Air traffic controllers and FBI agents have been spared from furloughs. And now, a handful of other agencies are suddenly finding room in their budgets to maneuver through sequestration without cutting into their workers’ pay.
The Agriculture Department said Wednesday that its employees at the Farm Service Agency would escape furloughs and its Rural Development division would likely also avoid the unpaid vacations. Instead, the department imposed a hiring freeze, cut discretionary expenses, and transferred unused fund from a conservation program to cover salaries, a spokeswoman told Government Executive.
The USDA is among the few departments to have “interchange transfer authority,” which enables it to shift up to 7 percent of its budgetamong its agencies.The Department of Justice, the Department of Education, Health and Human Services, among others have managed to avoid furloughs. A final decision on whether the Pentagon can avoid furloughing its 800,000 civilian employees is expected next week. -Read more at GovExec
GOP FEUD: GOVERNORS FIGHT LAWMAKERS OVER TAX CUTS Republican governors in Kansas, Louisiana, Nebraska and Ohio have proposed eliminating or trimming their state’s income taxes, causing concern from GOP state legislators who fear revenue losses. “What is playing out is a collision of long-held Republican Party ideals as lawmakers want to cut taxes to spur economic growth without running up deep budget deficits,” The Wall Street Journal’s Mark peters and Neil King Jr. write. “Most of the governors promoting cuts are first-termers who say the income tax damps consumer spending and business creation. The boldest plans, however, can't be done without expanding the sales tax and eliminating certain exemptions, a shift many legislators aren't willing to embrace.” - Read more at The Wall Street Journal
DR. DOOM PREDICTS ANOTHER CRISIS Renowned economist Nouriel Roubini, famously dubbed “Dr. Doom” for accurately predicting the financial crisis in 2008, says the Federal Reserve’s decision to continue its easy money policy is likely to lead to a financial crisis worse than 2008.
In an opinion piece for Project Syndicate, Roubini, co-founder and chairman of Roubini Global Economics, wrote that "the problem is that the Fed’s liquidity injections are not creating credit for the real economy, but rather boosting leverage and risk-taking in financial markets." On Wednesday, the Fed announced that it will continue buying $85 billion a month in bonds under its QE3 program. Roubini said the program has far reaching consequences, though he didn’t offer an alternative. He did, however, say “moving too quickly would crash asset markets and risk leading to a hard economic landing." - Read more at Project Syndicate
WHY OUR OBSESSION WITH THE MONTHLY JOBS REPORT HURTS THE RECOVERY The first Friday of every month is the same old story in Washington. This Friday will be no exception, and will likely go something like this: “Shortly after the 8:30 a.m. release of the April employment figures, the stock market will register its pleasure or frustration. Then GOP congressional leaders will denounce—no surprise—the policies of President Obama. And finally, the White House will emphasize how steady the recovery has been from the depths of the recession, while noting that additional steps are needed,” The Fiscal Times’ Josh Boak writes. “The myopia is a huge problem. All the hype on the unemployment rate has obscured more troubling phenomena about a U.S. economy that no longer cranks out jobs like it once did.” - Read more at The Fiscal Times
THE SHOCKING COST OF GUANTANAMO BAY In his third press conference this year, President Obama renewed his commitment to closing down the Guantanamo Bay prison in Cuba that has cost hundreds of millions of taxpayer dollars and severely damaged the U.S.’ reputation around the world. The Fiscal Times’ David Francis breaks down the expenses of operating the controversial prison. For example, it costs the government $150 million each year to operate the prison. Each of the 166 current Gitmo prisoners cost about $904,000 every year, that’s compared to the annual cost of $25,000 per prisoner at federal prisons inside the United States. - See more of Guantanamo Bay by the numbers here
CBO: REDUCE PRINCIPAL MORTGAGE BALANCES, SAVE BILLIONS A new Congressional Budget Office analysis shows that reducing loans for borrowers on their underwater mortgages could save taxpayers billions of dollars and avoid unnecessary defaults.
The new study could help the Obama administration and Democrats who have been pushing for mortgage giants Fannie Mae and Freddie Mac to reduce mortgage balances. Their efforts have been stiff-armed, however, by the Federal Housing Finance Administration’s acting director Edward DeMarco, who has refused to implement the policy because he says it could drive some borrowers to intentionally become delinquent to have their loan amounts reduced. President Obama has tapped Rep. Melvin Watt, D-N.C. on Wednesday, to replace DeMarco. - Read more at The Hill