POTUS Re-Election: 5 Key Issues for Feds

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Comment by David B. Grinberg on November 15, 2012 at 4:47pm

Federal Times reports: "Experts say pay reform appears unlikely soon"

"Despite statements from the Obama administration that it is looking at reforming the six-decade-old General Schedule pay system for federal employees, outside experts see little chance of big changes to the system soon. Critics charge the GS system is antiquated, is overly rigid for many of today’s agencies, fails to reflect market pay levels and is incapable of encouraging and rewarding high performance. Supporters argue the system is perceived by many employees as more equitable and less prone to discrimination than alternative performance-based pay systems. Republican and Democratic administrations have called for reforms to the GS system, but intense opposition to significant changes from federal unions and their allies in Congress has blunted reform efforts in the past."

Comment by David B. Grinberg on November 13, 2012 at 4:44pm

GovExec.com reports, "Cuts in federal pay and benefits are among deficit reduction possibilities":

"Lawmakers have a range of options for cutting spending and increasing revenues to rein in the government’s current trillion-dollar deficit, CBO said. And those choices could include increasing health care costs for military retirees, decreasing the government’s contribution to the Federal Employees Health Benefits Program, capping increases in military basic pay and reducing the annual across-the-board pay raise for feds. CBO estimated those changes could reduce the deficit by a total of $38 billion in 2020. Of the options affecting feds included in the report, limiting the TRICARE benefit for military retirees and their dependents would save the most money, at approximately $14 billion in 2020, according to the nonpartisan CBO.

The estimated savings from those changes and from adjustments to other mandatory and discretionary programs governmentwide is a drop in the bucket, however, compared to the real source of Uncle Sam’s burgeoning budget problem: the escalating cost of entitlement programs like Medicare, Medicaid and Social Security."

Comment by David B. Grinberg on November 13, 2012 at 4:03pm

Thanks, Henry, for sharing another enlightening article about the Fiscal Cliff.

All this talk reminds of the movie Rocky III when challenger Clubber Lang (played by "Mr. T") was asked about his prediction for the upcoming fight against Rocky --
"Prediction...PAIN," Lang remarked with a grimacing stareinto the camera.
You can watch the video clips at http://www.youtube.com/watch?v=lSPNQ82Sq4E

Meanwhile, here's an Associated Press (AP) article that sheds more light on the specific types of pain the Fiscal Cliff would entail: http://bigstory.ap.org/article/most-us-wont-be-able-escape-fiscal-c...
According to the AP: "Everyone who pays income tax — and some who don't —will feel it.
So will doctors who accept Medicare, people who get unemployment aid, defense contractors, air traffic controllers, national park rangers and companies that do research and development.
The package of tax increases and spending cuts known as the "fiscal cliff" takes effect in January unless Congress passes a budget deal by then. The economy would be hit so hard that it would likely sink into recession in the first half of 2013, economists say.
And no matter who you are, it will be all but impossible to avoid the pain.
Middle income families would have to pay an average of about $2,000 more next year, the nonpartisan Tax Policy Center has calculated.
Up to 3.4 million jobs would be lost, the Congressional Budget Office estimates. The unemployment rate would reach 9.1 percent from the current 7.9 percent. Stocks could plunge. The nonpartisan CBO estimates the total cost of the cliff in 2013 at $671 billion.
Collectively, the tax increases would be the steepest to hit Americans in 60 years when measured as a percentage of the economy."

Comment by Henry Brown on November 13, 2012 at 2:58pm

From Edweek Blog: Yes the slant is toward the Education portion of the budget but IMO should have some interest to perhaps help explain the impact of the Fiscal Cliff

Fiscal Cliff Cheat Sheet: 10 Frequently Asked Questions

Almost as soon as President Barack Obama was re-elected, the coming fiscal cliff took center stage. Lawmakers and the Obama administration are supposed to solve the problem in a planned "lame-duck" session of Congress, which starts today.

That means we can expect to hear the words "entitlements", "revenue", "loopholes", and "sequestration" a whole lot for the next couple months. What does it all mean for you, as a teacher/principal/superintendent/policy person?

Here's a breakdown of frequently asked questions:

1. What exactly is the fiscal cliff?
2. Sequestration? What's that? And how did it come about?
3. How would school districts be affected?
4. So ... wait—my school district is going to lose 8.2 percent of its federal funding on Jan. 2 if Congress doesn't figure something out?
5. Which districts should be really worried?
6. Are any programs exempt? And what about other programs that aren't funded through the Education Department?
7. So if sequestration actually goes through, what about maintenance of effort, where it applies?
8. What does President Obama say? What have leaders in Congress said?
9. What happens from here?

...
How can I get more information? There are a lot of great sources out there. Harkin's staff put together this analysis  (PDF File) of what the cuts would mean. The American Association of School Administrators has a sequestration tool kit.     Edweek coverage here and here.

Comment by David B. Grinberg on November 10, 2012 at 3:04pm

Superb points and questions, Peter!  My answers  are:
1) NO -- but, hopefully, I'm wrong. I don't think the EU will fragment to the extent of WWII days. However, the EU may lose some current members with collapsing economies, and thus need to reinvent itself.

2) NO. China is too vast in terms of the population's size and provincial diversity, as well as general geography, to have the current wealth spread or trickle down without the collapse of the current communist regime -- perhaps through another Tianamen Square mass popular uprising (albeit, this time successful with help from military defectors and with international support).

3)  NO. There will not be any wave of Western modernization throughout the Mid-East region -- at least not during our lifetime.  Of course, Israel is the lone exception.

 

 

Comment by Peter Sperry on November 10, 2012 at 1:50pm

David - We certainly agree on Europe. Right now the 3 most critical public policy decisions which could impact our future are all being made outside the United States. 1. Will the 27 members of the EU plus remaining European holdouts coalesce into a more well defined "United States of Europe" or recede back to the fragmented continent which existed prior to WWII? 2. Will Chinese leaders be able to bring the same level of prosperity to their inner provinces as has been achieved along the coast or will they also face fragmentation, interprovincial rivalry and possibly even an east-west civil war? 3. Will Islamic culture modernize in ways that fully accept diverse religious views and alternative lifestyles in pluralistic societies or turn inward as semi-authoritarian theocratic republics? Resolution of these three questions will have more impact on the interconnected global economy and our long term prosperity than any decisions made in Washington for the next decade.

Comment by David B. Grinberg on November 10, 2012 at 1:18pm

Thank you again, Henry and Peter, for sharing your valuable and insightful perspectives.  Your points are well made and well taken. As they saying goes, there are at least three sides to every story. 

I think it's also important for U.S. policymakers to step back and ponder the impact of the current U.S. economic situation in terms of ramifications on the global economy -- especially our friends in Europe, where the EuroZone may soon be teetering on the brink of collapse again, to the world economy's collective dismay.

Let's just hope the U.S. markets can settle themselves down and rebound before the EuroZone crisis go from bad to worse -- to potentially disastrous -- as Greece, Spain, Italy and other countries risk economic collapse, which could create an even bigger and more dangerous Domino Effect for the world if the EuroZone bites the dust.  The economic consequences would be unprecedented.

See The Guardian (UK), Reuters and similar news articles.

Comment by Peter Sperry on November 10, 2012 at 8:28am

Henry -- Good article and it makes a valid point. With interests rates this low, it is difficult to argue against continued borrowing. So Congress and the President will, as I said, posture for awhile, and then kick the can down the road.

David - you and I seem to have slightly different memories of the 90s. I think we sould agree to disagree. I believe we both accept the broader premise that national policy makers since the late 60s have consistently embraced short term feel good policies which continue to make long term challenges much more difficult. Starting with Johnson's reelection, Democrats have held the White House for 20 years, Republicans for 28. Democrats controlled both Houses of Congress for 28 years, Republicans controlled both Houses for 10 years and the parties have split control for 10. Democrats controlled both houses of Congress plus the White House for 12 years, Republicans for 4. Contrary to popular perception, there actually has been a great deal of bipartisan cooperation during this period. The most cynical, short sighted, politically motivated, long term counterproductive ideas of both parties have generally formed the foundation of these agreements. Everyone involved, particularly voters, are more than willing to bargain away their long term principles for short term gain.

Comment by Henry Brown on November 10, 2012 at 7:43am

ANOTHER Opinion From CNN Fortune blog

The fiscal cliff may be overblown
November 9, 2012: 10:32 AM ET
The U.S. isn't headed off the fiscal cliff or any other make-believe economic chasms, at least not anytime soon. Congress set this time bomb in motion and it will disarm it before it explodes.

By Cyrus Sanati

Go ahead. Jump.

FORTUNE -- The markets have taken a beating since President Obama trounced Mitt Romney in Tuesday's election. The Dow is down 3% in the last two trading sessions and looks to be headed further south on Friday. While it is true that the markets historically take a dive after an incumbent president wins reelection, this latest drop has many on Wall Street on edge. Forget the weak corporate earnings, the freak hurricane that hit the East Coast and renewed troubles in Europe – no, this is all because of one thing: the looming fiscal cliff. Or that is what we are to believe.

Indeed, the fiscal cliff is about as real of a problem as the nation's burgeoning national debt – it's theoretically bad, but it isn't bad enough for Washington to risk making the short term any more economically unpleasant than it has to be. After all, there will be elections for the House in just two short years, so neither side wants to go into that election cycle trying to defend why the government instituted growth killing spending cuts while allowing taxes to shoot up to address some arbitrary debt load that investors continue to fund for next to nothing.

Thursday, the nonpartisan Congressional Budget Office released its latest short and long-term economic forecasts for the country. Given all the hubbub over the fiscal cliff, the government bean counters so kindly presented two contrasting views of the economy – one in which the government drives off the fiscal cliff, which it must under current law, and one in which the government turns and just continues to drive on the edge of fiscal irresponsibility.

If the government gets caught up in partisan gridlock, all the Bush era tax cuts end on January 2nd – including those on capital gains and dividends (hence why the equity markets are in such a tizzy this week). Since the Congressional "super committee" failed to lay out at least $1 trillion in spending cuts over ten years as required under the Budget Control Act passed last summer, there will automatically be $600 billion in cuts to discretionary and mandatory spending and another $600 billion in defense-related spending (this is called the "sequester"). Together, the increase in taxes and the decrease in spending is what make up the dreaded fiscal cliff.

...

Comment by David B. Grinberg on November 9, 2012 at 8:05pm

THE FISCAL CLIFF - A VIEW FROM THE TOP

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