the United States, we have individual days when our negative or positive cash flow is 50 or $60 billion. So, $30 billion is not a responsible amount of cash to run the government on. . . .

If the normal ability of the government to smooth over shifts in outlays has been exhausted by the Obama administration, that is their fault.  Deals should have been reached well before this and President Obama should have been involved in those discussions.  To say that this is all the Republicans' fault because they don't give Obama everything that he wanted is ridiculous.  Still Lew's statement is sufficiently vague that it hides the fact that this cash flow is both positive and negative and tends to be much more likely to be positive when comparing revenue to interest payments.

Shutdown is cutting government spending by only 17 percent -- above level it was before Obama became president.

From the Washington Examiner:

"Based on estimates drawn from CBO and OMB data, 83 percent of government operations will continue. This figure assumes that the government pays amounts due on appropriations obligated before the shutdown ($512 billion), spends $225 billion on exempted military and civilian personnel, pays entitlement benefits for those found eligible before the shutdown (about $2 trillion), and pays interest costs when due ($237 billion). This is about 83 percent of projected 2014 spending of $3.6 trillion." . . .

By the way, cutting the projected $3.602 trillion in spending for 2014 by 17% would leave government spending at $2.990 trillion.  The year before president Obama became president government spending was at $2.983 trillion (see Table B-78).  It is only a 13% cut in spending from the $3.455 trillion in FY 2013.  Is the world really about to end if government spending was temporarily just a little higher than it was at the end of the Bush administration?

Of course, population has grown by about 3.99 percent since 2008 (to about 316.236 million in 2013 from 304.094 million in 2008) and prices have gone up by about 7.7 percent (index at 231.89694 in August 2013 (obtained by linking this series with the newest BLS numbers) and was at 215.303 in 2008).  So if you adjust for population growth and inflation, spending after the cut is $2.652 trillion -- that represents a 10 percent cut in real per capita government spending from what it was in 2008.

Given that during the presidential debates in 2008 Obama claimed that government spending had been increasing too much, this shutdown might be getting government back to the level of government Obama said he supported when he first ran for president.  From the Second presidential debate in 2008:

When George Bush came into office, our debt -- national debt was around $5 trillion. It's now over $10 trillion. We've almost doubled it. 

And so while it's true that nobody's completely innocent here, we have had over the last eight years the biggest increases in deficit, spending, and national debt in our history. And Sen. McCain voted for four out of five of those George Bush budgets. 

So here's what I would do. I'm going to spend some money on the key issues that we've got to work on. 

You know, you may have seen your health care premiums go up. We've got to reform health care to help you and your budget. 

We are going to have to deal with energy because we can't keep on borrowing from the Chinese and sending money to Saudi Arabia. We are mortgaging our children's future. We've got to have a different energy plan. 

We've got to invest in college affordability. So we're going to have to make some investments, but we've also got to make spending cuts. And what I've proposed, you'll hear Sen. McCain say, well, he's proposing a whole bunch of new spending, but actually I'm cutting more than I'm spending so that it will be a net spending cut. . . . .

BTW, for those interested in a handy place to get data here is a good source. 

How can Obama justify his demand that states shutdown state parks?

So what if the federal government covers some of the costs of state parks?  Can't the state governments make up their own minds about whether they want to temporarily cover the difference?  On top of all this, the House Republicans (and some Democrats) have already passed a spending bill for the nation's parks, but Democrats in the Senate won't allow a vote on it.  Well, at least one governor has ignored Obama's demands on closures.  From The Hill newspaper:

Wisconsin Gov. Scott Walker (R) is defying orders from Washington, D.C., to close down several state parks that receive federal funding. 

Despite receiving a closure directive from the National Park Service, Wisconsin's Department of Natural Resources (DNR) has decided instead that parks partly funded by the federal government would stay open to the public.  

In the wake of this week's federal government shutdown, the U.S. Fish and Wildlife Service also placed barricades by a boat launch on the Mississippi River because it was on federal land. Wisconsin’s natural resources agency reopened it.  

State officials said they had legal authority to remove the barricades at the boat landing because of an agreement Wisconsin has had with the federal government since 1961.  

"We respect the magnitude of the process the federal government has had to undertake to close its properties and certain activities on properties they own and manage," Wisconsin's Natural Resources Secretary Cathy Stepp told department employees in an email obtained by The Hill. . . .

More Obama hyperbole on the impact that the shutdown will have on the economy

JOHN HARWOOD: You mentioned calm. Wall Street's been pretty calm about this. The reaction I would say, generally speaking, has been, "Washington fighting, Washington posturing, yaddah, yaddah, yaddah." Is that the right way for them to look at it? 

PRESIDENT BARACK OBAMA: No, I think this time's different. I think they should be concerned. And-- I had a chance to speak to-- some of the financial industry who came down for their typical trip. And I told them that-- it is-- not unusual for Democrats and Republicans to disagree. That's the way the founders designed our government. Democracy's messy. 

But when you have a situation in which-- a faction is willing potentially to default on-- U.S. government obligations-- then we are in trouble. And if they're willing to do it-- now, they'll be willing to do it later. One thing that I often hear-- is, "Well, Mr. President-- even if they're being unreasonable, why can't you just go ahead and-- do something that makes them happy now?" And I have to remind people-- 

White House thinks it can tell the press this and still not be blamed for shutdown: "Not giving an inch is seen as best strategy for win at White House"

From The Hill newspaper:

There was no shadow of doubt at the White House as the clocked ticked down to midnight Monday. 

Officials suggested that a refusal to negotiate over funding the government was the winning strategy. 

White House officials expressed confidence they wouldn’t have to back down in the slightest, while aides close to Obama, former administration officials and top Democratic strategists who confer with the White House say the chances of them negotiating with Republicans are slim to none. . . .