June 24, 2017

The (Tab)ulation

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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...

Tuesday, February 21, 2017 - 12:20 PM

In the release of their annual projections for National Health Expenditures (NHE), the federal government's chief health care actuaries see the sector growing to represent one-fifth of the entire economy by 2025 (up from 18 percent in 2016). Understanding this growth and how to moderate it should be front-and-center for newly confirmed Secretary of Health and Human Services Tom Price.

Over the period of 2016-2025, the actuaries expect NHE to grow by an average of 5.6 percent a year, about 1.2 percent faster than the expected growth of the economy over the same time period.

The year 2016 itself actually saw a slight decline in the growth rate. Its 4.8 percent growth was the result of a slowdown relative to the prior two years, when new coverage under the Affordable Care Act (ACA) was phased in and there was a related increase in the usage and intensity of health care services.

However, the actuaries expect the growth rate to pick up over the projection period as the population ages, making more people eligible for Medicare and Medicaid, and as health care prices rise faster than prices in the overall economy. The two pieces of health care spending that will grow the fastest...

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...

Monday, January 23, 2017 - 11:15 AM

Last week marked a sad anniversary at The Concord Coalition. On Jan. 18, 1997, former U.S. senator and Concord Coalition co-founder Paul E. Tsongas passed away.

Twenty years later, his example and vision continue to guide us.

Upon his death, The Concord Coalition issued a statement about him and his legacy that we republish below.

"The death of Paul Tsongas will be deeply felt by every member of The Concord Coalition family. His leadership inspired many of us first in his 1992 presidential campaign, and later as co-founder of The Concord Coalition. He represented the best qualities in leadership - integrity, courage, commitment, compassion, and the good grace to take himself less seriously than the policies he advocated.

"With his death, some will inevitably wonder whether the work of The Concord Coalition will go on. But no one who had the privilege of knowing Paul Tsongas could have any doubt as to the answer. Of course it will.

"Paul Tsongas often spoke of legacies. To him, the work of The Concord Coalition went well beyond the tactical goal of balancing the federal budget. He was much more...

Thursday, January 19, 2017 - 12:12 PM

With a new administration coming into office, a report on the nation’s fiscal health provides a timely and emphatic reminder of the need for the new president and Congress to pursue sweeping long-term changes in the federal budget.

Released this week by the Government Accountability Office (GAO), the report provides a good look at the nation’s unsustainable fiscal path and deserves close scrutiny by elected officials in both parties.

Although our nation’s leaders face an array of serious short-term challenges and difficult policy choices, the new report reminds them -- and the American public -- that the federal government is already “highly leveraged in debt by historical norms.”

So in addition to the near-term financing decisions that must be made, the GAO says, “a broader plan is needed to put the government on a more sustainable long-term path.”

The report draws on the work of the GAO itself as well as Congressional Budget Office (CBO) projections and the recently issued Fiscal Year 2016 Financial Report of the United States Government.

Their projections, the GAO says, “all show that, absent policy changes...

Tuesday, January 17, 2017 - 10:34 AM

An amazing thing happened in Washington recently. With the total national debt about to top $20 trillion and on an unsustainable long-term path, 376 members of the House of Representatives voted for one of two Fiscal Year 2017 budget resolutions that would add another $9.1 trillion to the debt over next 10 years.

One version was passed by the House with 227 Republican votes. Nine Republicans voted in opposition. The other version was a Democratic amendment that was defeated with 37 Democrats voting in opposition.

That means only 46 members of the House (9 Republicans and 37 Democrats) voted against adding $9.1 trillion to the debt.

Both budget resolutions contained roughly the same recommended levels of spending, revenues and debt. The main difference was that the Republican version contained a fast-track procedure (“reconciliation”) to begin the process of repealing the Affordable Care Act (“Obamacare”).

Earlier in the week, the Senate also approved a version of the budget resolution that would add $9.1 trillion to the debt with only one Republican, Rand Paul of Kentucky, voting in opposition.

It is not easy to vote against a budget resolution or amendment put forward by the party leadership, no matter how fiscally responsible that vote may be.

...
Monday, January 16, 2017 - 4:58 PM

While the budget resolution that congressional Republicans approved last week was designed to speed repeal of the Affordable Care Act (ACA), budget analysts and some lawmakers in both parties have expressed understandable concerns about such hasty action before a replacement health care plan is ready.

Over the weekend President-elect Trump raised further questions when he told The Washington Post he was almost finished with a plan designed to guarantee “insurance for everybody” but provided few details on how such an ambitious goal could be met.

As The Concord Coalition said in an issue brief last week: “As a matter of sound fiscal policy, it makes no sense to reverse the many spending and tax policies of Obamacare without knowing what comes next." Concord added that having a replacement plan ready is “the only way to avoid great fiscal uncertainty, showdowns and risk with regard to Obamacare repeal.”

...
Tuesday, January 10, 2017 - 11:24 AM

Any day now the total debt of the United States government will top $20 trillion.

That eye-catching number should prompt all of us to reflect on what the growing debt means for future generations (a lot) and whether our elected officials have a plan to deal with it (they don’t).

The most important thing to recognize about the $20 trillion debt is that its size in dollar terms is not as important as the fact that it is on an unsustainable track.

Two non-partisan agencies, the Congressional Budget Office (CBO) and the Government Accountability Office (GAO), have concluded that unless actions are taken to cut spending, raise taxes or both, the debt will continue to grow faster than the economy.

That’s bad for future generations because it will harm long-term economic growth, greatly increase interest payments on the debt, squeeze out other government spending and make it more difficult to respond to emerging, unmet or emergency needs.

We’re placing a growing burden on future workers and investing less in the economy that will be called upon to support that burden. This generationally irresponsible pattern will continue absent major changes that alter the long-term trend lines rather than simply postpone a crisis.

The $20 trillion figure actually...