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E-News 4/22/11

1) The Week Just Past: Warning Signs on America’s Economy

2) What the S&P’s Warning Means

3) Noted with Interest: S&P on Budget Deficits

4) Absurd Quote of the Week: More Taxes = Less Spending?

5) New Questions for an Obama Health Care Cutting Scheme

6) Just the Facts: A Busy House

7) Rodney and the Revolution

 

The Week Just Past: Warning Signs on America’s Economy

“Burdened by a $14 trillion national debt, the United States received a ‘shot across the bow’ this week: we were warned that the United States could lose its coveted status as the world’s most secure economy if we don’t rein in that debt.

“The ratings agency Standard & Poor’s issued a 'negative' outlook on the U.S., saying, 'We believe there is a material risk that U.S.policy makers might not reach an agreement on how to address medium-and long-term budgetary challenges by 2013.  If an agreement is not reached and meaningful implementation does not begin by then, this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer ‘AAA’ sovereigns.'

“For decades, Washingtonhas blindly increased our debt while doing little to stop spending money that it doesn’t have, a dangerous pattern that must end.

“As S&P made clear this week, getting spending and our deficit under control can no longer be put off for another day.  This ‘wake-up call’ must lead to serious reforms that immediately reduce federal spending and end the culture of debt in Washington.

“Despite the President's ‘bully pulpit,’ his extraordinary ability to mold public opinion, and his relatively high personal approval ratings, he stands in stark contrast to our Congressional colleague, Budget Committee Chairman Paul Ryan (WI), in his unwillingness to really address major fiscal issues ahead such as balancing the budget, heeding this S&P ‘wakeup call’ on the country's debt, making some tough fiscal reforms part of the raising of the upcoming federal debt ceiling debate and largely ignoring his own Simpson-Bowles fiscal commission.

“And then he has the temerity to propose yet another ‘bipartisan/bicameral committee’ to reexamine and readdress the same issues again! 

“Last week, I voted for Paul Ryan’s fact-based budget that stops the government from spending money that it doesn’t have and focuses on private sector job growth so that people can get back to work.  This is precisely why President Obama should work with us NOWto cut spending, reform our tax code and rule out raising taxes.” 

                             Rodney Frelinghuysen

What the S&P’s Warning Means

The United Statesis at risk of having its pristine credit rating lowered if policymakers in Washingtoncannot agree on a plan to bring down the nation's deficits over the long term.

Standard & Poor's, one of the three main agencies that rate the ability of companies and sovereign nations to repay their debts, lowered its outlook for America's long-term credit rating to "negative" from "stable."

“We believe there is a material risk that U.S.policy makers might not reach an agreement on how to address medium-and long-term budgetary challenges by 2013,” S&P said in a report.

S&P added: “If an agreement is not reached and meaningful implementation does not begin by then, this would in our view render the U.S.fiscal profile meaningfully weaker than that of peer ‘AAA’ sovereigns.”

What would this change mean?

It could mean that there is a one-in-three chance that S&P could downgrade the nation's "AAA" credit rating within two years.  That would make it harder for the U.S.government to borrow money to fund its activities.

Currently, with its AAA rating, it costs America6.5 cents to borrow one dollar for two years.  But Greece, with a BB rating, has to pay 20 cents for every dollar it borrows.  And borrowing costs for the government affect borrowing costs for consumers and the job creators in our economy – small businessmen and women.

Recommended Reading: Wednesday editorial in the Washington Post, “On deficits, let a thousand firebells ring.”

Noted with Interest: S&P on Budget Deficits

The S&P analysis discussed fiscal conditions, most notably the scale of the deficit problem before and after 2008: "[I]n 2003-2008, the U.S.'s general (total) government deficit fluctuated between 2% and 5% of GDP. Already larger than that of most 'AAA' rated sovereigns, it ballooned to more than 11% in 2009 and has yet to recover."

Recommended Reading II: Sunday editorial in the Wall Street Journal, “Where the Tax Money Is. Obama targets the middle class while pretending to tax only the rich.”

Absurd Quote of the Week: More Taxes = Less Spending?

This week in Palo Alto, California, President Obama declared that raising taxes on families and small businesses would “do a lot in terms of us reducing our overall spending.” 

Of course, "reducing our overall spending" requires actually cutting spending, not raising taxes.

New Questions for an Obama Health Care Cutting Scheme

The Chairman of key Congressional Committees have some questions regarding the White House’s health-care rationing board.

“Rationing care from Washingtonbureaucrats is not the answer to fixing Medicare,” Budget Committee chairman Ryan said. “Empowering individuals and personalizing Medicare is needed to ensure this program is stable and secure for current and future beneficiaries.”

This week, the chairmen of the Ways and Means Committee and the Energy and Commerce Committee asked the White House to explain the President’s recent suggestions that the Independent Payment Advisory Board (IPAB) be given more power to cut medical spending.

The IPAB was established in the Obama-Pelosi "Obamacare" bill to control health-care costs by denying or approving medical treatments for millions of Americans. In his April 13 budget speech, the President suggested that its role be expanded to help reduce the annual deficit.

In the same speech, the President also suggested that the panel could help cut $340 billion in Medicare and Medicaid costs by 2021, another $480 billion in the next two years, and more than $1 trillion in the following decade.  Obamacare already cut $500 billion in future spending from Medicare’s complementary program, the popular Medicare Advantage program.

The letter sent by Camp and Upton to the White House asks the President to fill in the blanks on his deficit-reduction speech.  “Do you recommend making all [medical] providers subject to IPAB cuts beginning in 2014?… what specifically do you mean by ‘giving the IPAB additional tools to improve the quality of care while reducing costs’[?]… Would this require a statutory change?”

Rodney fundamentally disagrees with the establishment and operation of IPAB.   He has cosponsored H.R. 452, Medicare Decisions Accountability Act, which would eliminate the controversial board. 

It should be noted, however, that resistance to IPAB is bi-partisan.  75 Democrats last year wrote to then-Speaker Pelosi expressing strong opposition to the board.

Just the Facts: A Busy House

USA Todayreported this week that under Speaker John Boehner, the House of Representatives has taken 277 roll-call votes this year — the fastest pace of any House since Newt Gingrich was first elected speaker in 1995.

The Senate has had fewer votes, 68, than any time since 1997.

Rodney and the Revolution

Rodney was the kick-off speaker last weekend at the first-ever Annual Symposium of the “North Jersey American Revolution Round Table” at George Washington’s headquarters in Morristown.  The “Round Table” was part of the Revolutionary Times Weekend, a three-day event focusing on MorrisCounty's role in the Revolutionary War and its implications for today.

As part of this remarks, Rodney noted the presence of John Cunningham, one of New Jerseypremier historians. 

“John’s knowledge and contributions to the heritage and culture of New Jerseyare unmatched and almost equal his love for our state,” he said.