January 17, 2017

The (Tab)ulation

Subscribe to this feed Subscribe to this feed

 

Tuesday, January 17, 2017 - 9:34 AM

An amazing thing happened in Washington last week. With the total national debt about to top $20 trillion and on an unsustainable long-term path, 376 members of the House of Representatives voted for one of two Fiscal Year 2017 budget resolutions that would add another $9.1 trillion to the debt over next 10 years.

One version was passed by the House with 227 Republican votes. Nine Republicans voted in opposition. The other version was a Democratic amendment that was defeated with 37 Democrats voting in opposition.

That means only 46 members of the House (9 Republicans and 37 Democrats) voted against adding $9.1 trillion to the debt.

Both budget resolutions contained roughly the same recommended levels of spending, revenues and debt. The main difference was that the Republican version contained a fast-track procedure (“reconciliation”) to begin the process of repealing the Affordable Care Act (“Obamacare”).

Earlier in the week, the Senate also approved a version of the budget resolution that would add $9.1 trillion to the debt with only one Republican, Rand Paul of Kentucky, voting in opposition.

It is not easy to vote against a budget resolution or amendment put forward by the party leadership, no matter how fiscally responsible that vote may be....

Monday, January 16, 2017 - 3:58 PM

While the budget resolution that congressional Republicans approved last week was designed to speed repeal of the Affordable Care Act (ACA), budget analysts and some lawmakers in both parties have expressed understandable concerns about such hasty action before a replacement health care plan is ready.

Over the weekend President-elect Trump raised further questions when he told The Washington Post he was almost finished with a plan designed to guarantee “insurance for everybody” but provided few details on how such an ambitious goal could be met.

As The Concord Coalition said in an issue brief last week: “As a matter of sound fiscal policy, it makes no sense to reverse the many spending and tax policies of Obamacare without knowing what comes next. Concord added that having a replacement plan ready is “the only way to avoid great fiscal uncertainty, showdowns and risk with regard to Obamacare repeal.”

...
Tuesday, January 10, 2017 - 10:24 AM

Any day now the total debt of the United States government will top $20 trillion.

That eye-catching number should prompt all of us to reflect on what the growing debt means for future generations (a lot) and whether our elected officials have a plan to deal with it (they don’t).

The most important thing to recognize about the $20 trillion debt is that its size in dollar terms is not as important as the fact that it is on an unsustainable track.

Two non-partisan agencies, the Congressional Budget Office (CBO) and the Government Accountability Office (GAO), have concluded that unless actions are taken to cut spending, raise taxes or both, the debt will continue to grow faster than the economy.

That’s bad for future generations because it will harm long-term economic growth, greatly increase interest payments on the debt, squeeze out other government spending and make it more difficult to respond to emerging, unmet or emergency needs.

We’re placing a growing burden on future workers and investing less in the economy that will be called upon to support that burden. This generationally irresponsible pattern will continue absent major changes that alter the long-term trend lines rather than simply postpone a crisis.

The $20 trillion figure actually...

Tuesday, December 20, 2016 - 9:33 AM

Republican efforts to repeal Obamacare while imposing a delay on replacement plans could prove to be fiscally problematic.

From strictly a budgetary perspective, the “repeal and replace” plan being floated by Republicans can be viewed as simply an immediate $680 billion tax cut bill combined with an uncertain promise to achieve savings down the road.

Furthermore, those savings can only come from reducing the number of people with insurance or dramatically lowering the generosity of that insurance -- both politically unpopular options -- because you can’t keep just the good parts of Obamacare (for instance the ban on exclusion for pre-existing conditions) without the “bad” parts (subsidies for insurance and some type of mandate to keep healthy people in the insurance market).

This combination -- the immediate easy choice of a tax cut and the vague promise to make harder choices in the future -- is the definition of avoiding hard choices. Making it even more toxic is that the delay period itself might unravel the individual insurance market, making any replacement scheme even more costly or unworkable.

There are clearly ways to make Obamacare work better and there are ways to make it align with a more...

Monday, December 19, 2016 - 12:07 PM

In selecting Rep. Mick Mulvaney (R-S.C.) as his budget director, President-elect Donald Trump has chosen a strong advocate of balanced budgets accomplished through deep spending cuts. It will be Mulvaney’s difficult task to craft a budget that adheres to this goal while accommodating Trump’s many campaign promises to increase spending and cut taxes.  

As a co-founder and leader of the House Freedom Caucus Mulvaney has advocated deeper spending cuts than House Republican leaders have agreed to, even if that meant shutting down the government. In his quest to reduce spending he has not spared the Pentagon budget from scrutiny, particularly the gimmick of using the Overseas Contingencies Operations fund (OCO) to avoid spending caps.

He has also opposed raising the nation’s statutory debt limit without spending cuts and has downplayed the likelihood of a government default.

Some of these hard-line positions might prove difficult to maintain as budget director where his job will require negotiations with his former colleagues in Congress to push through the administration’s fiscal agenda. This will include decisions on Fiscal Year 2018 spending caps, replacement costs of repealing the Affordable Care Act, and an inevitable need to raise the statutory debt limit.

Mulvaney may also find...

Friday, December 16, 2016 - 3:50 PM

Senate Majority Leader Mitch McConnell (R-Ky.) made headlines this week when he suggested that the GOP must pay for its campaign promises, stating his preference for “deficit-neutral” tax cuts and offsets for new spending.

“I think this level of national debt is dangerous and unacceptable,” McConnell told the press at a recent briefing. His comments come at an important time.

As a candidate, Donald Trump frequently made mention of the size of the debt, but some of his more popular proposals threaten to grow it even larger. Analyses of Trump’s proposed tax cuts put the cost between $3 trillion and $6 trillion. Incoming White House Senior Advisor Steve Bannon says he is “pushing a trillion dollar infrastructure plan” and many observers are waiting to see the size of Trump’s actual proposal.

The size of possible proposals is leading many Republicans, including McConnell and even the incoming White House chief of staff, Reince Priebus, to call for offsets. On “The Hugh Hewitt Show” on Wednesday,...

Tuesday, December 13, 2016 - 11:41 AM

Once again, federal lawmakers have turned to a familiar tactic to keep the government operating and delay significant decisions to a later date: the Continuing Resolution (CR), a stopgap measure that generally extends federal funding at current levels.

The House and Senate left town last week after passing a CR to keep the government operating through next April, when the new fiscal year will be more than half finished. Many experts warn that CRs are irresponsible, short-sighted measures that merely punt serious fiscal decisions to a later date.

CRs continue current funding levels regardless of priorities and create uncertainty about the rest of the fiscal year, which makes planning more difficult for federal agencies. CRs also occupy ample amounts of time on the legislative calendar that would be better spent addressing the long-term fiscal challenges facing the nation: rising health care costs, an aging population and an inefficient tax code.

A CR only delays the day of fiscal reckoning, which is perhaps why they’ve been so popular over the years; Congress hasn’t been able to operate the federal government without some form of a CR since 1996.

Lawmakers in both parties should avoid this form of budgeting-by-crisis and develop a more sensible...

Tuesday, December 13, 2016 - 10:31 AM

Three former congressmen and a retired U.S. ambassador warned of the difficult fiscal policy challenges facing the incoming Trump administration and congressional leaders at a forum last week in Concord, N.H.

The bipartisan panel discussed issues such as the growing debt and deficit, tax reform, affordable health care, Social Security and infrastructure investment. It was hosted by The Concord Coalition and the Warren B. Rudman Center at the University of New Hampshire School of Law.
 
Panel members were retired ambassador George Bruno and former congressmen Charles Bass, Paul Hodes and William H. Zeliff. Bruno and Hodes are Democrats; Bass and Zeliff are Republicans. Robert L. Bixby, Concord’s executive director, moderated the conversation. A video is available here.
 
Bass said that both Republicans and Democrats are to blame for the nation’s debt and deficit issues, and that both parties must shoulder the responsibility of reform.
 
He called upon Congress -- which has struggled to complete appropriations legislation in recent years -- to consider systemic reforms that could...
Monday, December 12, 2016 - 11:07 AM

Many politicians, including the president-elect, have focused their efforts to improve the federal government’s finances on the elimination of waste, fraud and abuse. While such reforms would be woefully insufficient to address the nation’s broader fiscal challenges, a 2015 report uncovered last week suggests there remains ample opportunity to save money in the Department of Defense. 

The 2015 report, which was produced by a task force of corporate executives and consultants known as the Defense Advisory Board, identified reforms to the Pentagon’s bureaucracy that could have saved $125 billion over five years. Had the report’s recommendations been implemented, the board claims savings could have been achieved without laying off any federal employees or compromising military capability. In fact, the report recommended reallocating these funds to improve military capabilities through additional troop training and hardware purchases. 

Defense officials,...

Tuesday, December 6, 2016 - 9:54 AM

No sooner had Steven Mnuchin confirmed that he was the President-elect’s pick for Treasury secretary than he raised eyebrows in both parties by saying that the new administration’s tax plan would not give an overall tax cut to high-income households.

“Any reductions we have in upper-income taxes will be offset by less deductions so that there will be no absolute tax cut for the upper class,” Mnuchin said. He also said the new administration’s tax plan would provide “the most significant middle-income tax cut since Reagan.”

These comments seemed to contradict the tax reform section of the Trump campaign website, which said taxes would be reduced “across-the-board.” Mnuchin’s statement, in a CNBC interview last week, is also at odds with the work of independent analysts who say the Trump campaign’s plan would deliver substantial tax cuts to high-income taxpayers.

Mnuchin’s comments raised...