Budget Deal Moving Ahead, Despite Outrage on the Right
The bipartisan deal to suspend the debt ceiling and increase federal spending over the next two years will get a vote in the House on Thursday, House Majority Leader Steny Hoyer (D-MD) said late Tuesday. Leaders in both parties have expressed confidence that the bill will pass before lawmakers leave town for their August recess.
"We're gonna pass it," Hoyer told reporters. "I think we'll get a good number [of votes]. I don't know if it's gonna be huge, but we're gonna pass it."
President Trump announced that he backs the deal, removing one possible hurdle for the bill. “Budget Deal gives great victories to our Military and Vets, keeps out Democrat poison pill riders. Republicans and Democrats in Congress need to act ASAP and support this deal,” he tweeted Tuesday evening.
Despite widespread agreement that the bill will pass, however, not everyone is on board.
Grumbles from the left: Some progressive Democrats have been critical of the deal, portraying it as too easy on Republicans. Worried that the agreement could set up a budget crisis in 2021, Rep. Ro Khanna (D-CA) said he was “concerned that it was a two-year deal. Why not a one year deal?... It seems like it’s basically handcuffing the next president.” Other liberals, noting that Democratic leaders have agreed to avoid “poison pill” riders on controversial issues such as abortion and funding for the border wall in the funding bills that must pass this fall, lamented their loss of leverage in those negotiations.
Outrage on the right: Resistance to the deal was more pronounced on the right, with the hardline House Freedom Caucus announcing Tuesday that it would not support the bill due to concerns about the growing national debt. “Our country is undeniably headed down a path of fiscal insolvency and rapidly approaching $23 trillion in debt. … All sides should go back to the drawing board and work around the clock, canceling recess if necessary, on a responsible budget agreement that serves American taxpayers better—not a $323 billion spending frenzy with no serious offsets,” the 31-member group said in a statement.
The deficit hawks at the Committee for Responsible Federal published “Five Reasons to Oppose the Budget Deal,” which include its purported $1.7 trillion cost over 10 years. CRFB noted that the agreement would increase discretionary spending by 21 percent during President Trump’s first term, pushing such spending to near-record levels.
Sen. John Kennedy (R-LA) was more colorful in his criticism, saying, “You don’t have to be Euclid to understand the math here. We’re like Thelma and Louise in that car headed toward the cliff.” Nevertheless, Kennedy said he would consider supporting the deal.
Is the deficit hawk dead? The budget deal represents “the culmination of years of slipping fiscal discipline in Washington,” said Robert Costa and Mike DeBonis of The Washington Post, and it highlights the declining influence of fiscal conservatives in the capital, at least as far as policy is concerned. Sen. James Lankford (R-OK) said the Republican Party’s credibility on fiscal restraint is “long gone.”
Although it may be too early to declare the fiscal hawk extinct – plenty of critics say the bird will return as soon as there’s a Democratic president – it certainly seems to be in ill health. As the University of Virginia's Larry Sabato said Wednesday: “A battered bird has been named to the list of endangered species. The ‘deficit hawk’ is on the road to extinction. Rarely spotted around Washington, D.C., the deficit hawk’s last remaining habitat is found in some state capitals.”
Some Republicans said that fiscal conservatism was never really a core Republican value, dating back to President Reagan’s tax-cut-and-spend policies, and that Paul Ryan’s emphasis on fiscal issues was an aberration. “It was never the party of Paul Ryan,” former House Speaker Newt Gingrich told the Post. “He’s a brilliant guy, but he filled a policy gap. The reality here is that Republicans were never going to get spending cuts with Speaker Pelosi running the House, and they didn’t want an economic meltdown or shutdown this summer.”
Is the whole debate missing the point? William Gale of the Brookings Institution, who served on President George H.W. Bush’s Council of Economic Advisers, said he wasn’t sure why the budget deal was producing so much hostility, since it basically maintains the status quo and – more importantly – is focused solely on discretionary spending. “There *is* a long-term budget issue,” Gale tweeted Tuesday, “but cutting [discretionary spending] is not the way to go.”
Instead, Gale says that any serious fiscal plan must focus on the mandatory side of the ledger, where the rapidly increasing costs of health care and retirement are straining against revenues reduced by repeated rounds of tax cuts. Gale recommends a combination of entitlement reductions and revenue increases – a standard mix of policy options that faces an uncertain future, with well-entrenched interest groups standing opposed to movement in either direction.
Undertrained Military Drone Pilots Have Senators Steaming
Lawmakers on Capitol Hill sent a scathing letter to Defense Secretary Ash Carter this week slamming the Pentagon for allowing Air Force and Army pilots to operate predator drones without completing their necessary training.
The revelation came in a report published last week by the Government Accountability Office that said most drone pilots never finished all of their training because of pilot shortages and a lack of planning and strategy within the Defense Department.
Related: Undertrained U.S. Drone Pilots Put War Effort at Risk
The report said that just about 35 percent of Air Force pilots had completed training for all their required missions. Separately, the Army had not been keeping sufficient pilot training records. “As a result, the Army does not know the full extent to which pilots have been trained and are therefore ready to be deployed,” the report said.
In the letter to Carter, Sen. John McCain (R-AZ), chairman of the Senate Committee on Armed Services, and Sen. Jack Reed (D-RI), the ranking member of the committee, said they were “disturbed that the Department of Defense has no standardized training program for [unmanned aerial system] pilots and personnel.”
"The continued lack of consistent and uniform training standards is simply unacceptable. In addition to collecting critical intelligence, the department's UAS programs carry out sensitive strike missions that should require high standards and specialized training,” the letter said.
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The senators slammed the Air Force for its lax training efforts and demanded that the military improve its process and resolve the pilot shortages.
"These pilot shortages have constrained training and place extreme strain on the existing community of pilots and sensor operators,” the senators wrote.
The GAO first called attention to the drone pilot shortages and training concerns last year. The auditors said that the military attempted to resolve the shortages by hiring more instructors, but the new report shows that the instructors, too, lacked sufficient training.
Twinkies Get Back a Little Respect
You can’t keep a good junk food down.
The New York Post is reporting today that several bidders have made offers in the $2 billion range for Hostess Brands LLC, the maker of Twinkies, Ho Hos and Ding Dongs, among other gut-bloating goodies.
Hostess filed for bankruptcy in early 2012, and the snack cake part of the business was bought out of liquidation two years ago by Apollo Global Management and C. Dean Metropoulos.
Citing sources, the Post said bidders include Grupo Bimbo, Flowers Food and Aryzta AG, a Swiss company.
If Hostess does command anywhere near $2 billion, it will be a sweet day for Apollo and Metropoulos. According to the Post, they bought the Twinkies maker for $410 million.
The Easiest Way to Cut Your Home Insurance Bills
Here's a simple way to potentially cut $150 from your annual insurance expenses: Raising your homeowners’ insurance deductible from $500 to $2,000 could lower your premiums by an average of 16 percent, according to a new report by InsuranceQuotes.com. Based on the average insurance premium of $978, that works out to more than $150 a year in savings.
Of course, that lower bill comes with some caveats. First, the amount you save could vary widely depending on where you live and other factors. In the new study, the savings from a higher deductible ranged from 41 percent for North Carolina homeowners to just 4 percent in Hawaii.
Second, a higher deductible means that you would be on the hook to pay more out of pocket before your insurance coverage kicks in if something happened to your home. Before making the switch, be sure you have enough money in your emergency savings to cover the total cost of the deductible.
“Consumers need to consider the bottom line before increasing deductibles,” Laura Adams, a senior analyst with InsuranceQuotes.com said in a statement. “While switching from a $500 deductible to a $5,000 deductible sounds appealing because it lowers home insurance premiums by an average of 28 percent, it could be a risky move for consumers who don’t maintain that much in savings.”
Related: The Best Time to Buy Car Insurance
Increasing a deductible from $500 to $1,000 resulted in an average savings of 6 percent nationally, ranging from 25 percent in North Caorlina to a low of 1 percent in Kentucky.
As your deductible gets higher, it may become less likely that you file a claim at all, since doing so will push your premium up. A separate analysis last fall by insuranceQuotes.com found that a single claim—even if it’s denied—can hike your homeowners’ insurance by an average of 9 percent a year, which can amount to hundreds of dollars.
Looking to Buy a Home? Do This First
Buying a home is stressful enough without getting blindsided with a higher-than-expected rate on your mortgage — or outright rejection — due to a low credit score or errors on your credit report.
Even so, only half of recent home buyers said they checked their credit report early on in the homebuying process, according to a report released by Experian.
That can make for some nerve-wracked meetings with lenders. About a third of those surveyed said that their credit score surprised them, and a fifth of buyers said their score was lower than expected. Fourteen percent of homebuyers found something negative on their credit report that they didn’t know about.
Related: Why Your Credit Score Is the Most Important Number in Your Life
A low credit score can have costly consequences. A borrower with a FICO score of 760, for example, would pay $1,360 per month on a $300,000 loan, while a borrower with a score of 759 would pay $1,397 per month on the same loan. That difference will add up to more than $10,000 over the life of a 30-year mortgage.
Forty-five percent of future homebuyers surveyed by Experian said that they had delayed purchasing a home in order to work on their credit and qualify for better rates.
If your score is lower than expected, first check the report for errors and contact the credit bureaus about correcting them. If you’ve been dinged for a single missed payment, call your credit card company to see if it will remove the incident from your reports. Then focus on making on-time payments and paying down any high balances to get your debt-to-income ratio below 25 percent.
The New Billionaires: Younger, Self-Made, More Diverse
Quick, picture a billionaire.
Chances are you conjured up an older, white man who inherited his fortune. That stereotype was pretty accurate for the past century, but times are changing.
Cultural and economic shifts over the past decade are realigning the demographics of the world’s 1 percent, and the billionaires of the future will be self-made, younger, and more diverse, according to a new report from UBS and PwC.
Last year, two-thirds of the world’s billionaires were self-made, compared with just 43 percent of billionaires 20 years ago. The report projects that the trend toward more self-made billionaires will continue get stronger over the next 5 to 10 years, peaking at about 70 percent of the billionaire population.
Related: Playgrounds of the Very Rich and Famous—A 2015 Guide
While two-thirds of current billionaires are over age 60, the average age is getting younger, thanks to both wealth transfers from the older generation and the growth of self-made billionaires.
In addition to getting younger, the report finds that billionaires are also increasingly more diverse. From 2003 to 2013, the number of female billionaires rose from 44 to 116. That’s still less than 10 percent, but it’s a number that’s growing fast.
Part of the trend toward diversity among billionaires is the explosive growth of wealth in Asia. In the first quarter of 2015, China created a new billionaire almost every week. The authors of the report expect that Asia will overtake the United States as the center of billionaire growth in the next decade.