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Obama scores a hat trick: CBO projects the third straight $1 trillion deficit under the current administration

Natalie Gonnella
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As if a credit downgrade and an unemployment rate of 9% weren't enough, the dismal economic news just keeps building this month for American voters.

According to today's budget update from the non-partisan Congressional Budget Office, the federal government is on target to run another $1.3 trillion deficit in fiscal year 2011, easily erasing the $917 billion in savings secured in the recently signed Budget Control Act.

According to the Washington Times:

The deficit marks the third-largest shortfall in history, and the third straight $1 trillion deficit under President Obama, though next year’s deficit is projected to dip just under that mark, according to the Congressional Budget Office.

Still, over the next decade, the federal government will rack up nearly $6 trillion in new deficits, the CBO said — far outstripping the $1.5 trillion in future savings the new deficit super committee is charged with recommending to Congress.

And the nonpartisan agency now projects that unemployment will remain higher than average for years, including a rate of 8.5 percent in the final quarter of 2012, just as Mr. Obama and Congress go back to face voters.

With a $1 trillion deficit hat trick and with 14 million Americans currently out of work, it will be quite interesting to hear what President Obama has to say in September when he finally offers his 'highly touted' jobs plan to the American public.

Forget speeches, we need solutions

Natalie Gonnella
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President Obama maybe touting his upcoming jobs speech while enjoying his $1.1 million midwest bus tour, but with the country's economic outlook showing little signs of improvement, like voters across the country, Republican leaders remain more than a little annoyed.

As unemployment creeps back up to 9% this month, here's a look at what House Speaker John Boehner had to say about the President's latest announcement:

In the third year of his term, Americans are still asking President Obama, ‘Where are the Jobs?’ That’s why Republicans, in contrast to the Democrats who run the White House and Senate, have made creating a better environment for job creation our number one focus.  From our Path to Prosperity budget to our Plan for America’s Job Creators – which was built on our Pledge to America – House Republicans have laid out a clear, consistent jobs agenda, and acted on it.  The House has passed legislation to remove barriers to private-sector job creation, ease job-destroying regulations, expand American energy production, and significantly reduce our unsustainable debt burden. The House has led, but unfortunately we cannot act alone. Too many House-passed jobs bills remain stalled in the Democratic-controlled Senate, and we continue to urge our colleagues in the Senate to act.

To get our economy moving, what the American people need from the President is leadership and serious solutions that reflect a true change in his approach to our economy and the role of government. We welcome him to our ongoing efforts to help create jobs, and look forward to seeing a detailed plan next month. It is my hope the President will offer specific proposals that depart from his previous policies and allow us to find common ground and work together to put Americans back to work.  In the meantime, Republicans will continue to advance solutions that will reduce economic uncertainty and create a better environment for private-sector job creation.

GOP leaders announce their picks for debt super committee

Natalie Gonnella
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A week after the dramatic passage of the Budget Control Act, Republican leaders have officially announced their picks for the highly anticipated bipartisan super committee charged with cutting over $1 trillion from the federal deficit.

From the House of Representative, Speaker John Boehner has selected:

• House Republican Conference Chairman Jeb Hensarling (TX) 
• House Energy and Commerce Committee Chairman Fred Upton (MI)
• House Ways and Means Committee Chairman Dave Camp (MI)

Congressman Hensarling is also to serve as a co-chair of the joint committee.

And from the Senate, Minority Leader Mitch McConnell has selected:

• Senator Pat Toomey (PA)
• Senator Rob Portman (OH)
• Senator Jon Kyl (AZ)

Speaker Boehner issued the following statement in regards to the appointments:

Our debt and deficits are a threat to our economy, and America cannot achieve long-term job growth until we take action to address this crisis. In the weeks ahead, a serious, bipartisan committee of lawmakers will begin the hard but necessary work of making the tough choices needed to rein in mandatory and entitlement spending, which are the drivers of our debt.  The lawmakers I have appointed to serve on this joint committee are proven leaders who have earned the trust and confidence of their colleagues and constituents.  They understand the gravity of our debt crisis and I appreciate their willingness to serve on this panel.

The two parties have fundamental differences about government and its proper role in our society.  Where we've been able to agree, we have acted, and in a way consistent with the American people’s desire for a smaller, less costly, and more accountable government.  Still, the differences remain, and so does the urgent work of returning our economy to creating jobs and lifting the crushing burden of debt that threatens our children’s future.  This joint committee presents an opportunity for both parties to bring to the table their best ideas, debate them on the merits, and ultimately come together to do what’s best for our country.  With all that’s at stake, I expect that the joint select committee will conduct its work in the open and transparent manner the American people deserve.

The six Republicans will join Democratic Senators Patty Murray (WA), Max Baucus (MT) and John Kerry (MA) on the committee. House Minority Leader Nancy Pelosi is expected to announce her selections shortly.

Barely eight months into the current term, vast majority of voters say it's time to cut current members of Congress

Natalie Gonnella
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With soaring unemployment, stagnated growth, and the first ever US credit downgrade, it's no surprise that Americans are disappointed with their elected leaders (President Obama included).

And after a tumultuous month of debt debate, barely eight months into the current term, according to Gallup, registered voters are already looking for a change when it comes to the 112th Congress.

In the latest congressional approval poll, just 21% of registered voters feel that most lawmakers deserve reelection - the lowest percentage on record in the 20 year history Gallup has asked this question.

But while Americans' collective view of Congress has rapidly deteriorated, when it comes to their own district, Americans appear far more forgiving (likely due to more localized support). Overall, more than half of likely voters say their Representative deserves re-election. But while this seems more encouraging, Gallup does note that:

Even though a majority believes their own representative should be re-elected, the current percentage is on the low end of what Gallup has measured historically. The lowest readings were 48% in October 1992 and 49% on two occasions in 2010.

As lawmakers ready for their return to Washington in September, with concern growing over the upcoming super committee and the subsequent effects of the S&P downgrade, it will be interesting to see how voters' views will change (for better or worse) as the next phase of the budget battle gets underway.

The full analysis from Gallup's latest congressional poll is available to view here.

Although he says he's staying put, Republicans insist that it's time for Geithner to go

Natalie Gonnella
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Amid a growing list of economic failures and repeated calls for his resignation, Treasury Secretary Timothy Geithner today assured America he's staying put (lucky us):

Secretary Geithner has let the president know that he plans to stay on in his position at Treasury.

With discontent surging on both sides of the political spectrum, here's a quick look at the latest calls from Republicans for Geithner's timely Treasury departure:

Senator Rand Paul:

Secretary Geithner assured everyone that raising the debt ceiling without a plan to balance the budget would not result in a downgrade to our debt...He was clearly wrong. Our debt has been downgraded for the first time in history, and now American taxpayers will have to suffer the consequences.

Congresswoman Marsha Blackburn:

The Obama Administration must get on board with Republican efforts to cut up the credit cards and put our economy back on the path to prosperity.  The first step necessary in this process is for Treasury Secretary Tim Geithner to resign immediately.  It's time for new fiscal leadership in Washington.  Americans have had enough of the same old bad ideas that got us into this situation in the first place.

Congresswoman Michelle Bachmann:

We were warned by all the credit agencies that a failure to deal with the debt would lead to this downgrade in our credit rating,” she said. “But instead, the president submitted a budget that had a $1.5 trillion deficit, the he request a $2.4 trillion blank check on top of that. President Obama is destroying the foundations of our economy, one beam at a time. I call on the president to seek the immediate resignation of Treasury Secretary Tim Geithner and submit a plan that balances the budget in year. Turn the economy around and put our people back to work.

Senator Jim DeMint:

The president should demand that Secretary Geithner resign and immediately replace him with someone who will help Washington focus on balancing our budget and allowing the private sector to create jobs," DeMint said in a report Saturday in The Hill...For months he opposed all efforts to reduce the debt in return for a debt ceiling increase. His opposition to serious spending and debt reforms has been reckless and now the American people will pay the price,

What they're saying: Reacting to the US credit downgrade, GOP freshmen once again make the case for 'Cut, Cap, Balance'

Natalie Gonnella
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After a dramatic conclusion to Washington's latest budget battle, Americans ended the week with the unfortunate and unnerving news that despite the latest debt deal the US has lost its AAA credit rating.

And with the ever present possibility of further downgrades, lawmakers have been quick to weigh in on the unprecedented move, with many Republican freshmen once again raising their voices on behalf of the 'Cut, Cap, Balance' proposal.

Advocating for substantial spending reform and offering 'we told you so's' as Washington contends with the possibility of further economic decline, here's a look at what a number of GOP newbies had to say in response to Friday's downgrade announcement:

Congressman Mike Pompeo:

Since Obama has been President, we have accumulated an unprecedented $4 trillion in new deficits.  After 3 years, the President has yet to produce a plan to decrease spending or improve our economy.  I've seen enough.  As a result, I voted for a plan passed by the United States House of Representatives that would have trimmed almost $6 trillion in spending—Cut, Cap and Balance. 

Sadly, the Senate and the President mocked this plan.  Worse still, they refused to take action by even considering it in the Senate.  Cut, Cap and Balance is a credible plan that would begin to properly right the ship..The American people get it—cut the spending—I pray the President finally understands.

Congressman Joe Walsh:

Heeding the warnings of the rating agencies, Republicans in the House of Representatives took a different path and passed Cut, Cap and Balance legislation which would have brought structural change to the way Washington borrows and spends money. Regretfully, the Administration responded by calling the legislation an "empty political statement" and the President threatened a veto."

Simply put, if President Obama and Democrats in Congress had embraced Cut, Cap, and Balance and if the President were sincerely focused on the severe financial challenges facing the country instead of his re-election, this action by Standard and Poor's could have been avoided.

Senator Rand Paul:

There is plenty of blame to go around. Both parties have contributed to our $14 trillion debt. But it is hard to say this crisis wasn’t predictable, because it was. House and Senate conservatives clearly predicted this, and also offered the only solution that could have prevented our downgrade with our Cut Cap and Balance plan...We must rescue our finances through a Balanced Budget Amendment, and we must do it soon. We must cut spending immediately. And we must get new leadership, and put in place people who have seen problems coming and offered credible solutions, rather than those who continue to misdiagnose and mismanage our economy.

Congressman Reid Ribble:

Our legislation passed the House of Representatives on a bipartisan basis but was flippantly rejected by both Senator Reid and President Obama as being ‘draconian.’

In Washington, where some seem to act like rhetoric matters more than facts, spin more than substance, and misdirection more than problem solving, I wonder how the Democrat deficit doubters will react to these S&P analysts. I urge Senator Reid to give Cut, Cap and Balancethe full and proper debate that it deserves before our economy veers more dangerously toward crisis. Alarms are sounding for a reason...because our fiscal house is at risk of burning down.

Congressman Chris Gibson:

Given S&P's downgrade of our credit last night, I'm calling on the Senate and President to reconsider their position and pass this legislation. By passing "Cut, Cap, and Balance," and enacting comprehensive tax reform that closes "loopholes" allowing for lower marginal tax rates to grow the economy, we will solve the current fiscal crisis putting us on firm footing to make the the 21st century our best yet.

Senator Kelly Ayotte:

This is a blow to the United States, and it is a grim signal that we cannot continue to delay addressing our crippling debt. One of the reasons I opposed the recent deal to raise the debt ceiling was because it still left us vulnerable to the threat of a downgrade. The President and Congress must end business as usual in Washington and finally confront our debt crisis in a meaningful way with real cuts, serious budget reforms and entitlement reform.

What they're saying: Republicans weigh in on why they voted against the debt deal

Natalie Gonnella
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The Budget Control Act may have cleared Congress, but despite bipartisan support (although somewhat grudgingly) for the legislation's passage, in total 85 Republicans voted against the bill (19 Senators and 66 Representatives). 

Unimpressed with the proposal's key provisions, here's a look at what a number of congressional Republicans had to say about why they voted 'no':

Senator Jim DeMint:

This debt deal doesn't solve anything, it puts America at risk. At the end of his four-year term, Obama will be responsible for nearly $6 trillion in new debt. More than any other president. Washington's debt deal doesn't change our course, it taps the brakes as we speed toward a fiscal cliff.

Senator David Vitter:

We can -- we must -- do better. #tcot #latcot #debtceiling #deficit

Senator Dan Coats: 

I opposed the final vote because it falls significantly short of what is needed to address the severity of this fiscal crisis.  For months I have been saying a credible must include at least $4 trillion over a decade and a commitment to restructure entitlements and our tax code. This bill only cuts as little as $2.1 trillion over 10 years and most of these reductions don't occur til years down the road.

Congresswoman Martha Roby:

I am pleased that a default has been avoided as a result of the vote tonight. However, I was unable to support this legislation because, after a careful reading of the bill, I fear it could ultimately result in devastating and unjustified cuts to our national security. This bill, unlike previous proposals I supported, has a weak firewall against potentially destructive defense cuts. To be sure, there are savings to be found in the Pentagon’s budget, and I have already voted this year to trim wasteful and unnecessary defense spending. But this bill goes much too far. The legislation would use our defense budget as an insurance policy to guarantee savings in the event that the special joint committee, which this legislation creates, fails to achieve cuts in other areas of the government bureaucracy.

Congressman Tim Scott:

[T]his compromise did not take enough steps towards ensuring a stable economic future in order to earn my vote. The short-term spending reductions in the bill were insufficient, I believe the Balanced Budget Amendment should be mandated, and I have concerns with lingering questions regarding defense cuts. 

Despite my decision on this particular vote, I am pleased with the direction we are moving the debate, and want to thank the American people for supporting the principles of Cut, Cap, and Balance. I will continue the fight to reign in spending, reform our tax code, and get the government out of the way of our job creators.

Congressman Tim Huelskamp:

Despite having pledged to the American people an open and transparent process and despite having months to fix this problem, we were asked to vote in the 11th hour for a bill that the public had less than 16 hours to read and understand. The culture of fiscal irresponsibility may not have been created by this Congress, but we were sent here to put an end to it; I'm afraid this bill does not rise to that occasion.

Senator Marco Rubio:

I cannot support this plan because it fails to actually solve our debt problem, fails to diminish the risk of a credit rating downgrade and is not a long-term solution to avert a debt crisis.

Congressman Connie Mack:

The Congress voted again to continue funding the President’s reckless spending and financial irresponsibility. The President and Congressional Democrats have played games, used scare tactics, and offered ‘schemes’ not solutions to Washington’s spending problem. While I did not support the plan put forth today, the House has put forth three plans and the President has failed to put any plan on the table. America needs a permanent fix to Washington’s spending problem and today the co-sponsorship of the Mack Penny Plan has reached a new high of fifty-six Members of Congress, and I expect many others to join the effort during the August recess.

Senator Jeff Sessions:

[M]y great reservation that compels me to oppose this bill is that we are undermining the one thing most vital to ending the debt crisis looming over us: accountability. 

The new normal in Washington has become panic-driven 11th hour votes in which Members are told to fall into line before pandemonium ensues. This is no way to run the Congress or to run the government.

I fear we are relinquishing our responsibility as Senators.

Senator Chuck Grassley:

I voted against the plan because it delays meaningful spending reductions, fails to address entitlement spending in a way that will save the programs for future generations of retirees, and leaves open the possibility of tax increases.

In fact, the White House said yesterday it will seek to increase taxes in the second part of the deal.  Tax increases are the wrong answer for a struggling economy, and recent history proves that higher taxes don’t go to the bottom line.  Instead, they’re a license for Washington to spend even more.  Since World War II, for every dollar in new taxes, the government has spent $1.17.

Senator Pat Toomey:

Unfortunately, the debt ceiling deal...does nothing to deal with the path of our government's unsustainable deficit spending. For fiscal year 2012, this legislation will only cut two-tenths of 1 percent of total spending. Not only will our debt grow each year under this plan, it will continue to grow even as a percentage of our economy. Finally, I am concerned that the long-term cuts over the next decade will not materialize. All Congress has to do to override this bill's spending restraints in the future is pass another law that overrides them. If Congress is truly serious about cutting spending, it would mandate serious spending cuts in next year's budget - the only year in which cuts are actually guaranteed.

Senator Dean Heller:

I respect the effort by all involved to reach a compromise, but this agreement simply does not make the long-term, structural changes necessary to rebuild our economy. Congress has again shied away from making the tough decisions necessary to seriously address our nation’s need for fiscal health and economic growth. Twice I have voted in favor of forward-looking plans that would prevent tax increases, protect Social Security and Medicare and require Congress to send a Balance Budget Amendment to the States. 

Debt deal clears Senate hurdle 74 - 26

Natalie Gonnella
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After a torrent of dramatic debate, the debt deal has finally cleared Congress.

In a vote of 74 - 26, Senators today followed their House counterparts in passing the highly anticipated (and heatedly debated) legislation.  The bill now awaits President Obama's signature.

Overall 28 Republicans, 45 Democrats and one Independent backed the proposal in the Senate.

According to USA Today:

Senate Minority Leader Mitch McConnell, who helped broker the accord this weekend, said Republicans have succeeded in changing the debate in Washington.

"The spending spree might actually be coming to an end," he said. "This bill does not solve the problem but it at least forces Washington to admit that it has one."

The latest debt deal details

With the default deadline quickly approaching, here's a look at the talking points Speaker John Boehner sent to House members ahead of this evening's debt deal conference call.

Senate Republicans slam the Reid plan

Natalie Gonnella
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With the Senate set to vote on a series of deficit reduction proposals starting early tomorrow morning, Republicans today reiterated their opposition to Harry Reid's debt limit plan.

Much like the Democrats recent statement to House Speaker John Boehner, in a letter to the Senate Majority Leader, 43 GOP senators stood firm in their views against the strategy, ensuring the measure will fall short of the seven Republican votes needed to avoid a filibuster.

Republican Senators Olympia Snowe, Susan Collins, Scott Brown, and Lisa Murkowski declined to endorse the letter.

According to the Washington Post's Felicia Sonmez:

Senate Minority Leader Mitch McConnell (R-Ky.) announced on the floor shortly after the chamber convened Saturday afternoon that the senators had delivered the letter to Reid’s office.

Citing insignificant spending cuts and charging the Democrats' with a penchant for political games, here's a look at what GOP senators had to say ahead of tomorrow morning's vote:

Dear Leader Reid:

We are writing to let you know that we will not vote for your $2.4 trillion debt limit amendment which, if enacted, would result in the single largest debt ceiling increase in the history of the United States. In addition to this unprecedented increase in borrowing authority, your amendment completely fails to address our current fiscal imbalance and lacks any serious effort to ensure that any subsequent spending cuts are enacted.

The plan you have proposed would not alter the spending trajectory that is putting our economy and national security at risk. In return for an unprecedented $2.4 trillion debt limit increase, your amendment reduces spending by less than $1 trillion over the next decade. Setting aside the $200 billion shortfall between the CBO scored savings and the $2.4 trillion debt limit increase, identified by the Congressional Budget Office, most of the proposal’s alleged savings are based on a false claim of credit for reductions in war-related spending that were already scheduled to occur. This amendment proposes no change to our military posture and, for that reason, these savings are the sort of widely ridiculed accounting gimmick that breeds cynicism about our ability to tackle our fiscal challenges. The only possible justification for a $2.4 trillion increase in borrowing authority is to allow the President to avoid any accountability for these issues before his 2012 election. It is by constantly putting off these tough decisions that we have found ourselves with a national debt nearly equal to the size of our gross domestic product. The time for action is now, we cannot wait until we accumulate another $2.4 trillion in debt.

For all of these reasons, we must oppose your unprecedented $2.4 trillion debt limit amendment. Given the nation’s enormous future spending challenges, it would be irresponsible to give the President this unprecedented additional borrowing authority without requiring the enactment of significant spending reductions and reforms. We urge you to abandon this reckless proposal and instead pursue a more responsible course of action that would rein in spending, reassure the financial markets, and help promote private sector job growth.

Sincerely,

Republican Leader Mitch McConnell

Republican Whip Jon Kyl

Senator Lamar Alexander

Senator Kelly Ayotte

Senator John Barrasso

Senator Roy Blunt

Senator John Boozman

Senator Richard Burr

Senator Saxby Chambliss

Senator Daniel Coats

Senator Tom Coburn

Senator Thad Cochran

Senator Bob Corker

Senator John Cornyn

Senator Mike Crapo

Senator Jim DeMint

Senator Michael Enzi

Senator Lindsey Graham

Senator Chuck Grassley

Senator Orrin Hatch

Senator Dean Heller

Senator John Hoeven

Senator Kay Bailey Hutchison

Senator James Inhofe

Senator Johnny Isakson

Senator Mike Johanns

Senator Ron Johnson

Senator Mark Kirk

Senator Mike Lee

Senator Richard Lugar

Senator John McCain

Senator Jerry Moran

Senator Rand Paul

Senator Robert Portman

Senator James Risch

Senator Pat Roberts

Senator Marco Rubio

Senator Jeff Sessions

Senator Richard Shelby

Senator John Thune

Senator Patrick Toomey

Senator David Vitter

Senator Roger Wicker