…the diversity of the Washington economy is an illusion, for each of its business sectors is to some degree a creature of the region’s single great industry–the federal government. According to a 2007 report by the Tax Foundation, for every dollar in taxes Washington sends to the federal government, it receives five in return. Fuller says that over the past 30 years, the federal government has spent $860 billion in the D.C. region, two-thirds of that since 9/11.

Read it all.

A Senate panel expressed its outrage Thursday over Pakistan’s conviction of a doctor who helped the United States track down Osama bin Laden, voting to cut aid to Islamabad by $33 million ”” $1 million for every year of the physician’s 33-year sentence for high treason.

The punitive move came on top of deep reductions the Appropriations Committee already had made to President Barack Obama’s budget request for Pakistan, a reflection of the growing congressional anger over its cooperation in combatting terrorism. The overall foreign aid budget for next year had slashed more than half of the proposed assistance and threatened further reductions if Islamabad failed to open overland supply routes to U.S.-led NATO forces in Afghanistan.

Read it all.

The nonpartisan Congressional Budget Office (CBO) said Tuesday that unless lawmakers act to prevent scheduled tax increases and spending cuts at the end of the year, a recession will likely result in early 2013.

Early next year income taxes are set to go up when the Bush-era tax rates expire. Automatic spending cuts totaling roughly $109 billion triggered by last August’s debt-ceiling deal are set to hit. Meanwhile, payments to physicians under Medicare will be slashed.

CBO projects that these and other elements of the so-called “fiscal cliff” will cause the economy to contract as demand dries up.

Read it all.

It’s a teachable moment, but what’s the right lesson? Already, the $2 billion-plus trading debacle at JPMorgan Chase has inspired a powerful storyline. Nothing has changed since the financial crisis, it’s said. Big banks remain out of control, gambling recklessly. If Jamie Dimon’s bank, reputed to be one of the best-managed, can get into trouble, what can we expect of the others? Government regulations and regulators need to be tougher to counteract bankers’ greed and incompetence.

The storyline is marred only by this: Everything in it is exaggerated, misleading or wrong.

Let’s take stock. Here are four propositions that defy conventional wisdom.

Read it all.

The pro-gambling lobby…remains undeterred. As one example, the Poker Players Alliance spent $1.4 million last year lobbying Washington power brokers in support of Internet gambling initiatives such as Rep. [Joe] Barton’s bill, the Roll Call newspaper reported. This alliance, along with multiplied other gambling special interest groups, shows no intention of stepping away from the table this year, either.

No doubt there is money to be made in legalized online poker gambling. The gambling purveyors would rake in additional billions each year. According to the Barton bill, the government would collect “substantial revenue.” And a relative few players among millions would survive in the black, at least for a time.

But is there a greater price to be paid? The losers would far outnumber the winners.

Read it all.

Defense contractors have slowed hiring. Tax advisers are warning firms not to count on favorite breaks. And hospitals are scouring their books for ways to cut costs.

Across the U.S. economy, anxiety is rising about the potential for widespread disruptions after the November election, when a lame-duck Congress will have barely two months to resolve a grinding standoff over taxes and spending.

Read it all.

Congressional lawmakers seem to agree on two things: College student loan debt is out of control and something should be done about it.

Where they disagree is how to solve the problem. Currently they are looking at one piece of this puzzle: how to keep a lower interest rate on federally subsidized undergraduate student loans for low- and middle-income students which is set to double to 6.8 percent this June.

Isaiah Toney, a senior at George Washington University in Washington, said he is “extraordinarily happy” this issue is being raised, but he thinks the discussion has been too narrow.

Read it all.

That the losses would only dent the quarterly profits at one of the world’s largest banks, and that they were revealed by the bank’s own management, did not diminish the chorus on Capitol Hill for tighter controls. The charismatic and often outspoken Dimon, who has argued rigorously against strict financial regulations, fielded calls Friday from several lawmakers and regulators at the bank’s Midtown Manhattan headquarters.

The biggest blow-up between Wall Street and Washington since 2010, when Congress passed the Dodd-Frank Act to tighten oversight of the financial industry, comes just as regulators are drafting new rules governing banks. A signature feature of the law is the Volcker Rule, a prohibition on banks engaging in speculative bets. The authors of the act say the measure might have prevented JPMorgan’s bad trades had it been in effect.

Read it all.

[DAVID] GREENE: Robert Caro’s new book, “The Passage of Power,” records the moment when Johnson became president of the United States. He was vice president elevated in an instant when President John F. Kennedy was assassinated in Dallas in 1963.

[STEVE] INSKEEP: A famous photo shows Johnson’s hurried swearing in aboard Air Force One. Characteristically, the author has been researching that moment for years. We talked about his long, long dig for information as we sat among the bookshelves and filing cabinets at the New York office where Robert Caro works alone.

CARO: It’s very easy to fool yourself that you’re working, you know, when you’re really not working very hard. I mean, I’m very lazy. So for me, I would always have an excuse, you know, to go – quit early, go to a museum, you know. So I do everything I can to make myself remember this is a job. I keep a schedule. People laugh at me for wearing, you know, a coat and tie to work…

Read or listen to it all.

Government accounting for Social Security has devolved over time from deceptive to dishonest to desperate.

The latest Social Security Trustees report says that benefit promises are fully financed until 2033 and three-fourths financed after that. In short: no crisis.

Here’s the truth, embedded between the lines: At the current payroll tax rate, Social Security would only bring in enough revenue to pay for 72% of all benefits through 2036.

Read it all.

The Washington of conventional wisdom and the real Washington are two entirely different places. The Washington of conventional wisdom is overrun by well-paid insiders ”” lobbyists, lawyers, publicists ”” who systematically manipulate government policies to benefit corporations and the rich, defying the “will of the people.” The real Washington has government paid for by the rich and well-to-do. Benefits go mainly to the poor and middle class, while politicians of both parties live in fear that they might offend the “will of the people” ”” voters.

Recently, Ron Haskins of the Brookings Institution, a Washington think tank, testified before the House Budget Committee on the growth of the 10-largest “means tested” federal programs that serve people who qualify by various definitions of poverty. Here’s what Haskins reported: From 1980 to 2011, annual spending on these programs grew from $126 billion to $626 billion (all figures in inflation-adjusted “2011 dollars”); dividing this by the number of people below the government poverty line, spending went from $4,300 per poor person in 1980 to $13,000 in 2011. In 1962, spending per person in poverty was $516.

Read it all.

I will admit that the HHS contraception rule does ask these Catholic clerics to sacrifice something. But what is this sacrifice? Simply to allow the women who work for their organizations to be offered contraceptive coverage by their insurers. To refuse this sacrifice is not to uphold civil society. It is to refuse to participate in it.

Toward the end of their statement, the 15 bishops who signed this statement called on every U.S. Catholic to join in a “great national campaign” on behalf of religious liberty. More specifically, they called for a “Fortnight for Freedom” concluding with the Fourth of July when U.S. dioceses can celebrate both religious liberty and martyrs who have died for the Catholic cause.

As Independence Day approaches, I have a prediction. I predict that rank-and-file American Catholics will ignore this call.

Read it all.

“If we face today the prospect of unjust laws, then Catholics in America, in solidarity with our fellow citizens, must have the courage not to obey them,” the statement says. “No American desires this. No Catholic welcomes it. But if it should fall upon us, we must discharge it as a duty of citizenship and an obligation of faith.”

The document cites a number of other perceived threats to religious freedom besides the contraception policy, such as harsh immigration laws that could impede the church’s social ministry and university policies targeting campus student religious groups.

The statement also makes a concerted effort to portray the Catholic campaign as bound up with the fight to defend American values from an overbearing central government.

Read it all.

President Obama’s signature health reform law will add as much as $527 billion to federal deficits over the next decade, not cut them as advertised, according to a report released Tuesday.

The Affordable Care Act will add as much as $1.2 trillion to federal spending between 2012 and 2021, the report also finds. Charles Blahous, who serves as one of Medicare’s trustees, wrote the report, published by George Mason University’s Mercatus Center.

Read it all.

John McCain and Joseph Lieberman have already called for arming Syria’s rebels, in statements last month from the US Senate where they serve. But they repeated their demand in more dramatic fashion Tuesday ”“ from a Syrian refugee camp in Turkey and with violence unabated, as the regime of Syrian President Bashar al-Assad disregarded the UN plan that was to have silenced the Syrian Army’s guns Tuesday morning.

The two senators joined a growing international chorus of voices finding that the unimplemented plan, brokered by former United Nations Secretary-General Kofi Annan, is simply allowing the Assad regime to continue its oppression.

Read it all.

We have finally reached the point in our financial history where even bankers hate bankers.

Last week, the Federal Reserve Bank of Dallas issued its 2011 annual report with a 34-page essay, “Why We Must End Too Big To Fail — Now.” The report stops short of calling our nation’s largest banks terrorists, but it does dub them “a clear and present danger to the U.S. economy.”
It begins with a letter from regional Fed president Richard Fisher. “More than half of banking industry assets are on the books of just five institutions,” he complains. “They were a primary culprit in magnifying the financial crisis, and their presence continues to play an important role in prolonging our economic malaise.”

This is not the Tea Party. This is not Occupy Wall Street. This is not some disgruntled Goldman Sachs guy firing off a nastygram to the New York Times on his last day. This is a member of the Federal Reserve itself — an institution that bears responsibility for our banking system devolving into an untenable oligarchy that buys off politicians, captures regulators and eats up our money. This is a member of the establishment saying Too-Big-To-Fail, or TBTF, must die.

Read it all.

Rick Santorum says he found God in an unlikely place: the U.S. Senate.

The former Pennsylvania senator’s faith has taken center stage in his presidential campaign as visits to evangelical churches, where he offers his personal testimony about how he came to know God, are a staple of his life on the trail.

Read it all.

At some point, the spectacle America is now calling a presidential campaign will turn away from comedy and start focusing on things that really matter””such as the “fiscal cliff” our federal government is rapidly approaching.

The what? A cliff is something from which you don’t want to fall. But as I’ll explain shortly, a number of decisions to kick the budgetary can down the road have conspired to place a remarkably large fiscal contraction on the calendar for January 2013””unless Congress takes action to avoid it.

Well, that gives Congress plenty of time, right? Yes. But if you’re like me, the phrase “unless Congress takes action” sends a chill down your spine””especially since the cliff came about because of Congress’s past inability to agree.

Read it all.

The CBO forecasts it will now cost $1.76 trillion over a decade, whereas before they forecast it would cost 940 billion.

Read it carefully and follow all the links. Also, you can read more over there.

The agency’s 2011 long-term budget outlook showed that federal debt would begin to hurt the economy once it reaches about 77% of GDP. CBO’s January budget and economic outlook estimated that it will hit that level in 2013 under its high-debt scenario that is based largely on current policy.

“CBO expects that the large government deficits during the recession and afterward will raise the cost of capital in the future . . . constraining investment,” the nonpartisan scorekeeper wrote in its January budget and economic outlook.

Initially, the impact would be minimal, but it would grow over time as debt levels increase.

Read it all.

The U.S. Senate voted by a narrow 51-48 margin to block the Respect for Rights of Conscience Act (S. 1467), sponsored by Senator Roy Blunt (R-MO) and 37 other senators.
The proposed measure would have given employers and insurers the possibility to opt out of paying for contraceptives and sterilizations

“The need to defend citizens’ rights of conscience is the most critical issue before our country right now,” said Bishop William E. Lori of Bridgeport, Connecticut. Bishop Lori chairs the Ad Hoc Committee on Religious Liberty of the United States Conference of Catholic Bishops (USCCB).

Read it all.

….Bloomberg News reported last week that “the U.S. is the closest it has been in almost 20 years to achieving energy self-sufficiency. … Domestic oil output is the highest in eight years. The U.S. is producing so much natural gas that, where the government warned four years ago of a critical need to boost imports, it now may approve an export terminal.” As a result, “the U.S. has reversed a two-decade-long decline in energy independence, increasing the proportion of demand met from domestic sources over the last six years to an estimated 81 percent through the first 10 months of 2011.” This transformation could make the U.S. the world’s top energy producer by 2020, raise more tax revenue, free us from worrying about the Middle East, and, if we’re smart, build a bridge to a much cleaner energy future.

All of this is good news, but it will come true at scale only if these oil and gas resources can be extracted in an environmentally sustainable manner. This can be done right, but we need a deal between environmentalists and the oil and gas industry to lock it in ”” now.

Read it all.

A crucial thing to remember, both about the mandate and the promised adjustments-to-come, is that it is deeply un-American in its hostility to diversity and pluralism in civil society. The mandate’s religious-employer exemption is limited only to inward-looking entities that hire and engage only their own. It embodies the view that religious institutions may be distinctive only insofar as they stay in their place ”” in the pews, in the pulpit, at the altar. It reflects a troubling tendency to impose ideological sameness and conformity in the public sphere, to insist that all groups and associations act like the government, in the service of the government’s goals.

The mandate prompted an impressively united reaction by those who cherish America’s tradition of religious freedom and accommodation. On the left and on the right, among Republicans and Democrats, there was an appreciation for the fact that this was an overreach. It was, and still is.

Read it all.

At what point is a middle-class American ”” who has insurance ”” allowed to complain about the increasing taxes we pay to finance the national health-care system?

After all, what is a tax but an assessment imposed by authority on citizens for public purposes? And that seems a fair description of how our health-care system works. The federal government tells companies which services they must provide. In turn, the companies raise rates so they can meet these requirements and still make a profit. Basically, each time a federal official tells us that “insurance companies” will pay for, say, free condoms or expanded coverage, premiums paid by the middle class go up. Call it an unofficial tax, one collected by private industry instead of Washington.

Don’t get me wrong: I’d prefer to pay a federal health-care tax and get European-style care. But the current plan is the worst of both worlds: socialist enough, if you will, to provide free care for the poor; capitalist enough to make sure companies are guaranteed profit.

Read it all.

Seeking to avoid a politically toxic vote, Congress has failed to pass a federal budget for three years. This year’s new twist? Congress might not even try.

On Monday, President Obama presented his proposed budget for fiscal year 2013. It’s going nowhere on Capitol Hill, legislators and political analysts agree. What’s more, Senate Democratic leaders show no intention of presenting their own budget proposals ”“ or taking up any lobbed over from House Republicans.

Read it all.

In place of those cuts, the president offered a mixture of real steps to reduce the deficit ”” including nearly $2 trillion in additional taxes over the coming decade, mainly at the expense of high-income Americans ”” and bogus ones, such as almost $850 billion in “savings” from the previously planned end of foreign combat operations, a chunk of which would be spent on infrastructure and jobs programs. The one bright spot: Obama didn’t ignore the rapid and unsustainable growth in healthcare entitlements, as he did in last year’s budget. Instead, he called for saving about $360 billion over 10 years on those programs, in part by paying drug companies less for medicines prescribed to low-income Medicare patients.

There’s little chance this Congress will agree to many, or even any, of those suggestions. Tax increases seem particularly unlikely. But even if lawmakers were to adopt all of Obama’s deficit-cutting measures, they wouldn’t go far enough to set the budget on a path toward balance.

Read it all.

The Catholic Church reacted strongly Friday to a White House defense of new rules that will force many religious employers to provide contraception to their workers in government-mandated health insurance plans.

“The White House information about this is a combination of misleading and wrong,” said Anthony Picarello, general counsel of the U.S. Conference of Catholic Bishops. He said the bishops would “pursue every legal mandate available to them to bring an end to this mandate. That means legislation, litigation and public advocacy. All options are on the table….”

Read it all.

Speakers at the annual National Prayer Breakfast in the nation’s capital usually keep their talks diplomatic. After all, the room is filled with ambassadors, lawmakers from both parties, Cabinet members, and people of various faiths from around the world.

But Eric Metaxas, the featured speaker Thursday morning and the author of biographies on Dietrich Bonhoeffer and William Wilberforce, talked to an audience of 4,000 important people about false religion, human depravity, poverty, slavery, and abortion. But the New York author delivered his sharp commentary with his trademark wit, which kept the audience roaring with laughter. [There is a link provided for video of the event]

The halls of the Washington Hilton, the hotel that hosts the breakfast, were buzzing afterward as people discussed the speech””Metaxas’ speech, not President Obama’s, which followed. Outside the hotel, a protestor asked, “Is it true what I’m hearing, that Eric Metaxas talked about Jesus?”

Read it all.

US economic growth will slow dramatically if tax rises and spending cuts come into effect as planned in 2013, according to new figures from the Congressional Budget Office.

The expiry of tax cuts originally passed by president George W. Bush, the end of a 2 per cent payroll tax holiday and automatic spending cuts agreed last August will reduce growth to just 1.1 per cent in 2013 unless changes are made.

Read it all (subscription required).

While he has addressed the issue throughout his presidency, [President] Obama began late last year to shower even more attention on the importance of lifting middle-class wages. In the days after his address to Congress, he traveled the country to make arguments in favor of new investments in manufacturing, energy and college affordability.

But it is not clear that the measures ”” or any others ”” could compensate for the factors behind the decline of the middle class, including the rise of nations with abundant cheap labor and the development of new technologies that allow companies to operate with far fewer workers. Nor is it clear that the bruised American economy of 2012, with a growing population of retiring workers to support, can sustain a prospering middle class.

“There has been an avalanche of developments that have played out in the last 30 years or so that make it a huge challenge to think about real increases in wages and therefore a sustained rise in incomes,” said Lane Kenworthy, a sociologist at the University of Arizona. “I think, in truth, a lot of people are at a loss for what exactly can be done.”

Read it all.