July 30, 2010

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About The Tabulation

The Tabulation is The Concord's Coalition's blog featuring posts from Concord's policy staff, grassroots field directors, and special guest bloggers. For more about the blog click here.

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Stuck in the Deficit Ditch
Monday, July 26, 2010 - 4:51 PM

New projections released on Friday afternoon by the Obama administration show that the nation’s finances remain in a deep deficit ditch. This was hardly “news,” but it served as a pointed reminder that much hard work needs to be done to get us back on the road to fiscal sustainability.

In updating the President’s Fiscal Year 2011 budget proposals, the Mid-Session Review (MSR) does not pretend that all will be well once the economy recovers or that getting tough with earmarks and waste will meet the fiscal challenge. The MSR assumes a swift economic recovery and a three-year freeze on non-security appropriations. Yet even with these optimistic assumptions, the budget remains on a path that the administration concedes is unsustainable.

As stated in the MSR Summary, “the economy is still struggling; too many Americans are still out of work; and the Nation’s long-term fiscal trajectory is unsustainable, threatening future prosperity.”

Those looking for good news could point to the fact that the deficit for Fiscal Year 2010, which ends Sept. 30, is now projected to be $1.47 trillion instead of $1.56 trillion. However, a deficit equaling 10 percent of the economy (GDP) as opposed to 10.6 percent is hardly cause for celebration.

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Could U.S. Learn From British Experience?
Monday, July 26, 2010 - 3:34 PM

Prime Minister David Cameron’s visit last week to the United States underscored the important relationship between the U.S. and Britain, both politically and economically.

Britain’s new coalition government faces tremendous challenges, many of which are similar to the United States’ problems.  Britain’s public debt was 68 percent of GDP at the end of 2009; the comparable figure for the U.S. was 53 percent.

Cameron’s coalition aims to slash government spending over the next five years.  The eventual goal is to cut Britain’s annual budget deficits in half over five years, which will mean some ministries will face funding reductions of up to 40 percent.  Even the popular National Health Service (NHS) will be ordered to make personnel cuts, although overall it will face much lighter cuts than other ministries.  About 75 percent of deficit reduction will be achieved with budget cuts while the other quarter presumably will come from raising revenues.

The proposed cuts in Britain stand in stark contrast to the three-year freeze on domestic discretionary spending President Obama has proposed.  Although broad generalizations cannot—and, indeed, should not—be drawn from these figures, it is clear that both the U.S...

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Budget and Appropriations Update
Monday, July 26, 2010 - 10:14 AM

Below are several developments we have been following since the last edition of the Washington Budget Report (sign up here) was published.

COMMITTEES REPORT ADDITIONAL FY 2011 APPROPRIATIONS BILLS:  Last week the House Appropriations Committee continued to make progress on the FY 2011 bills.  The full committee reported the Military Construction-Veterans Affairs bill as well as the Transportation- Housing and Urban Development bill.  Both bills are expected...

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Round Two for Jack Lew
Monday, July 19, 2010 - 3:51 PM

Last week President Obama nominated Jacob “Jack” Lew to be the new head of the Office of Management and Budget (OMB), replacing Peter Orszag, who is stepping down at the end of July. OMB is primarily responsible for developing the President’s budget.

If confirmed by the Senate, as expected, Lew will become OMB director for the second time. He served as President Clinton’s director from 1998 through the end of the Clinton administration in 2001.

While Lew is familiar with the job, the budget picture has changed considerably. Lew was OMB director during the only four years of budget surpluses since the late 1960’s. He was also a key negotiator on the bipartisan balanced budget agreement in 1997. Now the budget environment is even more partisan and the country is experiencing the largest deficits since the end of World War II.

The change in OMB leadership provides an opportunity to review the changes that have taken place since Lew’s last stint as budget director and also gives us another chance to review the major decisions looming for the federal budget.

The final budget presented by Lew for the Clinton administration in February of 2000 (FY 2001)...

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IMF Prescribes Both Spending Cuts and Tax Increases for the United States
Monday, July 19, 2010 - 3:22 PM

The International Monetary Fund has given Americans a tough-minded analysis of the challenges we face in putting the country on a more responsible fiscal course. While a recent IMF report points to some bright spots in the U.S. economy and praises federal policies in some key areas, it offers less upbeat predictions than the Obama administration has issued. More belt-tightening, the international organization warns, will be needed in the next few years and beyond.

“The (U.S.) authorities’ commitment to halve the budget deficit by 2013, and intention to stabilize public debt at just over 70 percent of GDP by 2015 are welcome, although much remains to be done to achieve these aims,” the report says. “Given that we use less optimistic economic assumptions than the (Obama) administration, we see the need for more ambitious adjustment to stabilize debt than that envisioned by the authorities . . . “

The IMF praises the Obama administration’s plans for a freeze on non-security domestic spending. But it also cautions that more tax revenue will be necessary as well. The report bolsters The Concord Coalition’s long-standing contention that both spending cuts and tax increases will likely be needed...

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