October 25, 2014

The (Tab)ulation

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Thursday, June 24, 2010 - 10:00 AM

A Washington Post editorial today sums up a bunch of different strands of thinking about the federal budget that Concord has been writing about and talking about a lot recently. One is that the country can "walk and chew gum" at the same time when it comes to short-term actions to help the economy that may involve increased deficits and long-term planning to confront the nation's real fiscal challenges. Another is that the current debate in Congress over the cost of tax-extenders is failing to focus on their merits while the overall fiscal challenge continues to go unexamined. A third is that we generally do know what actions need to be taken to reform federal programs over the long run -- but that members of Congress lack the political courage to act, and hopefully the President's fiscal commission can begin to...

Monday, June 21, 2010 - 10:43 AM

Last month I participated in a conference of mostly military officials and national security experts at the Naval War College in Newport, RI. The conference title was “Economics and Security: Resourcing National Priorities.” 

Since then the debates over economic stimulus versus deficit reduction got pretty hot and heavy, and a funny thing happened. I began to recognize quite a few parallels between the other fiscal policy issues I always write about, and this particular angle that I really have never written about: the role of defense and national security spending in achieving fiscal sustainability.

First, I think most Americans (regardless of what they think of our wars and military activity more generally) assume that cuts in the national security budget would weaken our defense capabilities -- that a trade-off exists between deficit reduction and a strong defense. But what surprised me the most at the Naval War College conference was learning that most of the national security officials and experts there, who all advocate for a strong defense, believed that if the defense budget were tightened, the quality of defense spending would actually improve

All seemed to recognize that given...

Wednesday, June 16, 2010 - 1:23 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 14, 2010 - 4:05 PM

If the Obama administration follows through on its newly announced effort to identify and weed out unproductive federal programs, it could build public confidence and support for more sweeping fiscal reforms in the future.

The White House has asked federal agencies to submit lists of the programs that are “least critical” to their missions.  These programs should total at least 5 percent of  each agency’s budget, according to a memo issued by Rahm Emanuel, the President’s chief of staff, and Peter Orszag, the White House budget director.

It would be easy to dismiss the administration’s announcement of this effort as simply a public relations exercise.  But two points are worth noting:

  • Administration officials say they are considering not just paring back many programs but eliminating them entirely. This would be consistent with the concerns they have expressed in the past over redundant programs. If one program will do the job, we don’t need two – or two dozen.
  • The President wants Congress to pass legislation that would create a...
Wednesday, June 9, 2010 - 1:04 PM

The Obama administration has announced a very small effort to reduce deficit spending, and yet liberal groups are attacking them for promoting a policy that will kill the economy – or at least prolong the recession. And conservatives continue to argue that any “stimulus” spending is by definition “wasteful” – especially if they don’t get how a less-idle economy might benefit themselves personally.

But “fiscal hawks” can walk and chew gum at the same time. It’s possible to argue for more and better stimulus at the same time that you call for greater fiscal responsibility. Here are two prime examples, starting with Concord's executive director, Bob Bixby. He was quoted in a CQ Weekly story by Clea Benson (subscription required):

Robert Bixby, the executive director of the Concord Coalition, is at the forefront of the effort to publicize the dangers of uncontrolled federal spending. But even he worries that the economy is not yet at a point where it makes sense to forgo extending...

Monday, June 7, 2010 - 4:45 PM

How large is the federal debt? That's something of a trick question in economic circles, and some analysts believe it may have already tripped up the President's fiscal commission.

Some commission members think the panel, charged with recommending solutions to the nation’s fiscal problems, should focus on the total federal debt. That figure, which just hit $13 trillion, is most familiar to the general public because it is widely cited by the news media and politicians.

Many budget experts and economists, however, say the real number to watch is “publicly held debt,” meaning what the government owes to investors. This figure, now approaching $8.6 trillion, does not include money that the government owes to various trust funds, notably for Social Security.

Beyond this issue is the question of how much more debt the government can safely take on. Fiscal commission members tussled over that at their second full meeting late last month on Capitol Hill, with some arguing that the economy was still too weak for the government to start focusing on deficit reduction.

“It’s very important that we don’t in our zeal focus on deficit reduction right now,” said Rep. Jan Schakowsky, an Illinois Democrat.

Regardless of which figure the commission focuses on, federal debt is...

Monday, June 7, 2010 - 4:34 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...

Thursday, June 3, 2010 - 4:35 PM

Below are a few budget items we have been following, since the last edition of the Washington Budget Report (sign up here) was published.

  • Last week, the House Appropriations Committee postponed its mark-up of the FY 2010 war supplemental.  The committee's chairman, David Obey, released a proposal including $84 billion in supplemental funding.  In addition to funding the President's request for war funding, the proposal would...
Wednesday, May 26, 2010 - 4:56 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 - 5:27 PM

Today the Senate began considering the $59 billion supplemental spending bill (HR 4899) that the Senate Appropriations Committee approved last week. The bill includes emergency funding for priorities such as military operations in Iraq/Afghanistan, disaster assistance and veterans disability payments.  (For more details on the legislation, please see last week’s Washington Budget Report).

During the course of the week, amendments will likely be proposed to add extraneous items to the bill.  The Concord Coalition urges policymakers to resist adding non-emergency spending that will add to deficits that are already fiscally unsustainable. If these items are added, they should be paid for without emergency designations that exempt them from budget allocations.

Another potential addition to the bill is a procedural device called a “deeming resolution.”  Deeming resolutions are procedural shortcuts that Congress resorts to when its members have not lived up to their responsibility to pass a budget resolution.  Deeming resolutions have...