Next president faces daunting fiscal cliff

Published: Monday, November 05, 2012 @ 9:10 PM
Updated: Monday, November 05, 2012 @ 9:10 PM

Today, Americans will vote. On Wednesday, they will begin to face a grim reality.

No matter if President Barack Obama or Republican Mitt Romney wins the presidency, a crushing blend of tax increases and automatic spending cuts will go into effect at the end of the year unless Congress acts in the next two months.

To many financial analyst and economists, the automatic trigger of tax increases and spending cuts could deliver a lethal blow to the fragile U.S. economy. The non-partisan Congressional Budget Office calculates the economy next year would tip into a recession.

Yet despite anguished pleas from some of the nation’s top business executives, the institutionalized intransigence on Capitol Hill is prompting fears that lawmakers will be unable to put aside their deep divisions on taxes and federal spending and forge a bipartisan agreement.

Because of the Dec. 31 deadline, a lame duck Congress would need to approve a plan to prevent or delay the tax increases and budget cuts. And because most analysts believe Republicans will hold the House and Democrats keep the Senate, the same cast of characters will be arguing over the same set of issues when the new Congress is seated in January.

“If you have a status quo election, I am fairly pessimistic it can be resolved because there is a high degree of mistrust among congressional Republicans with President Obama,’’ said Ted Hollingsworth, a lobbyist in Washington and onetime chief of staff to former Sen. George V. Voinovich, R-Ohio.

“If you have a Republican sweep, I still think it’s fairly difficult (because) these are problems that have to be solved in a bipartisan way. The magnitude of our fiscal problems are such that they have to be solved in a bipartisan way and we are very, very far away from Republicans and Democrats even agreeing on the perimeters of a deal.’’

All the 2001 and 2003 income and investment tax cuts expire on Dec. 31,, which means that without congressional action, every American who pays income taxes will have a tax increase.

Then in the new year, the first of $1.2 trillion in automatic spending reductions will start going into effect. And while those reductions are spread out over the next decade, it means the federal government will be raising taxes and cutting spending as the economy continues to sputter.

Publicly, some lawmakers are hopeful. Sen. Sherrod Brown, D-Ohio, said “we have to do something immediately after the election to basically soothe the markets so they know we will do something serious after the first of the year on a balanced plan.’’

During a campaign trip to Ohio, Sen. John McCain, R-Ariz., predicted that if Romney wins, he will ask Congress to delay the tax increases and spending cuts for a few months while he organizes his new administration.

McCain said if Obama wins “we will try to get something done right away in the lame duck.’’ But McCain warned that if business executives conclude that Congress cannot produce a plan, then “the markets are going to go down’’ and the economy could tip into recession.

“So I believe that the chances of getting something done are good only because the alternative is so unacceptable,’’ McCain said.

During the debates, Obama said flatly that the automatic trigger will not happen.

The chasm between the two parties is vast, however. Democrats adamantly oppose deep reductions in the future growth rate of the programs that largely cause the deficit — Medicare, which pays health costs for the elderly; Medicaid, which provides health coverage for low-income Americans, and Social Security.

By contrast, Republicans want to dramatically reduce federal spending and extend all the 2001 and 2003 tax cuts. Obama and most Democrats have rejected that approach, insisting that the 2001 and 2003 tax reductions expire for families earning more than $250,000 a year.

Neither party’s approach leads to a balanced budget any time soon. The CBO has calculated that if even if all the 2001 and 2003 tax cuts expire at the end of the year, the government will add another $3 trillion during the next decade to the government’s publicly held debt — treasury bills held by private and public investors.

“Both sides are messaging to polling and not to reality,’’ said former Republican congressman David L. Hobson, R-Springfield. “The reality is there is not enough money in the rich to do this thing. And the other reality is you are going to have more revenue even as you cut spending. Because you will have to cut spending.’’

To many Democrats, the Republicans’ refusal to countenance higher income taxes on wealthier families is the major impediment to a deal. James Manley, a former top aide to Senate Majority Leader Harry Reid, D-Nev., said that if Obama is re-elected, the White House should hold firm on higher taxes for the wealthy — even if it means going over the fiscal cliff.

“The only way to get something done is to push to the limits,’’ Manley said. “The only way to fix our fiscal mess is to let everything expire and spend the first couple of months trying to deal with it all,’’ adding that “cliff jumping is the way to go.’’

Manley said that “hyper-partisanship still rules Washington and that will not change any time soon. Under this scenario, the Democrats and the president will have the upper hand because of the Republican all-consuming desire to keep the tax cuts for the wealthy.’’

Pointing out that the most drastic spending reductions do not go into effect until much later, Manley said, “There is a whole train of thought that this cliff is not really a cliff, it’s more of a falling slope.’’

Others reject such a strategy. Sen. Rob Portman, R-Ohio, said lawmakers should not “consider that option,’’ saying “it would be totally unacceptable to allow the country to go into a recession which is what most people believe will happen if we go off the fiscal cliff.’’

Instead, said Portman: “We should figure out a way to avoid the tax increases by postponing (them) for six months during which time we would put together serious tax reform,’’ in which income tax rates would be reduced while deductions and preferences are scrubbed from the tax code or capped in value.

On the automatic spending cuts scheduled for the next decade, Portman wants lawmakers to “come up with the savings that are necessary for this next calendar year. Portman said Congress would then have time to produce a mega-bargain by July — a package including tax reform and changes in Medicare and Medicaid.

What is beyond dispute is that the nation’s growing debt cannot be solved by one party. Unless lawmakers in both parties are willing to compromise, the U.S. debt will spiral out of control.

“At some point, the people who are so rigid in their view have to learn that you need to govern,’’ Hobson said. “It doesn’t mean you have to give up principle. But it does mean you have to learn to govern.’’

Joe Hallett of the Columbus Dispatch contributed to this story.

With backing of Trump, key Senators reach deal to fund health subsidy payments

Published: Tuesday, October 17, 2017 @ 2:37 PM

Key Senators say they have reached a deal – backed by the President – which would fund payments to health insurance companies for two years, while also giving states more flexibility in how they deal with the underlying requirements of the Obama health law.

“Yes, we have been involved,” President Donald Trump told reporters when asked about the negotiations. “This is a short-term deal,” as the President again said he hopes to get Congress to approve a set of longer-term reforms which revolve around block grants to the states.

The plan, worked out by Sen. Lamar Alexander (R-TN) and Sen. Patty Murray (D-WA), was discussed by Senators at their Tuesday lunch meetings in the U.S. Capitol; no legislative text was immediately available.

The deal would reverse a decision made last Thursday night by President Trump, who moved to stop payments to insurance companies known as “Cost Sharing Reduction” payments.

Republicans have claimed for several years – and federal courts have backed them up – that the payments were never directly approved by the Congress, and thus should never have been made by the federal government.

Mr. Trump authorized the payments from the start of his administration in January, but regularly threatened to end them – following through on that late last week.

Former Buckeye star could shake up race for Congress in Ohio

Published: Tuesday, October 17, 2017 @ 6:00 AM
Updated: Tuesday, October 17, 2017 @ 12:20 PM


            Anthony Gonzalez is running for Congress, and some of his friends from the NFL are helping.(Kiichiro Sato, Associated Press)
Anthony Gonzalez is running for Congress, and some of his friends from the NFL are helping.(Kiichiro Sato, Associated Press)

The 2018 races for governor and the U.S. Senate always figured to be expensive, but another big-money Ohio contest has emerged and promises to draw interest both from inside and outside the state.

Anthony Gonzalez, a former football standout for Ohio State University and the Indianapolis Colts, has raised more money than any other candidate — incumbent or otherwise — in his bid for Congress.

Gonzalez is running for the northeast Ohio seat being vacated by Rep. Jim Renacci, R-Wadsworth, who is running for governor.

Gonzalez, 33, joins State Rep. Tom Patton, R-Strongsville, and State Rep. Christina Hagan, R-Marlboro Twp., in a race that may prove expensive to fill.

RELATED: Competition lacking in Ohio congressional races Gonzalez raised $626,774 last quarter — including $526,774 in contributions. Among those contributing: Peyton Manning ($5,400), Gonzalez’s fellow Buckeye star A.J. Hawk ($1,000), former teammates Austin Collie from the Colts ($1,500)and LeCharles Bentley ($1,000) from the Buckeyes and Cleveland Browns owner Jimmy Haslem ($2,700 from him and $2,700 from his wife Dee).

Gonzalez also drew contributions from outside the sports world, including from various members of the Boich family, which runs coal companies and are active donors to Republican candidates.

Meanwhile, Patton raised $278,351 last quarter while Hagan pulled in $34,615. On the Democratic side, Aaron Godfrey raised $1,953.

RELATED: Fight over sex trafficking begins in Congress The filings from the Federal Election Commission provide an early glimpse at which congressional races — at least from a money standpoint — will be competitive next year.

By far the most expensive race is for the U.S. Senate. Sen. Sherrod Brown, D-Ohio, is seeking a third term and leads all candidates in fundraising with $2.6 million raised in the quarter and $8.3 million in the bank.

Ohio Treasurer Josh Mandel, who hopes to reverse the outcome of his 2012 losing contest against Brown, raised a little more than $1 million during the quarter and has about $4.1 million in the bank.

Republican Mike Gibbons will report bringing in $421,000 last quarter, according to a spokesman, bringing his total amount to $1.1 million since he entered the race at the end of May. Another Republican, Don Elijah Eckart, a Galloway theologian, contributed $250 of his own money last quarter, according to the filings.

RELATED: John Kasich wants Congress to work together on health care The other races for Congress show a huge money gap between incumbents and challengers.

In southwest Ohio, Citizens for Turner — the campaign committee for Rep. Mike Turner, R-Dayton — reported raising $142,401 between July 1 and Sept. 30. The committee has raised $444,437 to date this year.

No other candidate reported raising or spending $5,000 in that district during the quarter though Democrat Robert Klepinger has taken out petitions for the 10th congressional district, which includes all or parts of Montgomery, Greene and Fayette counties. Turner has $491,641 in the bank for his campaign.

In the adjacent 8th Congressional District, Rep. Warren Davidson, R-Troy, raised $86,183 last quarter and has $171,602 in the bank. Republican Edward Meer has also pulled petitions for the district but has yet to file a campaign finance report.

Davidson is a member of the conservative House Freedom Caucus, which was founded by Rep. Jim Jordan, R-Urbana. Jordan has $1.39 million in the bank for his re-election bid after raising $115,586 in the quarter. Democrats Andrew Mackey and Janet Garrett also filed campaign finance reports; they raised $229 and $6,646 to date, respectively.

RELATED: Brown has twice what Mandel has for Senate run In the Cincinnati area, Rep. Steve Chabot, R-Cincinnati, raised $125,270 during the quarter and has $1.15 million in the bank. He faces Democrat Laura Ann Weaver, who reported raising $9,810 in the quarter, and has $8,233 in the bank.

All told, Ohio incumbent House members raised $2.75 million this quarter — more than three times the amount raised by their challengers.

And if that isn’t advantage enough, those running for re-election to Congress have $19 million in the bank, including cash from prior election cycles.

Challengers, meanwhile, reported having less than $1 million on hand for their races.

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ONLINE VOTERS GUIDE

Learn more about these candidates and hundreds of others running for office around the region in our interactive online voters guide at vote.springfieldnewssun.com

ONLINE VOTERS GUIDE

Learn more about these candidates and hundreds of others running for office around the region in our interactive online voters guide at vote.journal-news.com

Trump move to end health insurer payments may cost feds billions more

Published: Monday, October 16, 2017 @ 8:41 PM

Even as President Donald Trump urged Senators on Monday to find a bipartisan deal on short-term fixes to the Obama health law, the consensus among health insurance experts is that Mr. Trump’s decision last week to no longer make payments to insurance companies to cover the health-related costs of some Americans might actually cost the federal government billions more in the years ahead.

At issue is the “Cost Sharing Reduction” payments that had been made by the Obama and Trump Administrations – that money helps subsidize insurance costs of some consumers in the Obamacare exchanges.

Those payments were never expressly approved by the Congress, leading many Republicans to charge that the spending had been illegal, and spurring the President to block the payments.

And that’s where the subject gets a bit complicated.

“The Congressional Budget Office estimated that not funding CSR would lead to a net increase of $194 billion in more spending over the next decade,” said health care researcher David Anderson of Duke University.

But wait – how would halting an expected $10 billion in payments in 2018, a move that would save Uncle Sam money – how would that lead to such a big cost for the feds over the next decade?

“While the federal government would save money by not making CSR payments, it would face increased costs for tax credits that subsidize premiums for marketplace enrollees with incomes 100-400% of the poverty level,” wrote officials of the Kaiser Family Foundation, which focuses on health care policy matters.

In other words, different subsidies doled out under the Obama health law would go up as insurance companies raise premiums to deal with the loss of the CSR federal payments – those are known as “Advance Premium Tax Credits,” which can go to families of four with a yearly income of up to $97,000.

“The biggest effect from the termination of cost-sharing subsidy payments is that premiums are going up to offset the loss,” said Larry Levitt of Kaiser, who labeled the impact of the Trump CSR decision, “confusing and complicated.”

One example of that started to appear on Monday in in Pennsylvania, as state officials said health coverage “rates will increase by an average 30.6 percent in the individual market ,” instead of by 7.6 percent.

One recent story from the Miami Herald found that the Trump move on CSR payments would mean a big increase for Florida in the amount of federal dollars spent to subsidize those who get their health insurance through the Obamacare exchanges in that state.

Some experts argue that Mr. Trump’s decision will have the biggest negative impact on insurance rates in states that are normally in the Republican column – especially if those states did not move to expand the Medicaid program during the Obama Administration.

In recent months, a bipartisan group of Senators had been working to figure out a way to tinker with the Obama health law, and make sure the CSR payments were made by Congress, led by Sen. Lamar Alexander (R-TN), who told reporters on Monday evening that he had already spoken with the President about his CSR decision.

Some GOP Senators have grumbled in recent weeks about the talks between Alexander and Sen. Patty Murray (D-WA), worried that it will contain little in the way of concessions by Democrats on the operations of the Obama health law.

That’s a concern for Republicans in the House as well, and could lead to a stalemate in Congress on any short-term effort to deal with the Obama health law.

“At this time, in my opinion, doing nothing is an acceptable outcome for liberal policy preferences while doing nothing moves policy further away from stated conservative policy preferences,” said Anderson of Duke University.

“I want to get healthcare that’s much more affordable and much better healthcare, and that’s what we’re doing,” the President said on Monday when asked about the CSR payments decision.

What that exactly means for the President is still not clear.

VIDEO: Trump and McConnell take questions after White House meeting

Published: Monday, October 16, 2017 @ 3:05 PM

With a lot of work still needed in Congress on key items of President Donald Trump’s legislative agenda, Mr. Trump met for lunch on Monday with Senate Majority Leader Mitch McConnell, giving off no signs of any ill will despite some sparring in the past, as both men vowed to push ahead on plans for major tax cuts and reform, emphasizing the need to get that done by the end of 2017.

“We’re fighting for the same thing – we’re fight for lower taxes, big tax cuts – the biggest tax cuts in the history of our nation,” the President said at a hastily assembled meeting with reporters in the White House Rose Garden.

“I want to underscore what the President said – we have the same agenda,” McConnell said, standing next to the President the entire time, as reporters verbally jostled to get his attention during a somewhat raucous Q&A that had not been on the original schedule for Mr. Trump.

“My relationship with this gentleman is outstanding,” Mr. Trump said of McConnell, not mentioning some of his tough statements and tough tweets about the Senate GOP leader in the past.

Here is the full Trump news conference, with McConnell:

[youtube=http://www.youtube.com/watch?v=uBI4qDnpW3U&w=640&h=390]