Three headlines caught our eye recently. First, as we expected, President Obama failed to produce a budget proposal by the first Monday in February as required by law for the third year in a row, and for the fourth out of the five Februarys in which he has been President:
For the third year in a row, President Obama on Monday blew the deadline for submitting his budget request to Congress, prompting Republicans to grouse once again about presidential fecklessness on fiscal matters.
Less usual was the administration’s refusal to say when Obama would release his 2014 spending plan. Congressional aides in both parties said they expect to see the budget in mid- to late-March—a delay of more than a month, unmatched by any other incumbent president except, on one occasion, Ronald Reagan.
Second, the President has instead called for the U.S. Congress to pass a small package of cuts in spending and increases in tax collections that would keep automatic spending cuts already set by law from taking place next month, but didn’t specify what spending to cut or taxes to hike, continuing his chosen strategy of not providing any sort of effective fiscal leadership for the nation:
President Obama on Tuesday called on Congress to pass a small package of spending cuts and tax changes to delay the start next month of deep reductions in domestic and defense spending that could deliver a fresh blow to a fragile economic recovery.
With time running out, Obama said, Congress should adopt measures to postpone the automatic spending reductions, known as the sequester, for a few months. Without any action, the cuts, worth $1.2 trillion over a decade, are scheduled to take effect March 1 and are causing deep anxiety among government workers and contractors.
Obama did not outline a specific proposal, and he said he still favored a broad deal of spending cuts and tax changes—which would eliminate deductions and loopholes that benefit the wealthy and certain industries—to replace the sequester.
The sequester that President Obama hopes to avoid would involve spending cuts totaling $85 billion between now and the end of the U.S. federal government’s current fiscal year on September 30, 2013, which would be equally split between defense and non-mandatory spending (so it wouldn’t affect things like Social Security, Medicare, Medicaid or payments on the national debt).
The third headline that caught our eye was in the news less than a week ago, as the Federal Reserve announced that it would continue loaning an additional $85 billion per month to the U.S. government indefinitely, buying up U.S. Treasury securities and mortgage-backed securities issued by the U.S. government-supported basket cases Fannie Mae and Freddie Mac:
The Federal Reserve will keep purchasing securities at the rate of $85 billion a month after the economy paused because of temporary forces including bad weather.
“Growth in economic activity paused in recent months in large part because of weather-related disruptions and other transitory factors,” the Federal Open Market Committee said today at the conclusion of a two-day meeting in Washington. “Household spending and business fixed investment advanced, and the housing sector has shown further improvement.”
Chairman Ben S. Bernanke has unleashed the power of the central bank to buy unlimited amounts of Treasury and mortgage- backed securities in a bid to end a four-year long period of unemployment above 7.5 percent and bolster an economy that shrank 0.1 percent in the fourth quarter.
So, what the President wants is for the U.S. Congress to go along with his non-specific plan to keep from having to cut his spending by roughly $14 billion per month (or $85 billion over six months), which requires the federal government to borrow at least $85 billion per month to sustain.
And that’s how Washington D.C. works these days. Or not.