September 3, 2014

Posts on federal budget

Subscribe to this feed Subscribe to this feed

 

Tuesday, April 12, 2011 - 11:57 AM

Here is a trivia question: Under which scenario would Social Security, Medicare and Medicaid make up the larger share of non-interest (i.e. “primary”) federal government spending?

A. President Obama’s budget

B. Rep. Paul Ryan’s budget (House Budget Committee)

The answer is B.

Under Ryan’s budget, these programs would grow from 46 percent of primary spending in 2011 to 62 percent in 2021. This compares with an increase to 56 percent under the President’s budget.

The divergence becomes even more pronounced after that. By 2040, Social Security, Medicare and Medicaid account for 74 percent of non-interest spending under Ryan’s budget compared to 62 percent under the President’s budget.

At first, this result may come as a surprise because it is clear that Ryan’s budget would do far more than the President’s budget to curtail the growth of federal health care spending. At...

Thursday, March 31, 2011 - 1:30 PM

Moe, Larry and Curly are fighting in the back seat of the car. No one is in the driver’s seat. As the boys settle down, Curly looks up and says, “Hey, don’t look now but we’re about to be killed.”

Leave it to The Three Stooges to provide the perfect metaphor for what passes as a budget debate in Washington these days.

It appears that we’re headed for a government shutdown in April and a possible default in May all because politicians can’t stop squabbling over a few billion dollars from a small slice of the budget while our overall fiscal policy is headed for a cliff.

The long-awaited “adult conversation” has not yet begun.

Very few dispute the fact that we’re on an unsustainable fiscal path. Yet too few seem willing to take the mountain of official and unofficial warnings seriously enough to do anything about them.

Indeed, they seem eager to engage in a reckless game of fiscal chicken, virtually daring the other side to do something responsible. We are left with a fierce debate over non-security appropriations that account for only 12 percent of the budget.

That is why even tentative sprouts of reason are worth nurturing. For...

Monday, March 28, 2011 - 12:00 AM

Updated April 3, 2012

The Government Accountability Office (GAO) recently updated its report on the federal government’s long-term fiscal outlook. The report underscores the serious problems our country faces if it continues on its current fiscal path.

Here are some of the projected milestones for the years ahead, based on one of the scenarios in the GAO's report (the "alternative simulation"* ):

  • 2023 -- Net interest costs would exceed Medicare
  • 2025 -- Federal debt held by the public would exceed the Gross Domestic Product (GDP)
  • 2025 -- Social Security, Medicare, Medicaid and net interest would consume all government revenues.
  • 2029 -- Net interest costs would exceed Social Security
  • 2037 -- Net interest would exceed both Medicare and Medicaid
  • 2038 -- Debt held by the public would exceed 200 percent of GDP
  • 2039 -- The federal deficit would exceed all government revenues.
  • 2046 -- The deficit would reach 22.6 percent of GDP, more than the entire federal budget in 2008 (22.4 percent of GDP).
  • 2047 -- Federal debt held by the public would equal 300 percent of GDP
  • ...
Thursday, March 24, 2011 - 3:30 PM

Budget-watchers in Washington are quite interested in how Republican Paul Ryan, chairman of the House Budget Committee, will write a budget that will achieve the numerous and sometimes conflicting aims of his conference. The difficulties facing him are the subject of a recent Concord Coalition issue brief, which we just updated to reflect the new numbers from the CBO's Preliminary Analysis of the President's Budget. 

Ryan faces the need to show noticeable progress on deficits (within at least five to 10 years) because the new Republican majority feels one of the main reasons they were elected in November was because voters were angry about large deficits. He also faces a group of freshmen Republicans who were elected on platforms that primarily called for cuts in non-defense, discretionary programs, while promising to protect defense spending, cut taxes, and not talk too much about the long-term spending challenge in popular entitlement programs.

As the issue brief illustrates, through a hypothetical...

Monday, December 6, 2010 - 11:54 AM

By now we've seen a number of proposals for fiscal sustainability from groups with very different perspectives. Some of the harshest critics of the bipartisan deficit-reduction panels are liberal-leaning groups that argue that the recommendations of the President's commission, as well as those of the Bipartisan Policy Center and the MacGuineas-Galston plan, leaned too heavily toward the conservative side and proposed packages that were too heavy on spending cuts and too insistent on keeping taxes (too) low. (I may agree that I would have preferred more revenue increases in the overall mix than the President's commission proposed, but I don't think that should lead me to declare the overall proposal "dead on arrival" or to reject the the individual policies contained within it.)

I've looked at two...

Monday, November 22, 2010 - 5:52 PM

My least favorite argument in deficit reduction debates is that a particular option can’t be chosen because it is too unpopular. If that criterion is strictly applied, we might as well fold our tents and wait for the inevitable fiscal crisis because we’ll never eliminate trillion-dollar deficits with “popular” options.

That message was clearly conveyed last week by the Bipartisan Policy Center’s Debt Reduction Task Force, led by two veterans of past deficit-reduction efforts, Pete Domenici and Alice Rivlin. Their report followed a similarly tough message from Erskine Bowles and Alan Simpson, co-chairs of the President’s bipartisan fiscal commission.

Elected officials have not flocked to embrace these reports and it is easy to see why. They propose spending cuts in popular programs. They challenge cherished tax breaks and raise revenues in the process. They produce howls of protest from powerful interest groups on the political left and right.

But they each do one more thing: They outline plausible paths to a sustainable fiscal policy.

As a member of the Bipartisan Policy Center’s task force, I’m very proud of the resulting report. We worked together in a spirit of cooperation and compromise....

Thursday, November 11, 2010 - 3:07 PM

The problem with campaign rhetoric is that you’re stuck with it if you win.

The danger is that people might just believe you can really do all the wondrous things you promise and if you don’t deliver, they get angry. That, in part, helps to explain what happened to President Obama and congressional Democrats last week.

Now, it’s the Republicans’ turn to see if they can live up to their campaign rhetoric. On the fiscal front, they have set a very high bar for themselves.

Republicans campaigned on a written pledge to put the nation on a path to a balanced budget by cutting spending and not raising taxes.

It is easy to see the political appeal in that promise. Most people think the deficit is too big and that the federal government spends too much. Very few want to see their taxes go up.

The problem with the Republicans’ pledge is that the numbers don’t add up.

Forget ideology and just look at the projections. Last year’s deficit came in at $1.3 trillion. This year, the nonpartisan Congressional Budget Office (CBO) projects a deficit of $1.1 trillion. Beyond then, CBO projects 10-year deficits totaling $6.2 trillion.   

...

Saturday, October 16, 2010 - 11:20 PM

The Social Security Administration announced on Friday that for the second year in a row there would be no cost-of-living increase in Social Security benefits for 2011.  Why not?  As the SSA explains, this is a straightforward, non-political determination based on historical economic data:

The Social Security Act provides for an automatic increase in Social Security and SSI benefits if there is an increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the last year a cost-of-living adjustment (COLA) was determined to the third quarter of the current year.

Very objectively, there will be no cost-of-living increase in Social Security benefits in 2011 because there was no increase in the cost of living, as measured by the CPI-W, from the 3rd quarter of 2008 (the last time a COLA was triggered, for 2009 benefits) to the 3rd quarter of 2010.  The latest data on consumer prices from the Bureau of Labor Statistics show that the...

Monday, October 4, 2010 - 10:33 AM

Fiscal Year 2010 ended last Thursday but no one was popping champagne corks. Little wonder. For the second year in a row, the federal government ran a budget deficit well in excess of one trillion dollars.

Final figures will be announced later this month, but it seems likely that the FY 2010 deficit was about $1.3 trillion or 9 percent of gross domestic product (GDP). Regardless of the exact number, there is little doubt that the deficit will be the second largest as a share of GDP since the end of World War II. If there is any good news in this, it is that the deficit came down from the previous year’s total, which at $1.4 trillion (9.9 percent of GDP) was the largest of the post-WWII era.

This might not be as bad as it sounds if the deficit were projected to shrink as the economy recovers. After all, much of the huge spike in red ink can be attributed to reduced revenues and higher spending caused by the recent recession and attempts to deal with it. As these factors fade, the deficit will come down. However, projections for the next several years don’t get much better.

As the new fiscal year began on Friday, the most recent projection by the Congressional Budget Office (CBO) showed a deficit of $1.1 trillion for this fiscal year and cumulative deficits of $6.2 trillion over the coming decade. That,...

Wednesday, September 29, 2010 - 2:24 PM

When Congress soon leaves the Capitol for the campaign trail, a long list of unfinished business will likely be left behind. This year will mark the first year since the modern budget process was created in 1974 that no budget resolution has been passed by either the House or the Senate. Of the twelve appropriations bills necessary to fund the federal government during the coming year, Congress has not enacted one of them. To avoid a government shutdown, Congress will need to pass a continuing resolution this week. 

If this breakdown of the budget process were not discouraging enough, there now appears to be a possibility that the Senate could leave without confirming the President's nomination of Jack Lew to head the Office of Management and Budget. The two Senate committees with jurisdiction over the nomination held public hearings and promptly approved the nomination with decisive bipartisan votes. The Budget Committee approved the nomination by a vote of ...