Tag Archives: balanced budget

State budget faces problems, Walker delays $101M in payments

Gov. Scott Walker’s administration said last week it’s delaying $101 million in debt payments to help the state budget’s bottom line. But how big of a problem the state’s budget may be facing isn’t clear.

The decision to restructure debt suggests that the Walker’s administration is concerned there will not be enough cash on hand for the state budget to balance at the end of the current fiscal year on June 30, as required by law.

The latest estimate, prepared by the nonpartisan Legislative Fiscal Bureau in January, projected that the state budget was going to end this year with a $219 million cushion, but a razor-thin $71 million buffer in June 2017.

Walker administration spokeswoman Laurel Patrick called delaying the payment a “prudent financial management tool,” but did not say why it was necessary.

“Normally, if you’re in strong financial condition, you’re not kicking the can down the road,” said state Rep. Gordon Hintz, a Democrat from Oshkosh who sits on the Legislature’s budget committee. He said it was embarrassing and an indication that there wasn’t enough money available to pay for tax cuts approved in the last budget.

Pushing off debt payments into a different budget year is a common tactic used by Republican and Democratic governors alike as a short-term method of balancing the books. Since 2001, more than $1.6 billion in such payments have been delayed.

The accounting move was first detailed in a memo by the Fiscal Bureau to the Legislature’s budget-writing committee. That memo said Walker intended to defer $50 million, but Walker’s administration later said it was actually going to be $101 million.

Walker has now delayed more than $741 million in payments since 2011, including $108 million last year. His predecessors, Democratic Gov. Jim Doyle and Republican Gov. Scott McCallum, also made similar delays totaling about $872 million.

Delaying $101 million will cost the state nearly $2.3 million in additional interest over the next eight years, according to the Fiscal Bureau.

Follow Scott Bauer on Twitter at http://twitter.com/sbauerAP and find more of his work athttp://bigstory.ap.org/content/scott-bauer


Analysis: GOP’s deficit reduction promises are unfeasible without tax increases and program cuts that they’ll never support

Thanks to Congress’ recent tax-and-spending spree, Republicans vowing to balance the budget will have to raise taxes and propose far deeper cuts than the public would accept.

If the GOP should won the White House in 2016, those promises — the same ones they make in every election cycle — are likely to come back and haunt them. The last president to balance the budet was Democrat Bill Clinton, who presided over an era of great prosperity that’s not likely to be equaled in the near future. 

In fact, the weakening economy that the nation is currently experiencing means Republicans will have to dig even further into the budget to find sufficient spending cuts to balance the budget, according to the latest projections from the Congressional Budget Office. The budget — a non-binding wish list of cuts and policies — was already unrealistic, promising cuts that lawmakers have never shown they’d be willing to make.

Last year, for instance, Republicans promised more than $5 trillion in spending cuts over a decade. Instead, they worked with President Barack Obama to add about $750 billion to the deficit over the decade through a mix of spending increases and permanent tax cuts. Even a token effort to curb the federal crop insurance program was immediately reversed after a revolt by farm state lawmakers.

Now, the dismal fiscal picture, budget experts say, would mean Republicans would have to slash more than $2 trillion over 10 years, with the most draconian cuts required in the final years. That’s assuming they will still try to balance the budget.

“Realistically speaking, that’s just not going to happen,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a Washington group that advocates for lower deficits.

With Social Security, the Pentagon and most of Medicare insulated politically from cuts, Republicans are likely to call for even further reductions to programs like Medicaid, domestic agency budgets, student loan subsidies and food stamps.

The GOP chairmen of the House and Senate Budget panels insist they will find a way.

“It’s not only realistic but essential,” Senate Budget Committee Chairman Mike Enzi, R-Wyo., said of balancing the budget. “This country is going to be bankrupt if we don’t do something.”

Under Congress’ arcane budget process, lawmakers vote first on a broad, non-binding outline called a budget resolution — which is akin to the blueprints for a house — and then use follow-up legislation to fill in the details. The second-step of votes to implement the budget are invariably more difficult than the first.

Congress does a lot more bragging about budget blueprints than actually trying to enact them. House Republicans boast but they’ve never drafted legislation detailing how they would turn Medicare into a voucher-like program for most future retirees or cut Medicaid funding by about one-fifth — and force many millions of people from health coverage or nursing home care.

Even architects of the budget acknowledge that there’s no stomach to actually try to impose its cuts.

“The critical mass does not yet exist in the country or the Congress that recognizes that we need to save and strengthen and secure these mandatory programs,” said House Budget Committee Chairman Tom Price, R-Ga. Price was referring to programs like Medicare, Medicaid, and Social Security, whose mandatory budgets grow automatically unless Congress cuts them.

So in some ways the budget process is perfect for politicians: It gives them a chance to tell voters they’re cutting spending even as they avoid the politically dangerous votes required to actually do it.

The budget process also fits into Speaker Paul Ryan’s vision for using the House agenda to tell voters what they’ll get if Republicans win the White House. The annual budget debate will come before efforts to replace the health care law or reveal the party’s plans to update the loophole-clogged tax code after five years of controlling the House.

Conspicuously left off the agenda? Emphasizing spending cuts, even as the deficit has begun growing again and the latest estimates reveal trillion-dollar deficits returning in just a few years.

“Clearly that’s going to take a Republican president because this president has continued to kick the can down the road and I see no change in his behavior,” Ryan, R-Wis., said recently.

But it’s by no means clear that balancing the budget will be a top priority for presidential candidates who have promised big tax cuts and aren’t really talking about the issue on the campaign trail. If there is a GOP president next year, he will have to answer questions about living up to the balanced-budget promises of Republicans in Congress.

If a GOP president embraces a balanced budget, they’ll have to offer an enormously difficult set of cuts to Republican lawmakers unschooled in what balancing the budget really means.

“The magnitude of the policy changes that you would have to implement to achieve the savings that are promised in the budget — I don’t think there’s an appreciation for the magnitude of those changes,” said Neil Bradley, a former top House GOP aide who now works for the Conservative Reform Network, which offers policy advice to GOP candidates and lawmakers.

Obama submits his budget Feb. 9, and House and Senate Republicans promise floor debates on their alternatives in March.

Fact checking the first Republican debate

The 10 Republican presidential hopefuls who took to the stage for their first debate in Cleveland faced a daunting task in distinguishing themselves among a sprawling field of candidates. Along the way, they puffed up their own records in office and public life and veered occasionally from the truth.

A look at some of the claims in the debate and how they compare with the facts:

DONALD TRUMP on illegal immigration: “The Mexican government is much smarter, much sharper, much more cunning. And they send the bad ones over because they don’t want to pay for them.”

THE FACTS: Illegal immigration from Mexico has steeply declined since 2000, when Border Patrol agents arrested roughly 1.6 million. Last year, agents at the border apprehended about 230,000 Mexican nationals.

For the first time last year, the apprehension of immigrants from other countries outpaced those from Mexico. An increasing number have come from Central American countries like El Salvador, Guatemala and Honduras, spurred by poor economic conditions and high levels of violence in those countries.

MARCO RUBIO, on allowing abortions for rape or incest: “I have never said that. And I have never advocated that.”

THE FACTS: He’s parsing his words. It may be true that Rubio has never said that publicly, but he’s supported legislation that included such exceptions.

In 2013, Rubio was one of 40 senators to co-sponsor a bill called the Pain-Capable Unborn Child Protection Act, which would have banned abortions after 20 weeks and set up a likely confrontation with the Supreme Court’s ruling in Roe v. Wade.

That bill contained a number of exceptions, including cases of rape or incest that have been reported to law enforcement or where the mother’s life is at risk. Rubio’s support for the overall bill, which never received a vote in the Democratic-run Senate of 2013, was widely perceived as support for rape and incest exceptions.

JEB BUSH, on his goal of 4 percent economic growth: “We can do this.”

THE FACTS: Most economists say the U.S. under any president is unlikely to grow consistently at even close to 4 percent, largely due to the difficulty of overcoming decades-long trends.

Current forecasts put growth averaging half the rate of Bush’s goal. To grow the economy faster, the country must either add more workers or increase their efficiency so their time on the job generates more income. The retirement of the baby boom generation will shrink the number of workers in the economy, making a huge increase of new employees unlikely.

Only four of the 16 presidential terms since World War II have experienced annual economic growth averaging more than 4 percent after inflation, according to research published last year by Princeton University economists Alan Blinder and Mark Watson.

CHRIS CHRISTIE: “We brought the budget into balance with no tax increases.”

THE FACTS: Not exactly.

As New Jersey’s governor, Christie in his first term cut the earned income tax credit, which largely benefits low-income workers, from 25 percent of the federal credit to 20 percent. He surprised Democrats this summer by proposing to bring it up to 30 percent. Democrats quickly approved the change.

Christie also repeatedly delayed implementing the Homestead credit program, which grants property tax relief, even as he capped property tax increases overall. He also extended the sales tax on online purchases to out-of-state retailers and pushed for higher taxes on e-cigarettes, but failed.

So while Christie indeed vetoed a number of proposed tax increases, his record isn’t free of hikes in taxes or their close cousin: fees.

TRUMP: “If it weren’t for me, you wouldn’t even be talking about illegal immigration.”

THE FACTS: Republicans have been talking about immigration for at least 30 years, including former President George W. Bush and the Republican field in the 2008 and 2012 presidential elections. In 2013, an immigration overhaul seeking to address illegal immigration passed the Senate with strong Republican support, although the House never took it up. And Republican debate about immigration has only intensified in the wake of President Barack Obama’s sweeping executive action shielding from deportation millions of immigrants in the U.S. illegally.

BUSH: “You get rid of Obamacare and replace it with something that doesn’t suppress wages and kill jobs.”

THE FACTS: According to the Labor Department, the unemployment rate was 9.9 percent in March 2010, when Obama signed the Affordable Care Act. In June of this year, it had fallen to 5.3 percent. The economy has added more than 12 million jobs since March 2010.

While the health care law doesn’t seem to have had a major impact on jobs, some lesser consequences are likely. The Congressional Budget Office projected that having government subsidized health insurance will prompt some people to leave the labor market, since they can get coverage without a job.

And although Republicans may be able to repeal Obama’s law, it’s unclear if and how they would replace it. The party has yet to rally behind a plan of its own, partly because of internal ideological differences. Some Republicans say it would be the 2016 presidential nominee’s job to forge a consensus.

BUSH: “During my eight years in office, 1.3 million jobs were created, and we left the state better off.”

FACT CHECK: Yes, but by December 2009, 900,000 of those 1.3 million jobs had been eliminated.

During Bush’s tenure as governor, the state benefited from a huge housing bubble that then burst just as he left the governor’s mansion. Home prices jumped 160 percent in Florida from 1999 through 2006 _ more than double the national increase of 74 percent — according to real estate data provider Zillow.

That growth fueled a 50 percent jump in construction jobs, and the boost to home values made many Floridians feel wealthier, leading them to spend more. Home prices started to fall in 2006, Bush’s last year in office.

TRUMP: “I built a net worth of more than $10 billion.”

THE FACTS: Trump’s precise net worth has long been a moving target.

Documents filed with the Federal Election Commission put Trump’s wealth at $8.7 billion. But the form requires disclosures of value ranges, not precise sums. The FEC also doesn’t specify how to value real estate, leaving Trump free to assess many of his proprieties in the highest bracket _ over $50 million.

Trump argues many of his properties are worth even more, a claim that cannot be verified without access to his private documents. He’s valued his personal brand and marketing deals at $3.3 billion.

Yet other assessments put his wealth at far less. Forbes Magazine valued his brand at just $125 million, and last month, Bloomberg News estimated his total worth at $2.9 billion.

Associated Press writers Alicia A. Caldwell, Ricardo Alonso-Zaldivar, Deb Riechmann, Christopher S. Rugaber, Lisa Lerer and Jill Colvin contributed to this report.

For the record: Walker kicks off re-election campaign

Wisconsin Gov. Scott Walker kicked off his re-election campaign on April 15 with Lt. Gov. Rebecca Kleefisch, appearing in a series of rallies in the state.

Walker, in a news release from the campaign, said four years ago the state “was in bad shape and it seemed like our best days were behind us. Taxpayers were strapped with a $3.6 billion deficit after years of double-digit tax increases and runaway government spending and over 130,000 Wisconsinites lost their jobs and some 27,000 businesses turned out their lights.”

The Republican claimed that since taking office his administration has balanced the budget, eliminated the deficit and “turned it into a $911 million surplus.”

He also claimed that on his watch “more than 100,000 jobs have been created for moms, dads, grandparents and graduates and nearly 17,000 new businesses are contributing to a growing Wisconsin economy.”

The governor, in his formal announcement, focused on economic issues and did not refer to his right-wing attacks on labor and collective bargaining, voting opportunities and reproductive freedoms or his defense of anti-LGBT measures.

Walker’s detractors, on Tax Day, said the governor’s budget claims are distorted, that his tax plan was a gimmick and that he can’t come close to fulfilling his campaign pledge to create 250,000 jobs in his first term.

Democratic candidate Mary Burke responded to Walker’s official re-election announcement saying that the state, under the Republican, “is falling behind.”

“In job creation, we are 35th in the country and second to last among Midwestern states. Worse still, we are one of the worst in the country in new business starts.

“Walker’s game plan has failed. Giving tax breaks to out-of-state corporations and those at the top is not how you create hobs. And it’s not how you grow the middle class.”

Burke said she created jobs at Trek Bicycle, where she was an executive, and has “a real plan, ‘Invest for Success,’ for how as governor I will grow jobs and strengthen the middle class.”