Bottom-lining the debt deal

posted at 2:00 pm on August 2, 2011 by Steve Eggleston
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There’s been a lot of numbers and rhetoric tossed about on what the debt deal (shortened to The Deal, not because I like it, but because it makes the phrase stand out) does and doesn’t do. However, I don’t believe anybody has done an exploration of the absolute effect is. It’s high time to do so.

Baselines matter

First, the base from which the reductions are to be needs to be established. While that base has been established to be a “modified” version of the March 2011 Congressional Budget Office extended-baseline scenario, a quick review of which is part of the CBO’s review of the President’s FY2012 budget proposal.

The extended-baseline scenario assumes the CBO’s estimates, based on current law and not necessarily current policy, of direct spending (which, among other things, ends the Medicare “doc fix”) and revenues (which, among other things, assumes that all of the Bush tax rates expire at the end of 2012 and the Alternate Minimum Tax is no longer “indexed” to keep middle- and lower-income Americans from being caught in that trap), and that every top-line category of discretionary spending that does not explicitly end in FY2010 is increased at the rate of inflation.

The bottom line on that is that, on $39.03 trillion in revenue and $45.77 trillion in outlays, there would be $6.74 trillion in deficit spending. However, there are a couple of “wrinkles” that were added to that in the baseline used.

Normally, that would include spending on what used to be known as (and is still called by the Republicans on the House Budget Committee) the Global War on Terror. However, every entity, from the White House to the House of Representatives to the Senate Democrat leadership, agrees that, instead of spending $1,589 billion over the next 10 years as the extended-baseline scenario calls for, $545 billion will be spent. While the CBO excluded the entirety of that at the request of Congress as it is not part of this bill, I will add the $545 billion back in, using the House budget spending by year, as there is no difference year-to-year between the President’s and the House of Representatives’ budgets.

Also, the CBO, at the request of Congress, has figured in the effects of the final FY2011 continuing resolution. That is another $122 billion reduction in spending.

Taking the full effect of those modifications into consideration, the federal government would take in $39.03 trillion in revenue, spend $44.60 trillion, and run a 10-year deficit of $5.57 trillion.

There are a couple of other “baselines” that one could choose. The President’s budget, according to the CBO, would take in $36.70 trillion in revenue, spend $46.17 trillion, and run a 10-year deficit of $9.47 trillion. That budget already includes all of the modifications above.

An “Alternate Fiscal Scenario” from the CBO, which assumes various spending and revenue options, including those outlined above, are affirmatively extended rather than allowed to expire or otherwise not happen and last outlined in percentage-of-GDP form in June, would also need to be adjusted by the above adjustments. Once that is done, it would presume $35.05 trillion in revenues, $46.81 trillion in spending, and $11.76 trillion in deficits.

Meanwhile, the House budget, which keeps all of the Bush tax rates, indexes the AMT, and does some further tax cuts, envisions $34.87 trillion of revenues, $39.96 trilion of spending, and $5.09 trillion of deficit spending. Like the President’s budget, it already includes all the modifications above.

The first 2 years – $63 billion in scorable deficit reduction versus the “adjusted” CBO baseline

Like the CBO, I cannot and will not attempt to score the effects of a potential $1.2 trillion in “trigger” cuts, $1.5 trillion in “commission” cuts, or adoption of a Balanced Budget Amendment. However, I have actually read the bill, and the discretionary spending caps are, unlike the $1.2 trillion-$1.5 trillion in “additional cuts”, actual hard numbers, not nebulous percentages or “reduction” numbers”. Therefore, actual bottom-line spending comparisons can be made against any base. As the CBO used an adjusted version of their March 2011 baseline, I added the (all-but-)agreed-to spending levels on the GWOT to do so.

Using the adjusted CBO baseline, there would be, between FY2012 and FY2013, $5.65 trillion in revenue, $7.34 trillion in spending, and $1.69 trillion in deficit spending. Adopting The Deal l would knock the spending down to $7.28 trillion and deficits down to $1.63 trillion.

By way of comparison, the President’s budget would have $5.44 trillion in revenue, $7.51 trillion in spending, and $2.07 trillion in deficits. That’s an additional $233 billion in spending and $438 billion in deficits versus The Deal.

The House budget would have $5.39 trillion in revenue, $7.09 trillion in spending, and $1.69 trilllion in deficits. While spending in the House budget would be $190 billion less than The Deal and $253 billion less than the adjusted CBO baseline, the deficit would be slightly higher than The Deal and insignifiantly less than the adjusted baseline as, instead of the Bush tax rates expiring at the end of 2012 (1/4th the way through 2013) and the AMT “indexing” not happening, both would continue as they have the past 8 years.

The “out” years – $855 billion in “scorable” deficit reduction – if The Deal holds

I will preface this that there is a significant amount of debt service savings from the reductions in spending on the GWOT that were scored in the two budgets that were not scored separately in even the CBO analysis of the Senate proposals. Judging by the CBO scoring of the Senate proposal versus the House proposals and The Deal, that is roughly $220 billion in reduced spending over the 10 years not reflected in either the adjusted CBO baseline or The Deal.

Also, the bulk of the $1.2 trillion-$1.5 trillion in additional deficit reduction, or any adoption of a Balanced Budget Amendment, will happen in this time frame. As noted above, that cannot be properly scored as yet.

With that said, the adjusted CBO baseline anticipates $33.39 trillion in revenues, $37.26 trillion in spending, and $3.87 trillion in deficits between FY2014 and FY2021. The Deal changes the spending to $36.41 trillion and the 8-year deficit to $3.02 trillion.

The President’s budget is a veritable blowout of spending, especially deficit spending. On $31.26 trillion of revenue, there would be $38.67 trillion of spending and $7.40 trillion of deficits.

While the House budget would continue to spend less at $29.48 trillion, its reduced expectation of revenue of $32.87 trillion would result in $3.39 trillion in deficits.

What about tax hikes?

While The Deal does not explicitly address taxes, I’ve got bad news for everybody (or at least everybody who thinks a non-WWII record level of revenues as a percentage of GDP in 2021 is a bad idea) on that front. Any attempt to either extend any part of the Bush tax rates beyond 2012 or keep “indexing” the AMT will be scored as a deficit increase. The back-of-the-envelope numbers on the various proposals are that the “scored” increase would be about $2.5 trillion for the Obama “hold those under $200K/$250K harmless” plan, $3.5 trillion for full extension of the Bush tax rates, and $4.2 trillion to continue the entirety of the current tax structure.

What about S&P and Moody’s?

Again, baselines matter. Unfortunately, neither S&P nor Moody’s appear to have mentioned from which baseline they wanted the “$4 trillion in deficit reduction”. It has been said that Cut, Cap and Balance, even before adoption of the Balanced Budget Amendment, would have met that. However, I have not seen any CBO score on that.

Moreover, up until the Congressional leadership decided to start talking to each other instead of with President Obama, it was widely assumed the $4 trillion that was being talked about was against the President’s budget and its $9.47 trillion 10-year deficit spending. The House budget, and the Cut, Cap and Balance bill that, after higher spending in FY2012 compared to that, used percentage-of-GDP spending levels based on that budget, would easily have cleared that hurdle.

Going against the President’s budget, The Deal, with $4.65 trillion in 10-year deficit spending, also would very easily clear that hurdle, even before the “trigger”/commission/BBA. Moody’s has already said they would maintain a negative outlook on the US soverign debt, while S&P is making noises that they will downgrade the debt. I have to wonder what more those credit rating agencies want.

Revisions/extensions - I really need to proofread these opii. Corrected a typo. I hope there isn’t more.

This post was promoted from GreenRoom to HotAir.com.
To see the comments on the original post, look

Obama in Pennsylvania virtual tie with … Rick Santorum?

posted at 1:22 pm on August 2, 2011 by Ed Morrissey
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Bad news comes out of the must-carry state of Pennsylvania today for Barack Obama and his re-election hopes.  Not only has Obama fallen far below water in his approval rating in the latest Quinnipiac poll, he has now dropped into a tie against a potential Republican nominee.  No, this isn’t a generic Republican, either:

    The protracted slugfest over raising the national debt limit leaves President Barack Obama with a 54 – 43 percent disapproval among Pennsylvania voters, but he scores better than Republicans or Democrats in Congress, according to a Quinnipiac University poll released today. …

    Pennsylvania voters say 52 – 42 percent that Obama does not deserve to be reelected. Matching the president against possible Republican challengers shows:

        Former Massachusetts Gov. Mitt Romney with 44 percent to Obama’s 42 percent;
        Former Pennsylvania Sen. Rick Santorum with 43 percent to Obama’s 45 percent;
        Obama leads Minnesota U.S. Rep. Michele Bachmann 47 – 39 percent;
        Obama tops Texas Gov. Rick Perry 45 – 39 percent.

The internals of the poll look even worse for Obama.  The overall deserves-re-election number is 42/52, a very bad number in Democrat-heavy Pennsylvania, where Democrats account for half of all registered voters.  Independents split almost exactly the same at 42/51, and the only region in which Obama has a majority for re-election is Philadelphia.  Even among union households, which should be Obama’s bread and butter, he only gets a narrow 48/45 split, roughly a virtual tie.

The head-to-head numbers are simply embarrassing for a Democratic President in Pennsylvania, especially against a former Keystone State Senator who got blown out in his last statewide election.  There is another reason to worry, too, in that series.  Obama doesn’t get to 50% against any Republican in head-to-head matchups, usually a big red flag for incumbents.  The best he does is 47% against Michele Bachmann.

If Obama is doing this badly in Pennsylvania, it strongly suggests a big opening in the Rust Belt for Republicans next year.  Democrats in Michigan have a similar registration advantage, but not in Ohio, Indiana, or even Wisconsin, which have similar demographics as Pennsylvania and all of which Obama carried in 2008.  Obama has a big, big problem in this region, and losing Pennsylvania might just be the beginning of his woes.

Open thread: Senate to vote on House-passed debt deal at noon Update: Senate passes debt deal, 74-26 Update: President ends this saga, signs debt deal

posted at 11:20 am on August 2, 2011 by Tina Korbe

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After a dramatic night in the House of Representatives last night, the disappointment of a debt deal that passed the House heads to the Senate, where it faces seemingly fewer obstacles than it faced in the House.

But that doesn’t mean passage will be “easy.” Senate Majority Leader Harry Reid has said no amendments will be allowed and the plan requires a supermajority of 60 votes to pass. One notable “no” vote will come from Senate Budget Committee ranking member Sen. Jeff Sessions (R-Ala.). The senator who has been sounding the warning bell about an eleventh hour deal for months — and who has kept the count as to how many days the Senate has gone without passing a budget resolution (825!) — explains why he can’t support the deal:

“We’re getting pretty far away from the traditions of this body when you don’t publicly debate a budget, you create a committee of limited numbers of people to produce legislation that can’t be amended,” Sessions says in the video. “For those reasons, I feel like as a Senator and the ranking member on the Budget Committee who’s wrestled with this for some time, I would not be able to support the legislation. Though, I truly believe it is a step forward, and I respect my colleagues who’ve worked hard to try to bring it forward.”

Sen. Mike Lee (R-Utah), whose name has become almost synonymous with the push for a balanced budget amendment, is still a “no” vote, as is Sen. Ron Johnson (R-Wis.), while Senate Minority Leader Mitch McConnell (R-Ky.) and Sen. John McCain (R-Ariz.) remain “yes” votes, of course.

Senate Democrat opposition to the deal doesn’t rival Democrat opposition in the House, where Rep. Emanuel Cleaver created news by calling the deal a “sugar-coated satan sandwich” and House Minority Leader Nancy Pelosi implied it also features “satan fries on the side.” But I’ll keep an eye out for any likely “no” votes from the left side of the aisle.

Again, though, the bill is broadly expected to pass. Bill Hemmer just said the guidance Fox News has received suggests the Senate will give it at least 70 votes — so it won’t even be close. After that, attention will turn to the 12-member special commission.

Meanwhile, rumors of a downgrade despite the deal continue to circulate.

Update I: Reid is on the Senate floor right now, saying, “We were on the brink of disaster, but, one day before the deadline, we were able to avert that disaster. … There’s principally one winner through all of this: the American people. … The result of this Tea Party direction of this Congress has been very disconcerting. It stopped us from arriving at a conclusion much sooner. …”

Update II: Bill Hemmer just tweeted and AP reports that 60 senators have already voted “yes” for the deal, which means it passes. But the roll call continues. Guy Benson tweets that four Democrats have voted “no” so far: Sen. Frank Lautenberg (N.J.), Sen. Robert Menendez (N.J.), Sen. Tom Harkin (Iowa) and Sen. Bernie Sanders (VT).

Update III: The deal has passed, 74 to 26. Three more Dem “no” votes: Sen. Kirsten Gillibrand (NY), Sen. Jeff Merkley (Ore.) and Sen. Ben Nelson (Neb.). Now awaiting the president’s speech from the Rose Garden …

Update IV: In his Rose Garden speech, the president issued veiled instructions to the deficit-reduction joint committee created by the debt deal — instructions that amounted to, “Raise taxes.” For more, see my upcoming post in just a bit.

Update V: The president just signed the debt deal. Aaaannnddd … it’s over. For now.

'Twilight Saga' on Showtime

I'm watching movies. My oldest son was watching "Twilight" when I came downstairs earlier. We have it on DVD, but Showtime's playing the full saga and I kept watching. A nice break from reading and watching cable news all afternoon. (My youngest son's working on his Legos. More about that later. He's got some new ones.)

'Rizzoli & Isles' Second Season Premieres Tonight

Should be starting in a few minutes on the East Coast.

See Atlanta Journal Constitution, "‘Rizzoli & Isles’ Angie Harmon, Sasha Alexander riding high as second season starts." And New York Daily News, "'Rizzoli & Isles' review: Angie Harmon and Sasha Alexander have great female friend chemistry."

And a great Angie Harmon interview from last year:

Impressions: The Beatles LOVE Cirque du Soleil

I mentioned previously how moved I was by the show in Las Vegas. Charles Spencer, writing at The Telegraph UK in 2006, really captures the feeling:

Everything that was bold and beautiful, fresh and funny, sad and just plain silly about the Beatles comes together in this ravishing and almost indecently spectacular show. It's what old hippies call a head-trip, a constant 90-minute rush of dazzling sights and sounds.

But for those of us who grew up with the Beatles - and the first record I ever bought was She Loves You, aged eight, in 1963 - this latest piece from Cirque du Soleil is also overpoweringly moving. For it achieves the apparently impossible, allowing you to hear the Beatles with fresh ears. At times you seem to be listening to the music of your childhood and youth as if for the first time.

Spencer's a progressive, but folks might put aside ideological reservations and just enjoy the show. We were kids once. "Let It Be" is my most powerful Beatles memory as a child (and "Hey Jude" is right up there), and sometimes nostalgia is overpowering. And recall that recently I've been moved by George Harrison's songs, and it turns out that the one entirely original song at LOVE is Harrison's "While My Guitar Gently Weeps." It's just so impressive all around.

I'm taking my kids to see LOVE next time we're in Las Vegas. They'll have to listen to some of the CDs, but they're already familiar with a whole lot of The Beatles from hanging out with me, my musical tastes, and from just the radio environment.

The Beatles LOVE Cirque du Soleil

My wife and I have seen three performances so far by Cirque du Soleil. The shows are simply outstanding, but nothing's left me with the same feelings as the LOVE production. I'll be writing about it this weekend, and posting music videos and commentary. I've never been an absolute Beatles junky. The show was transformative, however. I can see better than ever how important The Beatles are to American culture. And not just from the show, which was so good — exquisite even. It's the fans, the excitement, and the demand for it all. I'll save some thoughts for later this morning. Here's the brief advertisement at the Mirage YouTube page:

The BBC had a write up in 2006, "Love unveils new angle on Beatles."

And last month, at Las Vegas Sun, "Paul McCartney, Yoko Ono lead celebration for ‘Love’ anniversary."

See the write up at Rolling Stone, "Paul McCartney Celebrates Fifth Anniversary of the Beatles 'Love' Show: Yoko Ono, Sean Lennon also attended Las Vegas performance."

Angie Harmon Squelches Rumors That 'Rizzoli & Isles' Characters Are Lesbian

Well, this story gives me a chance to blog Angie Harmon!

At Los Angeles Times, "'Rizzoli & Isles' — are they or aren't they?":

The first season of TNT's crime drama "Rizzoli & Isles" featured an episode with the title "I Kissed a Girl." Its stars, Angie Harmon and Sasha Alexander, played on a softball team, shared some intimate dinners, drank wine over candlelight and hopped into the same bed for girl talk.

But this is not a gay show.

Series creator Janet Tamaro described Harmon's Rizzoli and Alexander's Isles as a "power couple" — the center of a buddy drama, one that broke cable ratings records in its debut run and returns for its second season July 11. But the women are not together, as in together.

Tamaro chalks up the rampant are-they-or-aren't-they discussion to throwing "two gorgeous actresses together who have great, natural chemistry." She contends that Harmon's tomboyish homicide detective and Alexander's stylish medical examiner "are straight women who don't fear the interest in or the speculation about their relationship."

That hasn't stopped gay pop culture blog AfterEllen from dubbing the show, "totally gay, it just doesn't know it yet." Or another lesbian blog, CherryGrrl, from creating a "Rizzoli & Isles" drinking game, advising viewers to take a shot for interaction between the title characters that includes "stares lasting longer than three seconds," "sleeping in the same bed/couch/squad car," "adorable bickering which generally relates to sexual tension," or "complaining to each other about their inability to find a compatible mate, all while being completely compatible mates." The Washington Post even pointed to a hunky visiting FBI agent as a short-lived distraction from the "faintly lesbian undertones that the show keeps trying to establish."

Harmon, a veteran of "Law & Order," said she's familiar with the online chatter and that it's "super fun" to play a role that has some same-sex romantic vibes. She's relishing a character who's gruff and aggressive, the polar opposite of her own girlie personality, she said.

But as close as they are, Rizzoli and Isles are just best friends, she said. Really.

"I hate to disappoint, but these characters are straight," Harmon insisted. "If we lose viewers because of it — sorry!"

And that's amazing, that Harmon would note the possibility of LOSING viewers if the characters weren't gay. Reminds me of my post the other day, on the anti-hetero bigotry of Dan Savage. It's hard out there if you're straight. See: "Gay Sexual Abandon and the Perverse Inversion of Values by Same-Sex Extremists."

The Rizzoli & Isles page is here, on TNT.

Daniel Craig and Rachel Weisz Married!

What a couple!

I like them both a lot.

At London's Daily Mail, "The name's Craig, Mrs Craig: Rachel Weisz marries James Bond star Daniel."

The Bond films are great, although I liked Craig in "Defiance," which I wrote about at the time, a couple of years back:

And I enjoyed Rachel Weisz's sexy, stoical character in "Enemy at the Gates," a thrilling World War II film. Both of Weisz's parents escaped the Holocaust:

Peter Falk, 1927-2011

My parents let me and my sisters stay up to watch "Columbo" back in the day.

But I'll never forget seeing Falk in "Wings of Desire," in 1987:

An obituary is at Los Angeles Times, "Peter Falk dies at 83; actor found acclaim as 'Columbo'." And at New York Times, "Peter Falk, Rumpled and Crafty Actor on ‘Columbo,’ Dies at 83."

Britney Spears at Staples Center

A concert review, at Los Angeles Times:

And pics: "Britney Spears’ Femme Fatale Tour — Is Britney Having Fun Yet?"

'X-Men: First Class'

When we saw "Super 8" a couple of weekends back, the movie previews were wicked: "Transformers: Dark of the Moon," "Captain America," Green Lantern," "Zookeeper," "Harry Potter and the Deathly Hallows — Part 2," and "The Twilight Saga: Breaking Dawn Part 1."

I thought my youngest son would give me fist-bump during "Transformers," but it might have been a little scary, so he kept his fist to himself. But when "Captain America" previewed, he looked over and said, "You and me, you and me!", so I guess we're going to that one.

Anyway, on Father's Day my oldest boy said let's go to the movies, and we saw "X-Men: First Class," which as great. That said, mixed reviews at Los Angeles Times and New York Times:

Amy Winehouse Booed Off Stage in Serbia, Cancels Part of European Tour

I spent three years in L.A. going to concerts, nearly every weekend, and the only performer I can recall on stage this drunk was Darby Crash of The Germs. He could sing, no matter how wasted, but he died from a drug overdose in 1980, just a couple days after the last time I saw the band play. I've never seen Amy Winehouse, but this is just sad. It's all sad, the drugs, the lost promise, the death. At the Independent UK, "They know that she's no good... Amy Winehouse booed off stage in Serbia," and Los Angeles Times, "Amy Winehouse cancels part of European tour":

California Coastal Commission Rejects U2 Guitarist's Plan for Five-House Compound Near Malibu

Apparently not a "Beautiful Day" for U2's The Edge.

At Los Angeles Times, "Coastal Commission rejects U2 guitarist's Malibu development plan":

The California Coastal Commission on Thursday rejected a controversial proposal by U2 guitarist the Edge to build five mansions on a rugged ridgeline above Malibu that is home to mountain lions and native chaparral.

The 8-4 vote was the culmination of what has become a closely watched property rights battle between the musician, whose real name is David Evans, and the agency that regulates development along the California coastline.

"In 38 years of this commission's existence, this is one of the three worst projects that I've seen in terms of environmental devastation," Peter Douglas, the agency's executive director, said in an interview after the vote. "It's a contradiction in terms — you can't be serious about being an environmentalist and pick this location" given the effects on habitat, land formation, scenic views and water quality.

Douglas said he expected the matter to end up in court.

More at that link above.

And from Steve Lopez, "The Edge is a bully, not an environmentalist."

Skylar Grey at L.A. Times Magazine

"Hooked":

Her name doesn’t ring a bell when mentioned, though you certainly know the voice. There was Skylar Grey, front and center amid the smoke and shadows at February’s 53rd annual Grammy Awards, singing the hooks she wrote for Eminem, Dr. Dre and Rihanna during a haunting performance of “Love the Way You Lie” and “I Need a Doctor.”

Now the 25-year-old is making her move on the spotlight. Previously known as the girl who pens the lyrics or adds the inimitable vocal track (think Diddy-Dirty Money’s “Coming Home,” Lupe Fiasco’s “Words I Never Said” and T.I.’s “Castle Walls” featuring Christina Aguilera), she wants to be more than hip-hop’s go-to girl.

RTWT.

And check the photos at the Skylar Grey News fansite.

'Breastaurants'

At Entrepreneur, "'Breastaurants' Ring Up Big Profits" (via Instapundit):

Franchises inspired by the Hooters model--such as Celtic-themed sports bar chain Tilted Kilt Pub & Eatery and faux mountain sports lodge chain Twin Peaks--have expanded rapidly over the last half decade, while corporate-owned chains like Brick House Tavern + Tap and Bone Daddy's House of Smoke are picking up steam regionally. In fact, for the next couple of years, this segment (often referred to as "breastaurants") is poised to be one of the fastest-growing restaurant categories.

More at the link.

Obviously not the kinda place for guys like ASFL Scott Eric Kaufman.

Shopping at Wal-Mart

Out with the family, yesterday morning:

This is the Wal-Mart in Foothill Ranch. It's beautiful out there. That's Saddleback Mountain seen from the parking at the second picture below:

Turns out that Wal-Mart had its annual meeting on Friday, "Wal-Mart CEO pushes plan to keep retailer growing." And it announced a huge $15 billion stock buy-back: "Wal-Mart to Buy Back Billions More in Shares."

Cruising around the toy section:

I love Wal-Mart. Great selection of products, and of course great prices. And environmentally friendly? "Wal-Mart's motive is no secret: Going green saves it money." Well, better late than never, I guess.

Okay, here's the kid's Holy Grail, the Beyblades:

I wrote about Beyblades last November. They're still popular.

And it's back to the skatepark later today!

Barry Manilow New Album Release

The new album is 15 Minutes.

Manilow's a featured performer at Paris Las Vegas. My wife's been dying to see him. She's trying to get a vacation schedule approved and we'll take another trip out there. Recall that we stayed at the MGM last time. I really recommend it. An awesome hotel.

Anyway, Manilow's interviewed at Vanity Fair, "Barry Manilow Only Ever Played One Bathhouse with Bette Midler."

Blake Lively Nude!

It's going wild right now on WeSmirch. Could be a hoax. Still, might get some Google traffic out of it.

PREVIOUSLY: "Leonardo DiCaprio and Blake Lively!"