April 27, 2017

Posts on federal budget

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Monday, April 24, 2017 - 12:26 PM

Congress is again down to the wire on spending legislation for the current fiscal year, which is already half over. Returning to Washington after a 2-week recess, lawmakers need to take action before a stop-gap measure expires at midnight on Friday.

The alternative would be a shutdown for much of the government, wasting tax dollars and further diminishing public confidence in elected officials’ ability to take care of their fundamental budgetary responsibilities.

This spending legislation should have been approved well before last Oct. 1, when Fiscal 2017 began. But Congress has only approved one of the twelve annual appropriations bills that are needed to keep the government running.

Instead, Congress has relied -- as it has in each year since 1997 -- on stop-gap measures known as “continuing resolutions” that generally continue funding for federal programs at current levels, regardless of changing needs and priorities. This reliance on temporary measures also make it difficult for federal agencies and departments to plan and work efficiently.

In addition, lawmakers now find themselves at the start of a new annual budget cycle without having completed their work on the last one.

Congress passed its first stop-gap measure for 2017 in late September, with only two days to spare...

Monday, April 3, 2017 - 11:17 PM

Many Americans are no doubt struggling to understand some of the latest news from Washington about the federal budget. That’s because elected officials in Washington are approaching their work on the Fiscal 2018 budget with some long-unfinished business: They have yet to agree on most of their spending plans for the current fiscal year.

That year is now more than half over. Congress has approved only one of the 12 regular appropriations bills that were supposed to have passed before Fiscal 2017 began Oct. 1. This is a poor omen for the 2018 budget work that is supposed to be completed in the coming months. It also raises the possibility of a costly government shutdown later this month.

Instead of getting more 2017 spending bills passed, Congress has been relying on stop-gap measures known as “continuing resolutions” that generally continue funding for federal programs at current levels -- regardless of changing needs, new priorities and the government’s growing debt.

In addition, the failure of Congress to make timely final budget decisions makes it difficult for federal agencies and departments to plan effectively, anticipate appropriate staffing levels and commit to important projects and...

Friday, March 10, 2017 - 5:10 PM

In recent days, there have been questions raised about the credibility of the Congressional Budget Office (CBO). This is likely a pre-emptive rebuttal in case CBO produces politically problematic estimates of the American Health Care Act (AHCA) -- the House GOP proposal for replacing the Affordable Care Act (ACA). There is no reason, however, to doubt that CBO will apply its usual and critically important “objective, impartial, and nonpartisan” analytical standard in arriving at its AHCA estimates.

This is hardly the first time the budget office has been questioned by policymakers with political agendas. Democrats criticized it during the original debate over the ACA for underestimating the degree to which their proposals could control costs. Republicans similarly criticized CBO in the early 2000s for refuting their claims that tax cuts would spur sufficient economic growth to make them self-financing.

The CBO’s role, admirably maintained over several decades, is not to take sides but to...

Wednesday, March 8, 2017 - 3:15 PM

Last week, the Congressional Budget Office published a blog exploring the role of fiscal policy in improving economic productivity. The subject is particularly interesting given how frequently politicians propose to pay for their agendas, be they tax cuts or spending increases, with dubious claims of improved economic growth. CBO identified four main fiscal tools that can actually result in increased growth through higher productivity:

  • Increasing funding for federal research and development (R&D)

  • Incentivize private investment in R&D through tax credits

  • Increase federal spending on education

  • Increasing loans or loan guarantees for businesses pursuing innovative technology

While federal lending programs can be difficult to quantify, the first three of these are easily measured and are worth putting in perspective relative to other areas of the federal budget.

In Fiscal Year 2017, the federal government is projected to directly spend just under $126 billion on four categories of R...

Tuesday, March 7, 2017 - 10:31 AM

In considering budget plans for the coming fiscal year, President Trump and lawmakers should keep in mind that under current law the federal government is already on track to run up deficits of nearly nine and a half trillion dollars, according to Robert L. Bixby, executive director of The Concord Coalition.

“I think that one of the problems . . . with what we’ve seen so far from the White House is that if you are just going to try to pay for new initiatives -- if you are going to pay for the new defense spending by cutting other spending -- that’s fine, but it still leaves the budget on an unsustainable track,” Bixby said Sunday on C-SPAN’s Washington Journal.

Stan Collender, a Forbes columnist, also appeared on the program and expressed a variety of concerns about Washington’s ability to meet the difficult fiscal challenges facing the country.

Bixby emphasized that most of the projected growth in federal deficits over the next 10 years is driven by mandatory spending programs such as Social Security, Medicare and Medicaid. These programs are growing rapidly because of the aging population and rising health care costs. They are projected to outpace federal revenue in the years...

Tuesday, February 28, 2017 - 1:00 AM

With large numbers of baby boomers moving into their retirement years, the federal government corporation that insures pension benefits for nearly 40 million workers and retirees faces growing difficulties that require Washington’s urgent attention.

These difficulties were recently summarized by the Government Accountability Office, which has included Pension Benefit Guaranty Corporation (PBGC) programs on the GAO’s “High Risk List.” That list includes government programs that GAO says need “broad-based transformation” or may be vulnerable to mismanagement.

“PBGC’s financial future remains uncertain, due in part to a long-term decline in the number of traditional defined benefit plans and the collective financial risk of the many underfunded pension plans that PBGC insures,” the GAO says.

This means the financial futures of millions of American workers and retirees are uncertain as well. Many of them could eventually face sharp reductions in their retirement incomes unless Congress and the Trump administration take steps to put the PBGC on a more sustainable track.

The government corporation backs up both single-employer...

Tuesday, February 21, 2017 - 12:52 PM

A new report from the Congressional Budget Office (CBO) found that non-health means-tested government programs, such as the Supplemental Nutrition Assistance Program (also known as food stamps) and Supplemental Security Income (SSI), are growing at a much slower rate than other federal benefit programs. The report analyzed both spending trends over the past decade and projections for the upcoming decade.

According to CBO, means-tested programs that provide benefits other than health care grew by 49 percent between 2007 and 2011, after adjusting for inflation. But since then, their costs have actually been falling and are projected to continue doing so over the next decade. That is despite the fact that gross domestic product is projected to grow by 37 percent between 2007 and 2027.

Non-means-tested programs, such as Social Security and Medicare, however, are projected to grow much faster than GDP. Between 2007 and 2027, the cost of these programs will double – even after adjusting for inflation.

There are two key reasons why these programs are growing faster than others in the federal budget. The first is demographic changes; while means-tested programs tend...

Friday, February 17, 2017 - 12:45 PM

President Trump and many lawmakers in both parties have promised to attack waste and substantially improve government efficiency. The Government Accountability Office (GAO) has just handed them a long list of opportunities to do so in its latest “High Risk List.”

With a large and growing federal debt, elected officials should vigorously pursue these opportunities to reduce unnecessary spending and collect hundreds of billions of dollars in unpaid taxes. In addition, Congress and the president should heed the GAO’s renewed warnings about the long-term fiscal challenges facing important but costly entitlement programs.

The High Risk List, which GAO updates at the start of each new Congress, spotlights 34 government activities or areas that the agency considers “vulnerable to waste, fraud, abuse and mismanagement or needing broad-based transformation.”

GAO, a nonpartisan investigative arm of Congress, reports that the government made “considerable progress” on problems highlighted in the 2015 list. The agency removed one area from the High Risk List: the sharing and managing of information related to terrorism, which U.S. Comptroller General Gene Dodaro called “a particularly...

Tuesday, February 7, 2017 - 11:43 AM

With interest rates in recent years far below traditional levels, it has been easy for American taxpayers and their political leaders to overlook one of the chief drawbacks of the federal debt: the borrowing costs.

But as Congressional Budget Office (CBO) officials have made clear recently, there is good reason for elected officials and the public to start paying more attention to what the government pays in interest -- and how rapidly these payments will rise in the coming years unless big changes are made in the federal budget.

In testimony last week on Capitol Hill, CBO Director Keith Hall said that net interest payments this year would be the fastest-growing component of the projected increase in federal spending.

If interest payments rise as projected over the next decade, they will make it even more difficult to put the federal budget on a responsible and sustainable path.

Two factors are driving the current and projected growth in federal interest costs:

  • Interest rates are on their way up. As explained in a CBO blog post last week, the budget office expects rates to rise...

Monday, January 30, 2017 - 12:24 PM

In an interview on Fox News last week, President Trump said that he would like to have a balanced budget “eventually,” but not at the expense of higher spending for the military.

“So a balanced budget is fine,” Trump said. “But sometimes you have to fuel the well in order to really get the economy going. And we have to take care of our military. Our military is more important to me than a balanced budget because we’ll get there with a balanced budget.”

This brief window into the president’s thinking on budget policy is troubling because it indicates that he does not feel constrained by the need to make trade-offs in pursuit of his policy goals. It is an invitation to pit any worthy initiative against the goal of a balanced budget regardless of the cost.

That is a false choice and one that has potentially harmful consequences for budget discipline.

As new projections by the nonpartisan Congressional Budget office (CBO) show, current policy is already on track to add another $9.4 trillion of borrowing to the nation’s growing debt over the next 10 years.

With that sobering outlook in mind, Trump’s...