Paul Ryan’s First Shutdown Fight – By Jim Newell NOV. 3 2015 4:03 PM

Newly elected Speaker of the House Paul Ryan holds his first news conference at Republican National Committee headquarters in Washington on Nov. 3, 2015. Photo by Gary Cameron/Reuters

Newly elected Speaker of the House Paul Ryan holds his first news conference at Republican National Committee headquarters in Washington on Nov. 3, 2015.
Photo by Gary Cameron/Reuters

Funny thing about that budget and debt ceiling agreement that supposedly removed the threat of a government shutdown for two years: It did no such thing. It didn’t even remove it for two months.

The Bipartisan Budget Act of 2015 “should finally free us from the cycle of shutdown threats and last-minute fixes,” President Obama said while signing the agreement Monday. All the weight of the world rests on that “should.” A lot of things shouldhappen. Donald Trump and Ben Carson should drop in presidential polls. Twitter should maintain stars and not replace them with dumb little twee hearts. Tom Brady should be exiled to outer space.

The 114th Congress, similarly, should have a smooth appropriations ride now that the budget agreement has resolved the thorniest aspect of the spending process: setting top-line funding numbers. House Republicans, with their flashy new hot-shot speaker, should offer their input and then do whatever the new boss says to avoid embarrassing him this early in his tenure over some ideological fantasy.

But things are going to get a little bumpier than they should.

Now that the framework for funding the rest of the fiscal year is agreed upon, Congress must pass the actual appropriations by Dec. 11 as agreed to under the short-term continuing resolution passed at the end of September. You’ll recall back then that Congress was barreling toward a shutdown over certain demands from the House Freedom Caucus. They wouldn’t vote for any funding measure that gave Planned Parenthood access to federal dollars, and they would attempt to oust Speaker John Boehner if he called up and passed with Democratic votes a bill that funded Planned Parenthood. So Boehner offered to topple himself instead and passed the two-and-a-half-month extension as a lame duck.

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Ben Carson accidentally stumbled on a great idea for improving education – Updated by Dylan Matthews on October 30, 2015, 12:00 p.m. ET

Ben Carson accidentally stumbled on a great idea for improving education

Last year, Ben Carson appeared to endorse a massive change in the way the US funds schools, asking reporter James Hamblin, “Wouldn’t it make more sense to put the money in a pot and redistribute it throughout the country so that public schools are equal, whether you’re in a poor area or a wealthy area?” The implicit idea here, of federalizing education funding and trying to eliminate the budget gap between rich and poor schools, is way more progressive than anything even Bernie Sanders has proposed. So CNN’s Jake Tapper pressed Carson further, and he stuck to his guns:

Republican presidential candidate, Dr. Ben Carson joined CNN’s Jake Tapper on The Lead.

Congress Avoids Government Shutdown – By Gabrielle Levy Sept. 30, 2015 | 5:05 p.m. EDT

The Capitol Dome, covered with scaffolding is seen on Capitol Hill in Washington on Wednesday, Sept. 30, 2015.

The Senate and House each voted on Wednesday to approve a government spending bill before the midnight deadline.

Congress managed to avoid a government shutdown Wednesday, as both the House and Senate voted to approve legislation that supplies funds for federal operations through Dec. 11.

Senate lawmakers voted 78 to 20 Wednesday morning to pass a continuing resolution that keeps federal spending at its current levels, with 32 Republicans joining the entire Democratic caucus in supporting the measure. Sens. Marco Rubio of Florida and Lindsey Graham of South Carolina, both Republicans running for president, skipped the vote.

“This bill hardly represents my preferred method for funding the government,” Majority Leader Mitch McConnell told reporters Tuesday. “But it’s now the most viable way forward after Democrats’ extreme actions forced our country into this situation.”

The House followed suit Wednesday afternoon, voting 277 to 151 with 91 Republicans joining House Democrats in favor of the legislation. That vote followed one on a procedural measure that would defund Planned Parenthood; the measure passed separately from the continuing resolution and won’t have any effect on the funding that keeps the government running.

“I understand that so far we have lacked the votes in the Senate to include defund language in the continuing resolution,” Rep. Martha Roby, an Alabama Republican and sponsor of the measure, said on the House floor Wednesday afternoon. “I realize this is a last-ditch effort to do this and the chances of this correction maneuver succeeding in the Senate are low, but I believe … that we have to fight until the very end.”


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White House, GOP weighing big budget talks – By SEUNG MIN KIM 09/29/15 03:29 PM EDT Updated 09/29/15 07:55 PM EDT



The goal is to ease the threat of repeated government shutdowns until after the 2016 elections.

As President Barack Obama and top congressional leaders prepare to launch negotiations on a two-year budget deal, Senate Majority Leader Mitch McConnell is maneuvering to cut key Democrats out of the talks, according to sources familiar with the nascent negotiations.

The ambitious budget goal, outlined by McConnell on Tuesday, could help ease the threat of repeated government shutdowns until after the 2016 elections. But drama is already unfolding behind the scenes with McConnell’s private suggestion that the discussions be limited to just him, President Barack Obama and Speaker John Boehner (R-Ohio), according to Democratic sources — a proposal that the president and outgoing speaker have rejected, the sources said.

On Tuesday, McConnell detailed the talks, which are focused on top-line budget numbers for fiscal 2016 and 2017. The discussions, which included McConnell, Obama and Boehner, began with an initial phone conversation among the three men nearly two weeks ago.

The discussions are preliminary, and are likely to stretch beyond the end of October, when Boehner’s resignation from Congress takes effect. But if the talks can produce top-line numbers for domestic and defense spending, that could help the GOP-led Congress avoid future showdowns over government spending like the standoff that will loom in mid-December.

“We’d like to settle a top-line for both years so that next year, we could have a regular appropriations process,” McConnell said Tuesday. “The president and Speaker Boehner and I spoke about getting started into discussions last week, and I would expect them to start very soon.”

A Boehner aide confirmed the talks, saying the men “discussed the need to get moving on the budget process.”


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Dem bill would cut lawmaker pay during shutdowns – By Cristina Marcos September 18, 2015, 06:13 pm

Rep. Rick Nolan introduced legislation on Friday to prevent future Congresses from getting paid during government shutdowns.

The Minnesota Democrat’s proposal wouldn’t apply to the current Congress, which faces a potential government shutdown on Oct. 1 if lawmakers don’t pass a spending bill in time.

The Constitution’s 27th Amendment prohibits any law that changes lawmakers’ salaries during their current terms. Lawmakers can only enact measures that affect future sessions of Congress.

Nolan said withholding lawmaker pay would put those serving in Congress on par with other federal employees who would be furloughed in the event of a shutdown.

“If hundreds of thousands of other federal employees are to go without their salaries — twisting slowly in the wind in a government shutdown — then the Congress should not be paid either,” Nolan said.

“This legislation would require the Congress to work full time — with no salary — during any government shutdown until they pass a bill to fund our government and pay the public employees who go to work on our behalf every day,” he added.

Many conservatives want to defund Planned Parenthood in the wake of controversial undercover videos depicting the organization’s use of fetal tissue donations with a spending bill as leverage. But such a measure does not have the votes to surmount a Democratic filibuster in the Senate or President Obama’s veto.

Only a handful of legislative days remain for Congress to pass a stopgap funding bill. Neither the House nor Senate currently has plans to vote next week on a bill to avoid a shutdown.

Some lawmakers opted to donate their pay to charity during the 16-day shutdown in 2013 over defunding ObamaCare.

Obama pushes for more US ice-breaking might in Arctic – September 2, 2015 1:48AM ET

Under new timetable, government would buy a heavy icebreaker by 2020 instead of 2022

Screen Shot 2015-09-02 at Sep 2, 2015 2.54

The move, part of a push to convince Americans to support Obama’s plans to curb climate change, has long been urged by Arctic advocates as climate change opens up the region to more shipping, mining and oil drilling.

Earlier in the day, Obama stared down the melting Exit Glacier, a 2-mile-long chock of solid ice has been retreating at a faster and faster pace in recent years, in a dramatic use of his presidential pulpit to sound the alarm on climate change.

“This is as good of a signpost of what we’re dealing with when it comes to climate change as just about anything,” Obama said with the iconic glacier at his back.

In the first step of Obama’s new timetable, the government would buy a heavy icebreaker by 2020 instead of the previous goal of 2022.

The United States used to have seven icebreakers. Russia currently has 40, with another 11 planned or under construction.

“Technically, we have three. Operationally, we really have only two,” Obama told reporters in the coastal town of Seward, named after Secretary of State William Seward, who negotiated the purchase of Alaska from Russia in 1867.

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U.S. Lacks Ammo for Next Economic Crisis – By  JON HILSENRATH and    NICK TIMIRAOS Aug. 17, 2015 10:37 p.m. ET

Policy makers worry fiscal and monetary tools to battle a recession are in short supply

Federal Reserve Chairwoman Janet Yellen, speaking at a Senate hearing last month, has described low interest rates as insurance against another economic downturn.

Federal Reserve Chairwoman Janet Yellen, speaking at a Senate hearing last month, has described low interest rates as insurance against another economic downturn. PHOTO: RON SACHS/CNP/ZUMA PRESS

As the U.S. economic expansion ages and clouds gather overseas, policy makers worry about recession. Their concern isn’t that a downturn is imminent but whether they will have firepower to fight back when one does arrive.

Money has been Washington’s primary weapon in the decades since British economist John Maynard Keynes proposed aggressive government spending to battle the Great Depression. The U.S. generally injects cash into the economy through interest-rate cuts, tax cuts or ramped-up federal spending.

Those tools could be hard to employ when the next dip comes: Interest rates are near zero, and fiscal stimulus plans could be hampered by high levels of government debt and the prospect of growing budget deficits to cover entitlement spending on retired baby boomers.

Few economists believe the U.S. is near recession. The economy seems to have regained its footing after a first-quarter stumble, and Federal Reserve officials are considering whether to raise short-term interest rates for the first time in nearly a decade to ensure the economy doesn’t overheat.

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Map: Here’s how much each country spends on food – Updated by Brad Plumer on August 15, 2015, 4:30 p.m. ET

When droughts or crop failures cause food prices to spike, many Americans hardly notice. The average American, after all, spends just 6.5 percent of his or her household budget on food consumed at home. (If you include eating out, that rises to around 11 percent.)

Americans spend a smaller share of their budget on food than anyone else

In Pakistan, by contrast, the average person spends 41.4 percent of his or her household budget on food consumed at home. In that situation, those price spikes become a lot more noticeable.

The US Department of Agriculture’s Economic Research Service keeps tabson household expenditures for food, alcohol, and tobacco around the world.

Americans, it turns out, spend a smaller share of their household budgets on food than anyone else — less even than Canadians or Europeans or Australians:


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The Puerto Rico crisis, explained – Updated by Matthew Yglesias on August 3, 2015, 5:10 p.m. ET

On August 3, the government of Puerto Rico missed a $58 million paymenton debts that it owes mostly to residents of Puerto Rico. That’s bad news for those who were expecting a check, but it’s also consistent with what the island’s governor has been saying for months — the island faces a “death spiral” of debt and economic stagnation unless the foreign creditors to whom it owes billions of dollars will agree to some form of restructuring

Some mainland politicians including Hillary Clinton and Jeb Bush have proposed amending the US Bankruptcy Code to create a legal mechanism for a Puerto Rican default and restructuring. But currently there’s nothing like that on the books. Simply a government that is warning it will have to start refusing to pay, and a lot of unanswered questions about the possible consequences of that.

1) What is happening with Puerto Rico?

Puerto Rico is an island in the Caribbean Sea that is also a largely self-governing territory of the United States.

For years, a quirk of US law created a tax subsidy for Puerto Rican debt that encouraged middle class Americans to binge on loaning money to Puerto Rico without really realizing that’s what they were doing. The Puerto Rican government took advantage of this situation by borrowing a lot of money, but didn’t manage to spend the money that they borrowed to accomplish much that was useful in the long term.

Then starting in 2006, Puerto Rico was hit with a series of economic misfortunes. At that point, Puerto Rico’s strong ties to the United States became a liability because Puerto Rico could not adjust to bad economic times with currency depreciation, but Puerto Rican people could adjust to bad times by moving to the mainland United States.

That has left Puerto Rico in a 10-year downward spiral of tax hikes, spending cuts, emigration, and higher interest rates. Padilla has decided that the only way to break the cycle is to announce to Puerto Rico’s creditors that they are not going to get their money back.

2) What is the “death spiral” Governor Garcia Padilla is warning about?

The bad news is that Puerto Rico is really facing two separate death spirals.

One is the basic death spiral of self-fulfilling default risk. The more money you owe, the more likely it is that you won’t be able to pay back all the money that you owe. That means that when your debts come due and you need new loans to pay off the old ones, investors start demanding that you compensate them for their risks in the form of higher interest rates. Those higher interests rates increase the financial burden on your country, and that in turn makes default more likely.

But the death spiral Garcia was referring to is a second one.

People generally don’t like paying taxes but do enjoy receiving high quality government services. Consequently, a given territory’s ability to turn tax revenue into useful services is an important driver of whether people will want to live and do business there. To the extent that your tax revenue is going to pay off old debts, it is not going to provide current services. Thus the more of your budget that you dedicate to debt repayment, the worse the value proposition that you are delivering to your territory’s residents and businesses.

The harder Puerto Rico squeezes, in other words, the more its economy suffers. But the more the Puerto Rican economy suffers, the harder it is for Puerto Rico to pay back its debts. In other words: death spiral.

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