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Austerity Daily 3.28.11 — Government Shutdown, NY Deal

Here is our latest installment of the Daily Austerity Watch, 24/7 Wall St.’s summary of the major news off efforts by governments to bring their fiscal houses in order. US Government: The game of fiscal chicken between the Democrats and…

By Douglas A. McIntyre
Published March 28, 2011, 9:47am ET · 3 min read

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Here is our latest installment of the Daily Austerity Watch, 24/7 Wall St.’s summary of the major news off efforts by governments to bring their fiscal houses in order.

US Government: The game of fiscal chicken between the Democrats and Republicans on Capitol Hill is reaching a dangerous new level.  Media reports indicate that a government shutdown is becoming more likely.   However, all hope is not lost.   According to the Wall Street Journal,  Democrats and the White House are crafting a proposal to slash an additional $20 billion in cuts in federal spending in addition to the $10 billion Congress had already agreed to do.  Will it be enough?  Probably not given that Republicans in Congress are seeking $61 billion in cuts and Tea Party activists are pressuring the party not to give an inch on fiscal matters.
New York:  It’s sad when the fact that New York passes its state budget on time is considered newsworthy, but that’s what Democratic Gov.  Andrew Cuomo managed to pull off.   The first term governor and the Legislature today announced that they had reached a deal on a $132.5 billion spending plan that cuts spending by 2%, the first decline in about a decade.  It also erases a $10 billion deficit with no new taxes.
“This budget makes tough choices, which is what you sent me to Albany to do,” Cuomo says in a press release, adding that the spending plan “redesigns government to force it to cut waste and inefficiency, and finally delivers real results for hard-working families across New York State.”
Cuomo was able to gain support for the agreement because he convinced leaders in the Legislature and the state’s powerful unions that the agreement was the best deal that they could get.   Some, such as New York Mayor  Michael Bloomberg, are fuming over cuts in education aid.  He has threatened layoffs of more than 4,600 teachers.
Minnesota: Gov.  Mark Dayton(D) and Republicans in the Legislature are at odds over the proposed state budget as they try to close a $5 billion deficit.
As the Star Tribune notes,  a settlement is nowhere in sight.   For one thing,  Dayton wants to increase income taxes on top earners, an idea that the GOP refuses to entertain.
“Republican legislators are cobbling together a budget outline that prevents income tax increases but appears destined to prompt a veto by the governor,”  the paper says.  ” Republicans controlling the Legislature are seeking deep cuts in aid to the Twin Cities and steep reductions to health and human services, which could boot thousands of Minnesotans off public programs.”
New Hampshire:  Legislators are trying to keep their promise to eliminate the  state’s unpopular $30 vehicle registration fee.   Unfortunately, members of the House Budget Committee  have to figure out how to make up the $90 million in lost revenue, according to the Associated Press. Republicans are at odds with Gov.  John Lynch (D) over the proposed two-year $10.2 billion budget.
Lynch argues that his plan, which cuts spending by 7% over current levels, “protects our state’s strategy for success, keeping taxes low and making smart investments in education, health care, public safety and economic development.””  Republicans counter that Lynch’s spending plan is based on overly optimistic assumptions.
–Jonathan Berr

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Douglas A. McIntyre

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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