Tag: Budgets

Tom Coburn: The Gang of Six’s Abysmal Failure Is Not The Gang of Six’s Fault

I understand the disappointment, and real danger, associated with our impasse. The question, though, is not how we tried and failed but why the Senate has not even tried. Commissions and “gangs” form when members lose confidence in the institutions in which they serve. Working groups have their place — but they should support, not replace, the open work of the full Senate. The truth is that we already have a permanent standing debt commission. It’s called Congress. [WaPo]

Latest Poll Suggests That Most People Think Paul Ryan’s Deficit Reduction Plan Is a Lousy Idea

[A McClatchy-Marist] poll reported that roughly two out of three registered voters — 64 percent — would be in favor of increasing taxes on annual income over $250,000. President Obama reiterated in his deficit-reduction speech last week that he favored allowing taxes to rise on families in that income level. Independents favored that plan of action at roughly the same percentage as the country at large, with more than eight in 10 Democrats also behind the idea. A majority of Republicans, 54 percent, opposed it. The poll was conducted both before and after Obama’s Wednesday speech, with support for higher taxes on wealthier Americans picking up afterward. Meanwhile, fully four in five registered voters oppose cutting Medicare and Medicaid. The House GOP’s fiscal 2012 budget, largely crafted by Rep. Paul Ryan (R-Wis.), makes fundamental long-term changes to both health entitlement programs, converting Medicaid into a block grant and turning Medicare into a type of voucher system. [The Hill, Earlier]

Paul Ryan Practically Threw a Fit During President Obama’s Speech

Mr. Ryan sat in a front-row seat in the George Washington University auditorium Wednesday while Mr. Obama unveiled his plan to constrain growing levels of federal debt. Mr. Ryan grew visibly annoyed during the speech, shaking his head in disgust. He feverishly took notes, and when Mr. Obama finished he stood up and bolted from the auditorium. The only person apparently running faster towards the exit tugged on Mr. Ryan’s sleeve near the doorway and reached out to shake his hand. “Hi, Mr. Chairman, Gene Sperling,” Mr. Obama’s director of the National Economic Council said to Mr. Ryan in what appeared to be a conciliatory gesture. “Oh, I thought you were a reporter,” Mr. Ryan said, explaining why he didn’t immediately turn around when his name was called. [WSJ]

Nonprofits Could be Forced to Pay to Save the Postal Service

It’s difficult to find numbers that don’t contradict each other, some reports say nonprofits are doing better than expected in this uncertain economic environment while others insist it’s still rough out there, especially for organizations that rely on donations to get by. For nonprofits, it doesn’t matter how the year is going, it may soon cost more to send out those pleading donation mailers.

The Postal Regulatory Commission is looking at a 2 cent increase for first class mail, an 8% increase for periodicals (just what the doctor ordered for struggling print publications) and a 23% increase on parcels. While they have not specifically mentioned an increase in nonprofit mailer pricing, the PRC has already identified certain “underwater” mail classes, non-profit mail being one such case.


As is, authorized nonprofits get a price break of about 40% over commercial mail prices so you could see why a struggling USPS might go straight for non-profits when looking for additional revenue sources to close its $7 billion budget gap.

Overall, postal prices are expected to rise 4 – 5%, a huge jump from the legally allowed .6% the Postal Service can use to adjust for inflation. Seeing as how we supposedly haven’t experienced any inflation this year, the jump is that much more disheartening to mass mailers.

Not surprisingly, there’s a nonprofit set up to focus on postal issues around nonprofit mail and they’re all over it. Said Tony Cooper of the Washington-based Alliance of Nonprofit Mailers, the USPS delivery system “is a system that’s built to handle about 300 billion pieces of mail, and they’ve got about 170 billion, and it’s set to decrease. It’s basically twice as big as it needs to be. It’s that excess capacity and costs that are creating the need in their minds to do this.” Hear that, USPS? Cut the fat before you start going after the little guys.

Adrienne Gonzalez is the founder of Jr. Deputy Accountant, a former CPA wrangler and a Going Concern contributor. You can see more of her posts here and all posts on the CPA Exam here.

Is Kansas Squeezing Non-profits to Close Its Budget Gap?

Kansas has a bit of problem with its tax code, or perhaps the issue at hand is not necessarily Kansas’ broken tax system but the suspicious absence of those all-important tax revenues. Seeking to fill a $416 million budget gap for the FY beginning July 1, it has begun looking at simplifying complicated exemptions but the change could hit already struggling non-profits in the state hard.


NYT:

Lori McMillan, an associate professor of tax law at Washburn University, said the proposal to not grant exemptions to specifically named organizations but rather categories, such as nonprofit and charitable organizations, was a better policy for the state.

”Sometimes it seems that the criterion for an exemption is one’s ability to find a parking place and the committee room,” said Mark Desetti, a lobbyist for the Kansas National Education Association.

Emily Compton, president and CEO of Goodwill Industries of Kansas, said removing the exemption would increase her operating expenses by $40,000. She said the organization also must come up with $125,000 in unemployment tax contributions this spring and the combined increase in expenditures could result in fewer services and employees.

The change would mostly mean Goodwill sacrificing its sales tax exemption but that’s not all that’s on the chopping block.

Also up for debate, a program that would reduce seldom-used tax credits for low-income individuals to buy a home, fund education, or start a business:

John Scott, president of the Interfaith Housing Services Inc. which administers the program in Hutchinson, said the IDA program is budgeted to receive $500,000 worth of 50 percent tax credits each year. For example, if someone invests $100,000 in the program, they receive a $50,000 tax credit.

He said that if the program has to be changed, reducing the amount to $250,000 would be acceptable and still allow it to receive matching grants from other sources.

“We feel this is a win-win compromise. It helps you cut the budget without losing outside revenue, and it does not force us to close the program and possibly cause loss of jobs,” Scott said.

As is, the state exempts $4.2 billion in sales taxes and proposals currently under review by the House Taxation Committee could bring in an additional $196 million – still leaving a $220 million budget gap.

Is Kansas penalizing non-profits is the way to make up the gap? Goodwill Industries claims 83 cents of every dollar generated in its retail stores goes to serving its mission of providing work to individuals in need. Can the government of Kansas claim that level of efficiency when it comes to tax revenues?

New Obama Proposal Would Invest $30 Billion TARP Funds in Small Banks

One can only postulate that since there was no room in President Obama’s bloated 2010 budget for small business initiatives, he instead chose to apply some TARP money that’s just lying around to get small business working again. I wish Mr President the best of luck on that plan as he’ll be needing it.

WSJ:

President Barack Obama proposed a $30 billion small business lending program Tuesday, the latest in a series of administration efforts to jump-start hiring by the nation’s small businesses.

The program, which Mr. Obama detailed at an appearance in Nashua, N.H., would invest $30 billion from the government’s Troubled Asset Relief Program in community banks to encourage them to lend to small businesses. If approved by Congress, the program would incentivize small and midsize banks to provide loans valued at several times that figure.


Didn’t we invest $700 billion in the Too Big to Fail banks for this same purpose? Not that it matters, we’ll try it again with the hopes that community banks will be able to accomplish what TBTF couldn’t.

A proactive sort of administration, White House officials were already prepared to counter the argument that TARP was never intended as a general piggy bank for funding the administration’s whims:

“The law is very clear: The monies recouped from the TARP shall be paid into the general fund of the Treasury for the reduction of the public debt. It’s not for a piggy bank,” [Sen. Judd] Gregg said.

[White House Budget Director Peter] Orszag said new legislation would be required to create the new small-business plan. He said the cost of the plan would depend on the subsidy rate of new activity and wouldn’t amount to a net cost, in terms of the deficit, of $30 billion.

Considering that he’s referring to a deficit of $3.8 trillion, I guess $30 billion isn’t really anything to get stressed out about after all.

Meanwhile, can community banks counter the continued deterioration of commercial real estate weighing on their balance sheets? I guess we’ll have to wait it out and see.