Obama 'offering to cut US pensions' for deficit deal

[BlueGin]

US President Barack Obama is prepared to offer cuts to Americans' pensions to strike a deficit deal with Republicans, a White House official says.

In return, the Democratic president wants higher taxes on the rich. He will outline his budget plan next Wednesday.

The proposal would cut the deficit by $1.8 trillion (£1.2 trillion) over 10 years, say administration officials.

But Democrats would oppose cuts to pensions, while Republicans have refused to accept tax rises.

Under the deal trailed by the White House, Mr Obama would support lowering the inflation measure used to calculate cost-of-living increases in Social Security pensions.

Obama hosting dinner

The plan will also include reductions in Medicare spending for the elderly, much of it by targeting payments to healthcare providers and drug firms.

Continue reading the main story

"Millions of working people will be extremely disappointed if President Obama caves in to the long-standing Republican effort to cut Social Security”

Senator Bernard Sanders
The senior administration official who discussed the so-called grand bargain spoke anonymously because the budget has yet to be released.

Mr Obama will seek to wine and dine Republican lawmakers as he hosts a dinner for them after unveiling his budget next Wednesday.

His plan also envisages making pre-school education available to more children by increasing taxes on tobacco.

The president discussed the main elements of his plan with Republican House of Representatives Speaker John Boehner last December during previous fiscal talks.

Those negotiations ended at the beginning of this year with Mr Boehner accepting tax rises on earnings of more than $400,000, returning rates to levels seen during the Clinton administration.

But the Republican deal-maker is likely to balk at the idea of another tax rise on the rich.

BBC News - Obama 'offering to cut US pensions' for deficit deal

 

[waltky]

Budget deficit just keeps gettin' bigger...

US budget deficit widens $139 billion in May
Jun 12,`13 WASHINGTON (AP) -- The government reported Wednesday that the U.S. budget deficit widened in May by $139 billion. But the annual deficit stayed on track to finish below $1 trillion for the first time since 2008.

Steady economic growth and higher tax rates have boosted the government's tax revenue. At the same time, government spending has barely increased. With the May increase, the deficit through the first eight months of this budget year totaled $626 billion, according to the Treasury. That's $218 billion lower than the same period last year. The Congressional Budget Office estimates the deficit won't grow much before the budget year ends on Sept. 30. It forecasts an annual deficit of $642 billion. If correct, that would be well below last year's deficit of $1.09 trillion and the lowest in five years. It would still be the fifth-largest deficit in U.S. history.

The federal deficit represents the annual difference between the government's spending and the tax revenues it takes in. Each deficit contributes to the national debt, which recently topped $16 trillion. At the same time, a smaller deficit has taken pressure off of negotiations to raise the federal borrowing limit. So far this budget year, revenue has risen 15 percent to $1.8 trillion. The government is taking in more money because of higher rates that went into effect on Jan. 1. Modest economic growth has also boosted tax revenue.

And this month the government is expecting large dividend payments from Fannie Mae and Freddie Mac, which will keep the deficit from growing. Fannie is expected to pay $59.4 billion; Freddie is expected pay $7 billion. The mortgage giants are profitable again and are paying dividends to the government in return for the loans they received during the financial crisis. While revenue has increased greatly, spending has only risen 0.8 percent this year to $2.43 billion. Military spending has dropped 4.3 percent, reflecting the winding down of the wars in Iraq and Afghanistan. Spending on unemployment benefits, which had swelled as millions lost their jobs during the Great Recession, fell 25.3 percent compared with the same period a year ago.

Across-the-board government spending cuts that began on March 1 are expected to lower spending further in the remaining months of this budget year. The deficit reached a record $1.41 trillion in budget year 2009, which began four months before President Barack Obama took office. That deficit was largely because of the worst recession since the Great Depression. Tax revenue plummeted, while the government spent more on stimulus programs. The budget gaps in 2010 and 2011 were slightly lower than the 2009 deficit as a gradually strengthening economy generated more tax revenue. President George W. Bush also ran annual deficits through most of his two terms in office after he won approval for broad tax cuts and launched wars in Afghanistan and Iraq. The last time the government ran an annual surplus was in 2001.

AP Newswire | Stars and Stripes

 

[waltky]

Granny says dat's some o' Washin'ton's 'creative accounting'...

Treasury’s ‘Extraordinary’ Accounting: Deficit UP $138.7B in May, Debt DOWN $90B
June 17, 2013 - Thanks to a large draw down in the federal government’s cash on hand and to the “extraordinary measures” that the Treasury is currently taking to avoid surpassing the legal limit on the federal debt, the federal deficit and the federal debt actually went in dramatically different directions in May.

In fact, the deficit went up $138.732 billion during the month, according to Treasury’s official accounting, while the debt went down $90.024 billion. That means that even though the federal government spent $138.732 billion more in May than it took in through tax revenues, it was still able to decrease its outstanding debt by $90.024 billion during the month. The result was a spread of about $228.756 billion between the increased deficit and the decreased debt. Where did the government get this $228.756 billion it needed not only to cover its $138.733 billion deficit for the month but also pay down a net $90.024 billion in debt?

Part of the answer is simple: The Treasury drew down its cash on hand by $179.182 billion. The Treasury started the month with $213.863 billion cash on hand, according to the Daily Treasury Statement, and ended the month with only $34.681 billion cash on hand--a net drop of $179.182 billion in the federal government's cash account. But that massive draw down in cash still leaves unexplained $49.574 billion of the $228.756-billion gap between the $138.733 billion increase in the federal government’s deficit during May and the $90.024 billion decrease in its net debt. Where did that additional $49.574 billion come from?

CNSNews.com asked the Treasury Department. A department spokesman pointed to the letter Treasury Secretary Jacob Lew sent to House Speaker John Boehner on May 17, which explained that the Treasury was going to begin using “extraordinary measures” to avoid hitting the current legal limit on the federal government’s debt. “The appendix to the letter describes the extraordinary measures the Treasury can use to keep us under the debt limit,” said the spokesman. “Treasury estimates we can glean approximately $260 billion ‘head room’ from those measures to keep us under the limit at least until Labor Day. If we hadn't used the extraordinary measures, it's likely the debt would have climbed.”

Among the “extraordinary measures” the Treasury can use during a “Debt Issuance Suspension Period,” Lew explained in the appendix to his letter, is to change the way it accounts for the pension funds of federal employees.

- See more at: Treasury?s ?Extraordinary? Accounting: Deficit UP $138.7B in May, Debt DOWN $90B | CNS News

 

[Kondor3]

Well, if the whole country is tightening its belt, I see no reason why retired Federal workers cannot chip-in just a skosh and accept a somewhat less favorable Index for computing Cost-of-Living Adjustments.

 

[Freewill]

Private pensions receive no COLA, or at least the one I have.

I am thinking though as a person gets older their spending actually decreases, except for medical care.

My company has taken care of that problem but cutting off retirees and throwing them on to Obamacare exchanges after 2014.

The future is uncertain for sure and is weighing heavily on my thinking about retirement. Will there ever be "enough?"

 

[noose4]

Another attack on the working class, Obama needs to stop acting like a Republican.

 

[Kondor3]

Am I correct in my soft-and-fuzzy remembering, that many government workers who get a pension do NOT also get Social Security benefits?

If true, then, Social Security benefits have a COLA component, so it would make sense for such government pensions to have a COLA component as well.

I think.

 

[martybegan]

Pensions being cut is just a way for Obama to make Republicans look like big meanies stealing grandma's pension and making her eat cat food.

What needs to be done is increase the payments current employees make into thier retirement plan, and switch over anyone not yet vested and new hires to a 401k type plan.

I know this requires getting those people onto Social Security, but lets handle one issue at a time.

 

[WillowTree]

Private pensions receive no COLA, or at least the one I have.

I am thinking though as a person gets older their spending actually decreases, except for medical care.

My company has taken care of that problem but cutting off retirees and throwing them on to Obamacare exchanges after 2014.

The future is uncertain for sure and is weighing heavily on my thinking about retirement. Will there ever be "enough?"

NO, it will never be enough. 47% of this country are leeches. It will never be enough.

 

[Freewill]

Pensions being cut is just a way for Obama to make Republicans look like big meanies stealing grandma's pension and making her eat cat food.

What needs to be done is increase the payments current employees make into thier retirement plan, and switch over anyone not yet vested and new hires to a 401k type plan.

I know this requires getting those people onto Social Security, but lets handle one issue at a time.

Again, using my fairly large company as an example. They did exactly what you said. All the new hires basically have a 401K. But the company took the 50 cent match and dropped it to 25 cents citing a down market.

If you require a company to make higher 401K payments what is the difference between that an a traditional pension or what they are doing with SS now?

 

[bitterlyclingin]

If Obama's mouth be movin', he be lyin'.

Obama is reknown for renegging on deals he has made, supporting Hillary in 2016 in return for Bubba's support for him in 2012, John Boehner during the deficit negotiations when Speaker Boehner queried "I gave you 76 billion in new revenues, what do I get in return?" to which Obama replied "You get nothing. I get that for free!"

You can't negotiate with madmen or liars. Look what happened to Chamberlain after he came back waving his itty bitty piece of paper while telling everyone who would listen "Peace in our time"

 

[Avorysuds]

Granny says dat's some o' Washin'ton's 'creative accounting'...

Treasury’s ‘Extraordinary’ Accounting: Deficit UP $138.7B in May, Debt DOWN $90B
June 17, 2013 - Thanks to a large draw down in the federal government’s cash on hand and to the “extraordinary measures” that the Treasury is currently taking to avoid surpassing the legal limit on the federal debt, the federal deficit and the federal debt actually went in dramatically different directions in May.

In fact, the deficit went up $138.732 billion during the month, according to Treasury’s official accounting, while the debt went down $90.024 billion. That means that even though the federal government spent $138.732 billion more in May than it took in through tax revenues, it was still able to decrease its outstanding debt by $90.024 billion during the month. The result was a spread of about $228.756 billion between the increased deficit and the decreased debt. Where did the government get this $228.756 billion it needed not only to cover its $138.733 billion deficit for the month but also pay down a net $90.024 billion in debt?

Part of the answer is simple: The Treasury drew down its cash on hand by $179.182 billion. The Treasury started the month with $213.863 billion cash on hand, according to the Daily Treasury Statement, and ended the month with only $34.681 billion cash on hand--a net drop of $179.182 billion in the federal government's cash account. But that massive draw down in cash still leaves unexplained $49.574 billion of the $228.756-billion gap between the $138.733 billion increase in the federal government’s deficit during May and the $90.024 billion decrease in its net debt. Where did that additional $49.574 billion come from?

CNSNews.com asked the Treasury Department. A department spokesman pointed to the letter Treasury Secretary Jacob Lew sent to House Speaker John Boehner on May 17, which explained that the Treasury was going to begin using “extraordinary measures” to avoid hitting the current legal limit on the federal government’s debt. “The appendix to the letter describes the extraordinary measures the Treasury can use to keep us under the debt limit,” said the spokesman. “Treasury estimates we can glean approximately $260 billion ‘head room’ from those measures to keep us under the limit at least until Labor Day. If we hadn't used the extraordinary measures, it's likely the debt would have climbed.”

Among the “extraordinary measures” the Treasury can use during a “Debt Issuance Suspension Period,” Lew explained in the appendix to his letter, is to change the way it accounts for the pension funds of federal employees.

- See more at: Treasury?s ?Extraordinary? Accounting: Deficit UP $138.7B in May, Debt DOWN $90B | CNS News

But But But.... Obama-bots hur on this very boards said Obama might get the deficit for 2013 under 500 billion.... How's it possible that giving Obama credit for something that he has not done yet could ever blow up in the Obama-bots faces??? How!!!!?

Give Obama credit for something he has not done, but when Obama fails to do so Blame Republicans.... Oh I see! It's a TRAP! If Obama can't live up to the accomplishment he never did it was all the Republicans fault! Very clever, I mean it's not possible to lose when it's put like that!

 

[martybegan]

Pensions being cut is just a way for Obama to make Republicans look like big meanies stealing grandma's pension and making her eat cat food.

What needs to be done is increase the payments current employees make into thier retirement plan, and switch over anyone not yet vested and new hires to a 401k type plan.

I know this requires getting those people onto Social Security, but lets handle one issue at a time.

Again, using my fairly large company as an example. They did exactly what you said. All the new hires basically have a 401K. But the company took the 50 cent match and dropped it to 25 cents citing a down market.

If you require a company to make higher 401K payments what is the difference between that an a traditional pension or what they are doing with SS now?

The difference is cost certainty for the company. My company matches 3% of my salary, and I contribute 10%. The main thing with defined contribution is (GASP) you have to manage your own retirement, which is easy if you do a little reading.

with defined benefit the company has a big ??? when it comes to how much it has to eventually spend on you. thats bad for the bottom line.