With today being the one-year anniversary of the American Recovery and Reinvestment Act of 2009 (more commonly referred to as “the stimulus”), and President Obama expected tomorrow to announce his Presidential commission for deficit reduction, I’m hearing a lot of claims and rhetoric about what has “worked” versus what has not, and what has to be done going forward versus what should remain “off limits.”
In all these arguments and politically-colored “evaluations”, I hear misplaced focus on (the stark and easy-to-talk-about) absolutes, averages, and aggregates, when what matters economically are relatives, marginals, and individuals.
Let me elaborate a bit with the two issues at hand…
On the Stimulus: Republican critics of the stimulus argue that the “proof” that the stimulus hasn’t worked lies in the still-bad numbers of the unemployed–-that since ARRA’s passage last year, total jobs in the economy have decreased, not increased. As the New York Times’...
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Following up on our press release about the President's Fiscal Year 2011 budget proposal, here are a few more thoughts:
Annual discretionary spending:
- A major element of the Obama administration’s 2015 deficit reduction goal is a three-year freeze on non-security discretionary spending (FY 2011-2013). While the portion of the budget covered by the freeze is less than 20 percent, it would still save an estimated $29 billion in 2015 alone, and $249 billion over 10 years.
- Clearly, more must be done and even doing this will prove difficult. Nevertheless, The Concord Coalition supports the proposed freeze and, given current economic circumstances, agrees that it is appropriate to begin implementation in 2011. Concord also agrees that the freeze should not be across-the-board. Some programs may merit an increase while others can be cut. An aggregate freeze, as proposed, would help to set priorities and reduce waste.
- War costs in the budget are likely underestimated. In keeping with last year’s budget, the administration has included annual placeholder sums of $50 billion for war costs beyond 2012. While it is...
If fiscal responsibility calls for significant changes in the big federal entitlement programs, shouldn’t the defense budget face scrutiny and reductions as well?
That question comes up a lot when The Concord Coalition emphasizes the need for entitlement reform. The answer is, “Yes.”
About a fifth of the federal budget goes to the Pentagon, and it is clear that there are many opportunities to achieve significant savings without jeopardizing national security.
Petty turf wars, bureaucratic bloat, poor planning, lax bookkeeping, no-bid contracts, illogical personnel policies and simple extravagance all inflate the defense budget in ways that knowledgeable taxpayers understandably resent.
In addition, short-sighted members of Congress often champion unnecessary defense spending -- or at least turn a blind eye to it -- in deference to the special interests that stand to profit.
All of this adds to the nation’s fiscal imbalances and massive borrowing. That’s why The Concord Coalition supports careful review of the defense budget to identify reasonable reforms and spending cuts.
In calling for a bipartisan fiscal commission that would submit recommendations to Congress, for example, we have stressed the importance of giving the panel a broad mandate that puts everything on the table. That...
"It isn't fiscally irresponsible to raise the debt limit, I think it would be rather irresponsible not to raise the debt limit because we have already incurred the bill."
That quote, from Concord executive director Bob Bixby, is one of many from our new videos highlighting some of the key points driving fiscal discussions in Washington.
We recorded the videos because the Senate is set to begin debate on increasing the debt ceiling while all of Congress awaits the President's budget proposal, which will purportedly contain the Administration's ideas for how to reduce the country's budget deficits.
The first shows a discussion about the basics behind increasing the debt limit and how there are a few key budget process reforms tied to fiscal responsibility that have become part of the debate as the Senate approaches a difficult vote. We talk about the possible Senate amendments...
It’s a little amusing to see how badly the idea of a bipartisan fiscal commission has frightened some partisans at both ends of the political spectrum. That alone indicates the idea may have merit.
Some skeptics, of course, doubt that a special bipartisan panel would have any hope of success in steering the government onto a more responsible fiscal course. And there’s no question that this would be a very tough assignment.
But the strident opposition to a bipartisan commission from some critics on both the right and the left is rooted in fears that such a panel might actually succeed. They describe commission proposals in conspiratorial terms, as though serious bipartisan planning for the nation’s future would be merely a cover for shady plots to sneak reprehensible policies past Congress and the American public. Oh, the deceit of it all...
The Wall Street Journal, for example, recently ran an editorial conceding that “current federal commitments are unsustainable, starting with $37 trillion in unfunded Medicare liabilities.”
Yet the editorial ruled out a bipartisan commission that could tackle this...
When we finished our issue brief on the health care reform "endgame" before the holidays, we had a difficult time trying to isolate the key 10-year costs and savings of different components of the legislation. Now that we have had a bit more time with the final House and Senate versions of the legislation and the CBO analyses, we wanted to present the following table:
| House Bill | Senate Bill | |
| Insurance Coverage Expansion | 1052 | 871 |
| Minus Offsets | ||
Spending Cuts | 352 | 413 |
| CLASS Act | 102 | 72 |
| Tax Increases | 570 | 474 |
| Penalties | 168 | 43 |
| Subtotal (offsets) | 1,192 | 1,002 |
| Deficit Reduction | -138 | ... |
For the last few weeks, members of Congress have been increasingly pushing for a bipartisan commission to tackle the nation's fiscal challenges. The impetus has been the need to raise the debt limit as the national debt rapidly approaches the $12 trillion statutory ceiling. Because legislation to raise the debt limit is must-pass, lawmakers are trying to tie commission creation to the legislative language. Senator Evan Bayh highlighted this issue in a letter to Majority Leader Harry Reid, which was co-signed by nine additional senators. The Blue Dog coalition of Democrats in the House also recently announced their support for a commission.
Last week, Budget Committee Chairman Senator Kent Conrad held...
This week marks the debut of Concord's new, online budget game -- The Federal Budget Challenge.
Based on our Principles and Priorities game, which has been used for years in hundreds of classrooms and town hall meetings across the country, users work through 11 different policy categories and choose the spending and tax policies that fit their preferences while being mindful of their budgetary effects.
Developed in partnership with the California-based non-profit Next 10, this online tool tracks the effect of individual policy choices on interest costs and the projected 10-year budget deficit as the choices are made. The game has already been mentioned in The Wall Street Journal and The New York Times.
It is important to point out what this game is and isn't. The...
The news from Thursday’s Washington Post:
The Senate voted Wednesday to renew the government’s $8,000 tax credit for first-time home buyers through the first six months of next year as part of a broader bill designed to extend unemployment benefits.
For the first time, the tax credit program would also enable many homeowners who buy a new primary residence to receive a $6,500 refund.
The measure was attached to a bill that would provide 20 weeks of unemployment benefits in more than two dozen states with jobless rates above 8.5 percent and up to 14 weeks elsewhere. Another provision in the bill would allow businesses that had operating losses in 2008 and 2009 to seek refunds for taxes paid on profits over the past five years.
Why this legislation now? Because despite signs that the economy as a whole, as measured by GDP, is growing again, most American households are still feeling the pain of a very weak labor market which all economists expect will be unusually slow to recover this time around. Hence, the extension of unemployment benefits is easy to justify.
But what about the ...
I have written a lot in this blog about the Congressional Budget Office and their estimates (here is the latest example). Today, the Washington Post has another great article explaining the process.
Reading it, I thought about how many things we do here at Concord that depend on CBO. We have been working over the last few weeks updating all of our education exercises with CBO information and data. Next week we will be unveiling a new online budget game that also is based on CBO publications. As is our plausible baseline, chart talks and many of our issue briefs.
We do this not because CBO can see the future, but because having a neutral umpire (especially one easily searchable online!), makes what we have to say stand out--because we don't have to spend as much time worrying or...