Last week FRC President Tony Perkins (representing lobbying arm FRC Action, of which he is also the president) and public policy group Let Freedom Ring President Colin Hanna co-hosted a webcast on the U.S. debt crisis. Invited to participate were Sens. Jim DeMint (R-S.C.) and Orrin Hatch (R-Utah) and Reps. Jim Jordan (R-Ohio) and Joe Walsh (R-Ill.), along with other conservative policy leaders.

“Congress has been using the country’s credit cards like an irresponsible teenager for decades,” read a press release previewing the June 23 Web conference. “But now a band of House and Senate conservatives are fighting to turn back the clock on America’s debt.”

During the 65-minute webcast, DeMint drew the morality analogy even closer.

“We’ve got to stop this spending addiction in Washington,” DeMint said. “And it really is like working with an alcoholic. First of all, they won’t admit they have a problem. And then when they do, they say, ‘We’ll quit tomorrow, but let’s have one more drink today.’”

To which Perkins, a former police officer for the Baton Rouge Police Department in Louisiana (from which he was suspended and then resigned in 1992, according to The Nation), responded, “When I was a police officer, I found one thing that really worked on those drunks that came home at night was a frying pan.”

But 20 days earlier, Perkins sent supporters an e-mail alert, asking for help closing its $1 million budget gap by June 30. He excused the organization’s financial struggle for all the work it has done during recent legislative sessions. According to the Center for Responsive Politics, Family Research Council Action’s (FRC’s lobbying arm) total lobbying expenditures in 2010 was $110,000; according to the Federal Election Commission, FRC Action Political Action Committee has spent $43,143 in individual contributions for the 2011-’12 election cycle through May 31.

In his alert Perkins wrote:

Ever since last November’s watershed election, which swept a record number of pro-family conservatives into office, FRC has more friends in Congress than ever before. And the more friends we have on Capitol Hill, the greater our ability to advance your pro-family views. This demand for our expertise is a blessing, but it has outstretched our revenue. As we enter the summer months when giving historically declines, FRC faces a $1 million gap between what we’ve budgeted for our work here in Washington, DC and what we’ve received in donations. I have already made cuts to reduce our costs, and our staff is working tirelessly.

Unless supporters donate, Perkins said, FRC “will be forced to do less for the conservative cause.” Every donation up to $250,000 will be matched by a “generous family,” Perkins said. The family was not named.

FRC did not immediately return requests for comment.

The priorities mentioned during last week’s webcast: Cut the deficit, cap the spending and balance the budget. A coalition of more than 80 organizations recently formed acampaign to convince U.S. Senate and House members and future candidates to pledge to oppose any debt limit increase unless the budget has been cut, capped and balanced. Thus far, the pledge has been signed by 12 senators, 20 representatives and 28 candidates.

Throughout the hour, the United States’ fiscal situation was repeatedly compared to Greece’s, but Rep. Joe Walsh (R-Ill.) took the analogy further to draw comparisons to slavery.

“Turn your TV on, and look at what’s been happening in Greece,” Walsh said. “We are at the cusp of that. This is a huge moral issue. How dare we enslave future generations? How dare we do that?”

And later on: “I could give a darn about my reelection. I’m on a mission here to stop my kids, your kids, our grand-kids from becoming indentured servants.”

During the web conference, there was no mention of FRC’s own fiscal situation. And in the June 3 e-mail, in which Perkins was soliciting donations, nothing was mentioned of America’s fiscal situation.

“This is no time to be trimming our sails,” wrote Perkins in the alert. “We have more pro-family conservatives in Congress than ever before. Daily, they look to FRC for the facts they need to stand up for families. I have fresh hope that if we keep working and keep praying, we can change the course of this nation.”

The “key areas” FRC is working on include “shaping historic court cases regarding ObamaCare and religious liberty” and “building a powerful network of informed and motivated pastors across the nation.” But “liberals are fighting back-hard,” Perkins said.

If they sense any weakness, they’ll move in and take back the gains we’ve made. And they’ll thwart our efforts at every turn, pushing their pet causes from taxpayer funding of abortion to normalization of homosexuality to intimidating and punishing Christians who voice their objections. Frankly, some donors are on the sidelines because Republicans control the U.S. House of Representatives. Yet the Obama administration simply bypasses the legislative branch and abuses executive power to reshape major policies affecting every family and business.

“Folks we are here today forcing this issue because America is at risk,” said Brooks. “We are at risk of insolvency and bankruptcy because the socialist members of this body choose to spend money that we do not have. They believe in wealth transfer programs.”

Rep. Ellison interrupted. “Point of order. My point of order is I would like the gentleman’s words taken down referencing members of this body as socialists.”

After some discussion, Ellison asked, “Does the gentleman withdraw his word or not?”

Brooks did, but he didn’t do so without some complaint.

“Ladies and gentlemen of America, we all know what we are talking about here and we all know the what the definitional terms are, and I’m more than happy to resume this discussion off the House floor, but for whatever reason I’m not permitted to use one word,” he said.

Friday was a day of budget battles on Capitol Hill. The Republicans put forward their budget, authored by Rep. Paul Ryan of Wisconsin, with massive changes to Medicare, deep cuts to social safety net programs such as Medicaid and food stamps, and lower taxes on the wealthy and corporations through reforms the tax code.

Progressive Democrats put forward the People’s Budget which would raise taxes on the wealthy and propose deep cuts to defense and military spending mainly be ending the wars in Iraq and Afghanistan.

After backing off his socialist claim, Brooks slammed the progressive budget proposal. “To the United States of America now, this progressive People’s Budget I submit to you is nothing more than a Trojan house. Why should anyone believe that the folks who have wracked up these massive deficit that is put America at risk are now going to change their stripes?”

California Rep. Maxine Waters of California had a different view of history.

“The gentleman from Alabama evidently has amnesia,” he said. “The Clinton administration eliminated the deficit and left a balanced budget; it was the Bush administration that created the deficit. I rise in strong support for this the Progressive Caucus’ alternative balanced People’s Budget.

She continued, “During the last administration, my colleagues on the other side of the aisle maxed out our nation’s credit card for wars and tax cuts for the rich all while saying that deficits don’t matter. Now they are in an identity crisis as a rationale to undermine programs they have never supported and push a divisive social agenda that’s a sideshow to our budget debate.”

Ellison and McCollum were the only two member of the Minnesota delegation to vote in favor of the People’s Budget, which failed with only 77 votes.

Rep. Paul Ryan’s budget passed the House 235-193 with no Democrats voted for it. The Minnesota delegation was split between the state’s four Democrats and four Republicans.

On Tuesday morning, Rep. Paul Ryan (R-Wis.) rolled out the House GOP’s “budget blueprint” for 2012. Meanwhile, the White House and the GOP-controlled House still have not reached an agreement on how to to continue funding the government through the end of the current fiscal year, which ends in September.

Both sides have stated the desire to reach a compromise before the April 8 deadline, in an effort to avoid a federal government shutdown. However, as The New York Times reported Tuesday, the White House rejected an offer from Republicans to keep the government’s doors open for one more week in exchange for another $12 billion cut from the current year’s spending. Obama and Senate Democrats have agreed to cut $33 billion, $1 billion more than the House GOP originally asked for in February.

A poll from the Pew Research Center released Monday shows that the American people overwhelming favor a budget compromise over a shutdown, despite various pushes for a government shutdown in the name of effective political strategy from people such as Reps. Michele Bachmann (R-Minn.), Mike Pence (R-Ind.) and former Democratic National Committee Chairman Howard Dean.

Where Americans’ opinions differ is on whom should shoulder the blame in the event of a shutdown, congressional Republicans or the Obama administration.

According to Pew, 39 percent of the 1,507 Americans polled from March 30-April 3 believe Republicans would be the most to blame for a government shutdown; while 36 percent believe the Obama administration should take most of the heat. Those who believe both sides should be blamed equally make up 16 percent of respondents, while 9 percent said “neither” or that they did not know.

Asked if “lawmakers who share your views on this issue should stand by their principles, even if it means the government shuts down,” 36 percent of those polled agreed with this statement, while 55 percent said lawmakers agreeing with their views should “be more willing to compromise even if they pass budget you disagree with.” Those who didn’t know made up 10 percent.

Breaking it down along party lines, 50 percent of republicans voters said their party lawmakers should stand by their principles, while 43 percent said they should compromise. Among those who identify as Democrats, 69 percent were in favor of a compromise vs. 21 percent. Among Republicans who agree with the tea party, 26 percent said they were  in favor of a compromise vs. 68 who said they favored a shutdown.

Pew points out that these opinions are much different today than they were during a similar budget/government shutdown dispute in 1995, when polled in a Washington Post/ABC News survey shortly before the government actually shut down. At that time, 46 percent of Americans polled said Republicans would be at fault in the event of a shutdown, while 27 percent blamed the Clinton administration.

It sounds, frankly, rote. Take a look at the word cloud of the speech, and your eyes glaze over.

But it was actually one of the more interesting and exciting speeches Bernanke has given of late. He essentially chastises Congress for its lack of seriousness about the debt. And he subtly stakes out a political position: No tax increases for two years, or until the economy really starts growing and adding jobs again, then real tax increases and spending cuts. He even suggests that Congress take up stronger self-regulating guidelines to achieve better fiscal balance. Such political advising is part of Bernanke’s job — he isn’t overstepping some bound — though in the past he has been softer about fiscal issues.

Leon Evans is used to doing more with less. But with the state facing an estimated $18 billion budget shortfall, even Evans is dreading the spending cuts to come. Evans runs the Center for Health Care Services, the local mental health authority in San Antonio. The people who operate public mental health clinics in Texas have to be efficient, and Evans has become creative at finding ways to treat as many people as possible.

The state provides the Center for Health Care Services enough money to treat about 4,200 patients each month. The center stretches those funds to serve more than 6,000 clients. Still, it’s not even close to meeting demand. Thousands with severe mental illnesses go without treatment.

The center has also worked with hospitals and law enforcement to create some of the most innovative jail-diversion programs in the country. Those programs combined keep about 1,000 people a month out of the Bexar County jail, placing them in treatment programs instead.

Those innovative programs, which save taxpayer money, are now at risk. “Taxpayers end up paying anyway,” Evans said. “If you can’t deliver services one way, then [people] end up going to emergency rooms and to jails and eventually to prison if they don’t get mental health and substance abuse treatment.”

More on state aid here and here.

Kansas lawmakers are hoping the federal government will help. After the state’s April revenue missed estimates set just two weeks earlier, the legislature responded by changing the state budget to assume Congress will extend more federal support for Medicaid through the end of the year.

Increased federal spending on Medicaid…was a major component of last year’s stimulus package, and it has helped many states prop up their budgets. But it is uncertain that Congress will approve more such funding.

In some states, governors are responding to the April shortfalls on their own. Missouri’s April tax revenue decreased $13.2 million, or 3.6 percent, from the same month a year ago. State budget director Linda Luebbering ordered agencies to hold back $45 million in appropriated spending because tax collections were so far below projections.

Other states have already taken drastic measures to close budget shortfalls. For instance, in March, Arizona decided to end its state health insurance program for children, eliminating free coverage for 47,000 kids. California might end its welfare-to-work program as well as a number of child-care initiatives. And South Carolina has closed group homes for children and a program to help youths emerging from prison sentences to get jobs.

President Barack Obama delivering his State of the Union; House Minority Whip Eric Cantor (R-Va.) and Minority Leader John Boehner (R-Ohio) (EPA/ZUMApress.com)

On December 9, House Republicans did what they’d done multiple times throughout 2009. They released an open letter to President Obama, laying out their ideas for a “No-Cost Jobs Plan.” It included, among ideas like scaled-back energy regulation and a temporary tax break for corporations repatriating foreign profits, a proposal for a “spending freeze.”

[GOP1] “A freeze in domestic discretionary spending,” they argued, “would immediately save $53 billion and more importantly demonstrate an immediate commitment to fiscal restraint.”

Over the next month, the “No-Cost Jobs Plan” remained a useful talking point for Republicans rebutting attacks on their “no” votes, a hook for op-eds, and not much else. But in early January, White House Budget Director Peter Orszag fueled speculation that the White House might want freezes in discretionary spending in the 2011 budget. On Monday night the White House leaked the news that President Obama would propose a three-year freeze on such spending, which makes up roughly one-sixth of the budget. In his State of the Union speech, the president confirmed it.

“Starting in 2011, we are prepared to freeze government spending for three years,” Obama said. “Like any cash-strapped family, we will work within a budget to invest in what we need and sacrifice what we don’t. And if I have to enforce this discipline by veto, I will.”

This sudden and hardly expected shift–using the language of personal responsibly that Republicans have used since before Obama took office–has startled members of both parties and economists both critical and supportive of White House policy. And while they’re using the opportunity to needle Democrats on a policy that’s seen as unlikely to shrink the deficit, conservatives see Obama’s decision as a partial declaration of surrender.

“I never met a spending freeze I didn’t like,” Rep. Mike Pence (R-Ind.), the chairman of the Republican conference, told TWI. He pointed to the December 9 letter and gave his party full credit for appearing to change the president’s mind on spending. “I’d welcome a sincere attempt at a spending freeze.”

“Step one is admitting you have a problem,” said Brad Dayspring, a spokesman for Rep. Eric Cantor (R-Va.), the GOP whip who co-signed the “No-Cost Jobs Plan” with Pence. “Step two is doing something about it. If the president’s come to his senses about spending being too high, we agree.”

As a short-term attempt to co-opt Republican rhetoric, the “spending freeze” promise is a success. The first poll on the idea, conducted by Rasmussen Reports, found a 56-24 percent majority in favor of a freeze, with a slim 48 percent plurality of voters predicting it would have at least “a little” impact on cutting the deficit. It followed multiple polls that have found the public skeptical that government spending can pull the economy out of the recession. That, according to some critics, explains why the White House would grab onto a Republican concept unlikely to have a major effect on the economy.

“It has to be evaluated on political terms,” said Bruce Bartlett, a conservative economist who has clashed with fellow travelers over his opposition to spending cuts in a bad economy. “What’s he trying to accomplish politically by saying this? He’s trying to give the appearance of moving to the middle. As policy, it’s too puny to have an effect even if it’s implemented.”

Bartlett argued that liberal economists’ concerns about the impact of any kind of spending freeze were “overwrought, because nothing will come of this. But Obama’s sending mixed signals to everybody–his own supporters as well–as to what exactly his economic philosophy is.”

Deficit hawks have taken the same approach to the “freeze” concept as Republicans. At best, it points to the right policy but doesn’t get there fast enough. At worst, it’s a distraction from more deeply-needed cuts.

“We wouldn’t oppose this,” said Josh Gordon, director of policy at the budget watchdog group The Concord Coalition. “It’s an acknowledgment that the deficit is a problem. You have to start somewhere. My concern is that too much political capital could be wasted on small items, and not enough could be spent on long-term challenges, like entitlement and defense spending.”

“Voters aren’t stupid,” said Alex Conant, a Republican strategist. (Conant’s client Tim Pawlenty called the “freeze” concept “kind of like somebody eating three Big Macs and then deciding they’re going to control their weight by ordering a Diet Coke.”) “The spending issue is not going anywhere, with or without this spending freeze. It only pertains to a small part of the budget, not even the fastest-growing part of the budget.”

Conant doubted that Obama had taken a Republican issue off the table for 2010, despite the instant polls. “Republicans do deserve credit for having the president acknowledge a problem,” he said. Other Republican strategists agreed that the “freeze” wouldn’t shift public opinion on which party can grapple with the deficit; one suggested that Obama’s embrace of the frame might make it easier for Republicans to run on government-cutting while dodging the tricky questions of entitlement or defense spending cuts.

“Ninety-five percent of Republican candidates, officials, staffers and advisers do not give a rat’s ass about fiscal restraint or government size,” one strategist told TWI. “At the end of the day, 95 percent of them believe people want to hear about fiscal restraint, but ultimately want government to give them stuff. This is how we default to talking about tax cuts, not spending, because everyone is afraid that if you criticize a spending item, you’ll offend someone. Well, you will. But when you bankrupt the whole country, which Obama’s proposal is not going to stop, you offend millions.”

Pence and other Republicans suggested that the “freeze” concept would come up again in a Friday meeting between the president and their party’s conference in Baltimore. Whatever the long-term political effect–whether or not a “freeze” happens–Obama critics are pleased that a year of arguments for more government spending are being swept aside.

“What he’s doing is actually pretty much what Bush didn’t have the guts to do in eight years,” said Veronique De Rugy, a libertarian economist at the Mercatus Center who has criticized the Keynesian spending policies of the Obama administration. “It’s nothing. But it’s more than Bush did.”

Now, S&P said that America is in no immediate danger of a downgrade (a 100 percent debt ratio would have to be sustained for for some time to earn such treatment), and Moody’s noted today that America’s AAA rating was safe. And while Treasury notes have fallen through the week, indicating that markets are worried about the amount of debt the government is unloading on private markets, the latest debt auction  — of $35 billion in five-year notes — enjoyed the highest level of demand in three months.

There are a number of things going on here.

One is that private investors are losing their appetites for government debt — which they ran to in the flight for safety that characterized the past nine months — just as the government is pouring a great deal of new debt into the market. Another is surely rising levels of nervousness among investors waiting to see how large sovereign debts are going to be paid. And a third is the fear that efforts to juice the American economy will lead to inflation. This is certainly a possibility. But the language being used to talk about this possibility is growing increasingly outlandish. John Taylor, for instance, has been widely mocked today for making a basic arithmetic error in arguing that the threat of a seven percent annual rate of inflation over the next decade is greater than that posed by the credit crisis and current downturn. But Marc Faber takes the cake:

I am 100% sure that the U.S. will go into hyperinflation.

Hm. People seem not to understand that seven percent annual inflation, or 20 percent annual inflation (which would be quite a bit more damaging) do not count as hyperinflation. Countries experiencing hyperinflation, like Zimbabwe, suffer monthly rates of inflation in the millions, billions, trillions, and quadrillions. Really. An American hyperinflation would be impossible without a complete collapse in its governing institutions. Faber may as well have said that he is 100 percent sure America will be seized by a dictator or invaded and left in a state of near-anarchy.

It’s quite fair to worry about how we should pay our debts. But there is not much indication that current monetary and fiscal policies pose a serious threat to future economic health, given reasonable expectations about future economic growth and tax policy changes.

“As estimated by CBO and the Joint Committee on Taxation, the President’s proposals would add $4.8 trillion to the baseline deficits over the 2010–2019 period,” CBO Director Douglas Elmendorf wrote on his blog this afternoon. “CBO projects that if those proposals were enacted, the deficit would total $1.8 trillion (13 percent of GDP) in 2009 and $1.4 trillion (10 percent of GDP) in 2010.”

On a conference call just now with reporters, Office of Management and Budget Director Peter Orszag explained how the higher projected shortfall came about.

“As expected, it reflected a worsening of both the economic and fiscal picture since the CBO’s January report,” Orszag said. “I think one thing that’s often underappreciated is how sensitive the budget is to small changes in assumptions.”

As a hypothetical example, he said, if initial projections had spending at $1,050 and revenue at $1,00,  and then revenue decreased 10 percent, the deficit would rise from $50 to $150 — a 200 percent increase.

But he insisted that the new projections will have no impact on the administration’s commitment to its four top priorities in the budget: health care, education, clean energy and cutting the deficit in half by the end of Obama’s first term.

Asked about the possibility of using the controversial budget reconciliation process to circumvent a possible GOP filibuster of cap-and-trade legislation, Orszag said, “With regard to reconciliation, I’ll again say, it’s not where we want to start, but it would be premature to take it off the table.”

The budget will now head to Congress, where Orszag anticipates there will be significant adjustments.

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The 2009 federal budget deficit is projected to be $1.2 trillion, the Congressional Budget Office announced today — NOT INCLUDING THE ECONOMIC STIMULUS PACKAGE EXPECTED TO ARRIVE EARLY NEXT MONTH.

From USA Today:

In the first official reckoning of the damage caused by the severe recession, the report paints a bleak picture for 2009: a 2.2% drop in the size of the nation’s economy, a jump in the jobless rate to 9.2% in early 2010, a 14% drop in home prices and a 1% decline in consumption.

Most economists agree that the deficit spending is necessary to pull the country through the recession. Still, the deficit as a chunk of the gross domestic product — which CBO expects to hit 8.3 percent — should alarm some folks. Not even President Ronald Reagan, who spent wildly throughout the 1980s in the name of smaller government, ever ran deficits topping 6 percent of GDP.

Lawmakers are furiously shooting out statements in response to the news. House Speaker Nancy Pelosi (D-Calif.) is blaming the “fiscal mismanagement of the Bush administration.” Senate Minority Leader Mitch McConnell (R-Ky.) says the figure is a “stunning and sobering reminder” that Democrats should tread carefully as they craft their economic stimulus package. All parties, of course, share some blame. It was, after all, Congress under both Republicans and Democrats to approve the deficit-laden budgets of the last decade.

And how much is $1.2 trillion? Well, if you stacked $100 bills on top of each other, you’d have to find a ladder nearly 830 miles tall to place the top bill on a $1.2 trillion pile.

Indeed, the only bright spot in this dismal tale is also meaningless: The CBO report is signed by Acting Director Robert A. Sunshine.