From the Associated Press:

House Speaker John Boehner abruptly broke off talks with President Barack Obama Friday night on a deal to cut federal spending and avert a threatened government default, sending compromise efforts into an instant crisis.

Within minutes, an obviously peeved Obama virtually ordered congressional leaders to the White House for a Saturday meeting on raising the nation’s debt limit. “We’ve got to get it done. It is not an option not to do it,” he declared.

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Here’s some friendly fiscal advice: Any time some Washington big shot like Ben Bernanke or Tim Geithner claims that immediate spending cuts in the debt deal will harm the economy—ignore them. Completely. You know why? Because in this great country of ours, spending never goes down. Never.

Take a look at the following chart:

The blue line you see is President Obama’s budget. The green line is Congressman Paul Ryan’s budget.

Now, Paul Ryan’s is of course a couple of trillion dollars lower than Obama’s over the next ten years. But what do they both have in common? They both go up. As in spending more, not less. As in, roughly $40-45 trillion dollars more. That’s a whole lot of taxpayer money, folks.

Now why is this? It’s because of something called the “current services baseline” which includes population and inflation increases built into the budget. Entitlements have their own formulas.

So when you hear a politician tell you they’re cutting spending, they’re actually referring only to reducing the growth of spending. Rarely, if ever, do they actually reduce the level of spending.

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California lawmakers thought they were targeting Amazon.com, the out-of-state giant, when they voted last week to force Internet retailers to collect sales tax.

It turns out eBay Inc., California’s own golden child of e-commerce, isn’t so thrilled about it, either.

The San Jose online auction company says the legislation would hurt its business model, which relies on thousands of entrepreneurs who sell goods on its site.

The intent may have been to go after Amazon, but “we’re literally caught in the crossfire,” said David London, senior director for state government relations at eBay.

From The Associated Press:

The six have met in private for several months, even as House Republicans and Obama developed more partisan plans that have little chance of being enacted into law because of Washington’s divided government.

House Republicans passed a nonbinding plan in April that calls for reducing annual deficits by a total of $6.2 trillion over the next decade. It includes no tax increases but calls for transforming Medicare from a program in which the government directly pays medical bills into a voucher-like system that subsidizes the purchase of private insurance plans.

Obama has outlined a plan to reduce borrowing by $4 trillion over the next 12 years. His plan includes $1 trillion in tax increases and is less specific about how he would cut benefit programs.

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On today’s edition of Coffee and Markets, Brad Jackson and Ben Domenech are joined by Francis Cianfrocca to discuss the Tim Pawlenty’s hiring of Nick Ayers and the budget compromise that was reached on Friday night.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

Tim Pawlenty lands a presidential campaign manager
Erick Erickson: The Compromise
It’s as if millions of voices suddenly cried out in terror, and were suddenly silenced.”
Democrats will yield on everything but abortion
Obama Puts Taxes on Table
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On today’s edition of Coffee and Markets, Brad Jackson is joined by Rory Cooper to discus a possible deal in the House to avoid a government shutdown. Then Pejman Yousefzadeh talks about what a shutdown could mean politically.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:
Budget Negotiators Reach Tentative Deal To Avert Government Shutdown
Heritage: Freshman Lawmakers Make the Case for Government Spending Cuts
Understanding the numbers in budget talks
Lots of Talk, But Shutdown Still Looming
Howard Dean: Democrats Should Be ‘Quietly Rooting’ for Shutdown

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California leaders including Gov. Arnold Schwarzenegger have reportedly agreed a new budget deal, but as the state attracts jeers for its lateness in taking concrete steps to pass a budget, some are booing its leaders for their willingness to sign off on tax hikes when it is being reported that California is owed about $1.4 billion in tax revenue already collected by businesses from consumers, but never remitted to the state.

The LA Times reports:

California is owed nearly $1.4 billion by auto dealers, restaurants and other businesses that collected sales taxes from buyers but didn’t pass the money along to the state — a situation that is aggravating California’s budget crisis.

The tab is up about 25% from a year ago and has almost doubled since 2007, state records show.

That money could make a significant dent in the state’s $19-billion budget gap. Watchdog groups say the state’s failure to collect it is particularly galling because much of the tax money has already been paid by consumers — it just hasn’t been turned over by merchants to the state Board of Equalization.

“All of us want people to pay the tax they legally owe before lawmakers go looking to raise taxes,” said Jean Ross, executive director of the California Budget Project, a Sacramento nonprofit that advocates for lower-income Californians.

Indeed, reports indicate that Republicans in the Golden State have reluctantly signed off on one tax increase as a possible pathway to getting more tax cuts included in any budget.  According to the Sacramento Bee, as of last week, GOP leadership had agreed to a delay in implementation of a net operating loss (“NOL”) deduction originally intended to begin this year until 2012– a move that would supposedly bring in about $1.4 billion.

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