November 20, 2014

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Wednesday, June 16, 2010 - 12:23 PM

Debate on the so-called “extenders” bill has focused on the size and duration of unemployment benefits, health insurance assistance for those who recently lost their jobs, Medicare physician payments, state aid for health care and various offsets to mitigate the overall effect on the deficit.

Conspicuously missing from the debate is any scrutiny of the extenders themselves. It’s a missed opportunity to raise needed revenue while simplifying the tax code and broadening the tax base -- goals that economists of all ideological stripes have long advocated. 

Both the House and Senate versions of the extenders bill contain more than 60 narrowly targeted tax breaks that expired last year. Extending them just through this year will cost about $32 billion. The long-term cost runs to over $350 billion. That cost will add to the debt unless it is offset by corresponding tax increases or spending cuts that may prove more harmful to the economy than failing to renew some, or all, of the extenders. 

At a time when the President is commendably urging all federal agencies to identify their lowest priority and least effective items, Congress should devote the same level of scrutiny to the tax code. The extenders would be a good place to...

Monday, June 7, 2010 - 3:34 PM

Public concern about the nation’s rising debt burden is beginning to have an impact on the legislative agenda.  

That much was evident as the House passed a scaled back “extenders” bill (H.R. 4213) on May 28 by a slim margin. Originally estimated to have a gross cost of $192 billion and a net deficit increase of $134 billion, the final bill carried a gross cost of $114 billion and a net deficit increase of $54 billion.

While this cost reduction was a victory for House Democrats -- mainly Blue Dogs -- who objected to the deficit impact of the original bill, much of it was accomplished by timing shifts rather than a change in policy. For example, shortening the extension period of certain unemployment benefits “saved” about $8 billion and sunsetting an increase in the Medicare physician reimbursement rate (the “doc fix”) after 19 months “saved” almost $40 billion. 

It remains to be seen whether concerns about the immediate deficit, which is largely driven by economic conditions, will be translated into hard choices on the long-term structural deficit. 

In that regard, it is worth noting that the policies extended in the extenders bill carry large long-term costs whether they become visible now or in the...

Wednesday, May 26, 2010 - 3:56 PM

While we publish a weekly Washington Budget Report (sign up here), we wanted to direct your attention to some other budget items we are watching this week.

  • The Senate is considering a McCaskill/ Sessions (amendment text here) that would institute statutory discretionary spending caps for three years.
Monday, May 24, 2010 - 4:25 PM

The extenders bill that the House will consider this week is a timely reminder of why it is important for Congress to complete action on a budget resolution.  A budget resolution continues to elude Congress, but there has been considerably less trouble reaching agreement on a bill that the Congressional Budget Office estimates will add a staggering $167 billion to the deficit over 2010-2014 and a net increase of $134 billion over 2010-2020. 


Last Thursday, leaders of the Senate...

Sunday, April 25, 2010 - 8:53 PM

President Obama’s bipartisan fiscal commission will hold its first meeting on April 27. It has two very ambitious assignments -- find a way to balance the budget excluding interest on the debt by 2015 and “meaningfully improve” the long-term fiscal outlook. All of this is supposed to be done by December 1, 2010.

That’s quite a task. It may even be too much to ask. So here is a simple suggestion for the commission: Leave the short-term goal to the regular budget process and focus on the more important long-term goal.

Finding long-term solutions to the nation’s unsustainable fiscal outlook is what originally motivated members of Congress to propose a statutory commission. Only when that effort failed did the President step in by establishing an executive commission with the added goal of filling a gap in his budget.

The short-term budget goal could easily distract the commission from its long-term mission. Senate Budget Committee Chairman Kent Conrad, a commission member, had it right when he told POLITICO last week, “I don’t think a commission should be absorbed with the short-term budget. We need them to focus on long-term structural problems.”

Simply determining which baseline to use in assessing the required deficit reduction in 2015 would get the commission bogged down. They can’t know what it...

Wednesday, March 31, 2010 - 10:00 AM

According to a March 29 Roll Call article (subscription required), Senate Republicans have gone home for the two-week congressional recess with a strategy memorandum advising them to call for repeal of “Medicare cuts, tax hikes, mandates and sweetheart deals” in the new health care reform legislation.

Leaving aside the sweetheart deals, repeal of the other three items would amount to a fiscal catastrophe. One can legitimately argue that the law will end up costing more than anticipated or that some of the proposed savings will fail to materialize. Claims of big deficit reduction do indeed rest on some shaky assumptions, and the law certainly leaves a lot of work to be done on fiscal sustainability. However, the surest way to guarantee exploding deficits would be to leave in place all of the popular insurance reforms and repeal the politically difficult choices that have been made to pay for them.

Expanding health insurance coverage costs money. Unlike the 2003 Medicare prescription drug bill, this plan at least attempts to pay for its new spending by cutting future Medicare costs and raising new revenues. Constituents may not like these things but they are essential parts of the law. They are also protected by...

Wednesday, February 17, 2010 - 8:39 PM

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’...

Thursday, January 28, 2010 - 9:52 PM

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...

Sunday, January 24, 2010 - 8:06 PM

As the White House and congressional leaders rethink health care reform after the Republican upset in the Massachusetts Senate race, there is a growing danger that Congress will jettison comprehensive health care reform altogether. Even worse, they might pass stripped-down measures that eliminate politically difficult cost-containment, while popular but costly provisions are kept.

President Obama has suggested narrowing the focus of national reform, advising that Congress should “try to move quickly to coalesce around those elements of the package that people agree on.” Some members of Congress have also expressed support for a limited bill.

However, most policy experts agree that a limited bill is nearly impossible to construct without running into some major issues with short and long-term costs. That is because the easier elements -- the ones that “people agree on” -- are interlocked with elements whose benefits are far less apparent to many voters.

The key reforms for the health insurance industry are popular -- for instance, prohibiting discrimination based on pre-existing conditions. Yet, just doing that would lead to an insurance "death spiral" where only the sick would get insurance when needed, driving up the cost of premiums. The only way around this spiral is to have an individual mandate to...

Wednesday, January 20, 2010 - 1:57 AM

"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...