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Budget Battle Continues

posted on March 22, 2013

A private report this week indicated the recovery in the housing sector is strengthening. 

According to the National Association of Realtors, sales of previously occupied homes increased 0.8 percent in February.  That’s their best performance since November of 2009, when a temporary homebuyer tax credit boosted sales. The February sales figure of nearly 5 million units was more than 10 percent higher than last February. 

The median price for a home sold last month was $173,600 …up nearly 12 percent from last year. 

The number of available homes on the market rose 10 percent in February, but even with the gain the inventory of homes for sale was still 19 percent below a year ago.

Rising demand and tight supplies are boosting construction. U.S. builders broke ground on 946,000 houses and apartments in February and applied for building permits at the fastest pace in 4 1/2 years.

And Federal Reserve officials reiterated plans this week to hold interest rates near record–lows until U.S. unemployment falls to 6.5 percent, which officials don’t expect until 2015. 

Despite improvement thus far in 2013, America’s fragile economic recovery faces threats, including government spending cuts, which were expected to trigger furloughs and layoffs.  Late this week though, lawmakers in both chambers of Congress approved measures designed to blunt the budget axe and avert a government shutdown.

With the prospect of a government shutdown looming, the Senate approved legislation Wednesday to secure $85 billion in less-than-favored spending cuts intended to rein-in excessive federal deficits.

Reworking the across-the-board cuts, criticized as random and untargeted, means there will be no furloughs of federal meat inspectors.  But uncertainty regarding the fate of several smaller air traffic control facilities lingered.  Bipartisan support to preserve military tuition assistance was part of the ebb and flow of limited cooperation that swirled through Washington this week.

On Thursday, the Republican-controlled House passed its fiscal plan steeped in Budget Committee Chairman Paul Ryan’s vision.  Showcasing the mathematic possibility of a balanced budget within a decade, the austere measures proposed by the House would implement deep cuts in the social safety net and would not raise taxes.  Medicaid, food stamps and Obamacare are in the crosshairs of the House plan, and are characterized by the President and Democratic leaders as a rehash of ideas rejected by voters in the 2012 presidential election.

The executive and legislative branches continue to approach spending based on respective party ideologies, inevitably leading to more monetary clashes in the long term.

President Barack Obama: “Making progress on these issues won’t be easy.  In the months ahead, there will be more contentious debate and honest disagreement between principled people who want what’s best for this country.  But I still believe that compromise is possible.  I still believe we can come together to do big things.  And I know there are leaders on the other side who share that belief.”

 Because the president and Congress failed to reach an agreement prior to March 1, automatic spending cuts began to take effect, and unchecked, the reductions were estimated to balloon up to $1 trillion over the next decade.  Though that amount would make a small dent in the overall federal deficit, it would come at the cost of programs that many lawmakers claim are politically unsustainable for both parties.

Rep. Paul Ryan: R – Wisconsin: “The only difference between the Democrats in Congress and the Republicans is in the budgets we’re passing. But at least we’re bringing budgets forward.  The president hasn’t even proposed a budget yet.  The law requires that the President of the United States submit his budget the first Monday in February and he’s missing in action…and we are showing here is a responsible path to a balanced budget which we think is far better than another tax increase and more spending and borrowing which would evolve into a debt crisis.”

 Senate Democrats rejected the House budget Thursday evening, and moved toward passing their first budget in four years on Friday.

Tags: Barack Obama budget Congress economy federal deficit furloughs meat inspections Paul Ryan president resolution senate sequester