House Rejects Balanced Budget Proposal

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http://news.yahoo.com/house-rejects-balanced-budget-proposal-185905943.html

WASHINGTON (AP) — The House has rejected a proposal to amend the Constitution to require a balanced budget, seen by many as the only way to force lawmakers to hold the fiscal line and reverse the flow of federal red ink.

The 261-165 vote was 23 short of the two-thirds majority needed to advance a constitutional amendment. Democrats, swayed by the arguments of their leaders that a balanced budget requirement would force Congress to make devastating cuts to social programs, overwhelmingly voted against it.

Four Republicans joined the Democrats in opposing the measure.

The first House vote on a balanced budget amendment in 16 years comes as the separate bipartisan supercommittee appears to be sputtering in its attempt to find at least $1.2 trillion in deficit reduction over the next decade.

With the national debt now topping $15 trillion and the deficit for the just-ended fiscal year passing $1 trillion, supporters of the amendment declared it the only way to stop out-of-control spending. The government now must borrow 36 cents for every dollar it spends.

"It is our last line of defense against Congress' unending desire to overspend and overtax," Judiciary Committee Chairman Lamar Smith, R-Texas, said as the House debated the measure.

But Democratic leaders worked aggressively to defeat it, saying that such a requirement could force Congress to cut billions from social programs during times of economic downturn and that disputes over what to cut could result in Congress ceding its power of the purse to the courts.

Even had it passed, the measure would have faced an uphill fight in the Democratic-controlled Senate.

The Democratic argument was joined by 16-term congressman David Dreier of California, who broke ranks with his fellow Republicans to speak against the measure. The Rules Committee chairman said lawmakers should be able to find common ground on deficit reduction without changing the Constitution, and he expressed concern that lawsuits filed when Congress fails to balance the budget could result in courts making decisions on cutting spending or raising taxes.

The House passed a similar measure in 1995, with the help of 72 Democrats. That year, the measure fell one vote short of passing the Senate. This year, only 25 Democrats supported the proposal.

Constitutional amendments must get two-thirds majorities in both houses and be ratified by three-fourths of the states. The last constitutional amendment ratified, in 1992, concerned lawmaker pay increases.

The second-ranking Democrat, Steny Hoyer of Maryland, voted for the amendment in 1995 but said the situation has vastly changed since then. "Republicans have been fiscally reckless," he asserted, saying the George W. Bush administration would not cut spending elsewhere to pay for the wars in Iraq and Afghanistan, major tax cuts and a Medicare prescription drug benefit.

"A constitutional amendment is not a path to a balanced budget," said Rep. Lloyd Doggett, D-Texas. "It is only an excuse for members of this body failing to cast votes to achieve one."

Conservatives had pressed for a tougher version of the amendment that would have also set tight caps on annual spending and required a supermajority to raise taxes.

The measure on the floor Friday, sponsored by Rep. Robert Goodlatte, R-Va., mirrors the 1995 resolution in stating that federal spending cannot exceed revenues in any one year. It would require a three-fifths majority to raise the debt ceiling or waive the balanced budget requirement in any year. But Congress would be able to let the budget go into deficit with a simple majority if there was a serious military conflict.

The Republicans' hope was that the Goodlatte version would attract more Democratic supporters, and the "Blue Dogs," a group of fiscally conservative Democrats, said they were on board. But there are now only 25 Blue Dogs, half the number of several years ago when there were more moderate Democrats, mainly from rural areas, in the House.

Rep. Peter DeFazio, an Oregon Democrat who is not a Blue Dog member, said he was supporting the amendment because "there's an infinite capacity in this Congress to kick the can down the road. ... We are going to have to force people to make tough decisions."

But other Democrats pointed to a letter from some 275 labor and other mostly liberal groups saying that forcing spending cuts or higher taxes to balance the budget when the economy was slow "would risk tipping a faltering economy into recession or worsening an ongoing downturn, costing large numbers of jobs."

Democrats also cited a report by the liberal Center on Budget and Policy Priorities estimating that, if there is not an increase in revenues, the amendment could force Congress to cut all programs by an average of 17.3 percent by 2018.
The amendment would not have gone into effect until 2017, or two years after it was ratified, and supporters said that would give Congress time to avoid dramatic spending cuts.

Forty-nine states have some sort of balanced budget requirement, although opponents note that states do not have national security and defense costs. States also can still borrow for their capital-spending budgets for long-term infrastructure projects.

The federal government has balanced its budget only six times in the past half-century, four times during Bill Clinton's presidency.
 
In related news......

WASHINGTON (AP) — A congressional official says Democrats on the deficit-cutting supercommittee have rejected a last-ditch offer from the Republicans that would curb deficits by $545 billion over the next decade.

The latest development raised serious doubts about the 12-member bipartisan panel reaching an agreement by Wednesday's deadline.
Democrats called it a "halfway" proposal and said it was unbalanced because it included just $3 billion in tax revenue.

The panel's mandate is to produce a plan to cut deficits by at least $1.2 trillion over 10 years. If they fail, it would trigger automatic, across-the-board cuts to the Pentagon and a wide variety of domestic programs.

The congressional official spoke on condition of anonymity because of the sensitivity of the talks.

http://news.yahoo.com/official-dems-reject-latest-gop-deficit-offer-201542541.html
 
Blame Game..

http://news.yahoo.com/deficit-gridlock-looms-supercommittee-deadlocked-221121080.html

WASHINGTON (AP) — Deadline nearing, the deficit-reduction talks in Congress sank toward gridlock Friday after supercommittee Democrats rejected a late Republican offer that included next-to-nothing in new tax revenue. Each side maneuvered to blame the other for a looming stalemate.

The panel faces a deadline of next Wednesday, the day before Thanksgiving, and lawmakers on both sides stressed they were ready to meet through the weekend in a last-ditch search for compromise.

But there was little indication after a day of closed-door meetings that a breakthrough was likely, both Democrats and Republicans emphasizing long-held political positions.

"Where the divide is right now is over taxes, and whether the wealthiest Americans should share in the sacrifices," said Washington Sen. Patty Murray, the Democratic co-chair of the panel.

But Michael Steel, a spokesman for House Speaker John Boehner, said Republicans had offered "a balanced, bipartisan plan - the fact that it was rejected makes it clear that Washington Democrats won't cut a dime in government spending without job-killing tax hikes."

While prospects for a deal faded, House Democrats checked a Republican attempt to pass a balanced budget amendment to the Constitution. The vote was 261-165, or 23 shy of the two-thirds majority required. GOP lawmakers voted overwhelmingly in favor, while Democrats generally opposed it, sealing its doom.

The vote on a noisy House floor contrasted to the secretive proceedings inside the supercommittee, a panel that projected optimism when it began its quest for a deficit deal late last summer but has yet to come to any significant compromise.

Republicans disclosed during the day they had outlined an offer on Thursday for about $543 billion in spending cuts — leaving Medicare, Medicaid and Social Security untouched — and $3 billion in higher tax revenue.

Most if not all of the recommended savings were items that Democrats have agreed to in earlier talks, but only, party officials said, on condition they part of a larger deal in which Republicans agreed to additional tax increases.

Democrats have long demanded that Republicans agree to significant amounts of higher taxes on the wealthy as part of any deal, and they quickly rejected the offer, according to officials in both parties.

It was unclear where the talks would turn next, but the GOP proposal suggested the discussions had effectively moved into a range of savings far below the $1.2 trillion the committee has been seeking.

It also appeared Republicans were jettisoning a plan for $300 billion in higher tax revenue, an offer that had exposed internal GOP divisions when it was presented two weeks ago. It also has failed to generate momentum for a compromise among Democrats.

If the panel fails to reach agreement, $1.2 trillion in automatic spending cuts are to take effect beginning in 2013, a prospect that lawmakers in both parties say they want to avoid.

That is particularly true among defense hawks, who argue that the Pentagon cannot sustain the estimated $500 billion in cuts that would be required on top of the $450 billion already in the works.

In a letter to Murray and Rep. Jeb Hensarling, R-Texas, the GOP chairman of the supercommittee, the head of the House Armed Services Committee warned of "immediate, dire and in some cases irrevocable" damage to the nation's military. "Our ability to respond to national security crises or humanitarian disasters would be disrupted," added Rep. Howard P. (Buck) McKeon, R-Calif.

Republicans familiar with the GOP plan said it included $543 billion in spending cuts, fees and other non-tax revenue, as well as the $3 billion corporate jet provision. There also would be $98 billion in reduced interest costs.

Officials familiar with the offer said it would save the government $121 billion by requiring federal civilian workers to contribute more to their pension plans, shave $23 billion from farm and nutrition programs and generate $15 billion from new auctions of broadcast spectrum to wireless companies.

It also would claim about $100 billion in savings from Pentagon civilian personnel costs and another $35 billion by increasing the fee that mortgage giants Fannie Mae and Freddie Mac charge lenders to guarantee repayment of new loans. The fee increase would add $15 a month to the monthly cost of an average new mortgage.

The per-ticket security fee to pay for Transportation Security Administration operations at the nation's airports would increase, and $18 billion would come from savings within Postal Service accounts.
 

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