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Monday, February 11, 2013 - 10:24 AM

By David M. Walker

Over the past 20 years The Concord Coalition has worked to build an impressive grassroots network. Given our nation’s poor financial condition and fiscal outlook, it is more important than ever to inspire action within that grassroots network. The next three months are critical in regards to addressing our nation’s huge and mounting fiscal challenge.

There are many fiscal issues that need to be resolved in the next 100 days, and the action, or lack of action, taken will largely determine whether a fiscal “Grand Bargain” is going to be reached in 2013. While the debt ceiling was extended until May 19, the sequester (across the board defense and other spending cuts) will take place on March 1, unless there is congressional action. Presently, it does not appear that Congress will reach a deal to avert the sequester, but even if it did, there are other key deadlines ahead. The continuing resolution that is funding all government agencies expires on March 27, and that’s not even on Congress’ radar at the moment. A joint budget resolution is supposed to be achieved by April 15, and the debt ceiling issue will come up again after that.

These issues must be dealt with, and we must quit moving from one...

Monday, January 28, 2013 - 9:36 PM

The Concord Coalition, which has long viewed public engagement as essential to U.S. fiscal reform, is partnering with the Campaign to Fix the Debt to present  a series of public forums around the country in the coming weeks.

This joint project will focus its efforts on ten programs in six states: Colorado, New Hampshire, Iowa, Wisconsin, Florida and Tennessee. These events,  open to the public, will take a variety of forms.

We at Concord are delighted to be involved in a project that we believe can help lay the groundwork for comprehensive fiscal reform in the near future. The Campaign to Fix the Debt, which was launched last year, has been working with business leaders, political figures and hundreds of thousands of citizens from across the ideological spectrum who want to see elected officials step up to solve the nation’s fiscal challenges. The impact is being felt in Washington already.

The speakers at the upcoming events will include both national and regional experts on the rapid growth of the federal debt and related issues, including the need for fundamental reforms of the tax system and entitlement programs. There will also be an emphasis on the need to curb future increases in health care costs. Some of the speakers hold either...

Friday, January 18, 2013 - 2:32 PM

In his press conference this week, President Obama suggested that policymakers only need to pass another $1.5 trillion worth of deficit reduction, on top of the $2.5 trillion already enacted, to stabilize the growth of the nation’s debt and, in his words, “finish the job.”

The Center on Budget and Policy Priorities and The Committee for a Responsible Federal Budget, two well-respected fiscal policy organizations, basically agree with the President’s math, and there is nothing to quibble about in those calculations regarding stabilizing the debt.

However, that level of deficit reduction would hardly mean the “job is finished.” In fact, the whole idea that we can pinpoint a specific amount of deficit reduction necessary within a 10-year time frame can be a distraction from the fiscal sustainability conversation we need to have.

Getting caught up in exactly when the debt-GDP-ratio stabilizes, or whether we might miss that goal by a few percentage points at the end of the 10-year window, assumes a precision in economic and technical estimating that no entity actually possesses (even the CBO, whose respect and skill in these matters is second-to-none).

Our main emphasis...

Monday, January 7, 2013 - 12:00 PM

On his way out the door, retiring Senate Budget Committee Chairman Kent Conrad (D-N.D.) had a lot to say. It was a final reminder -- he called it a challenge -- from one of the Senate’s foremost deficit hawks of why deficits matter and why much more must be done to do bring them under control.

Conrad voted for the fiscal cliff deal in the early hours of Jan. 1, but he explained that he did so only because going over the cliff would risk a recession and higher unemployment. Moreover, 2 million people already out of work would have lost unemployment benefits.

And yet, Conrad said, “I hate this agreement. I hate it with every fiber of my being because this is not the grand bargain I had hoped and worked for and believe is so necessary to the future of the country.”

While Conrad and many others, including The Concord Coalition, had pushed for a deal that would start the nation down the road to a more sustainable fiscal future, the end result was “not, by any standard, a deficit reduction plan,” he said. “As necessary as it is, no...

Tuesday, January 1, 2013 - 3:46 AM

Once again we have a political punt.

With no time left on the clock, Senate Democrats and Republicans have approved a deal to avoid the most immediate consequences of the so-called “fiscal cliff.” The defining feature of the deal, however, is that it leaves much more to be done.

The deal -- which the House must still vote on -- requires no hard choices and solves no difficult problems.  

There is no entitlement reform, no tax reform and no framework or process for addressing these critical needs in 2013. Meanwhile, the indiscriminate and disproportionate discretionary spending cuts mandated by last year’s Budget Control Act are postponed, creating a new cliff.

And with no increase in the statutory debt limit, it still looms as the next self-imposed crisis to remind everyone of how dysfunctional the legislative process has become on Capitol Hill.

So we have a deal, but not a grand bargain. The best that can be said for it is that it smoothes out a portion of the cliff. That will benefit the economy in the very near term, but aside from some relatively minor tax increases on the highest of income earners, the net result of the fiscal cliff deal is to preserve an unsustainable status quo. 

The unfinished business has not gone away. It has simply been handed off to the new...

Friday, December 28, 2012 - 4:08 PM

For the third week in a row, I will be discussing the nation’s fiscal challenges on C-SPAN’s Washington Journal, this Sunday at 7:45 a.m. (Here is the first week, and here is the second.) Stan Collender, who among other things writes the Fiscal Fitness column in Roll Call and the Capital Gains and Games blog, will again be my co-panelist.

One thing that might help you get ready for another fun hour of viewing would be to play The Concord Coalition’s budget exercises to see how you would replace the fiscal cliff.

Our online exercise, The Federal Budget Challenge, is a great single-player experience. If you want fun for the whole family gathered for the holidays, you can print out our pen-and-paper exercise Principles and Priorities. In either case...

Monday, December 17, 2012 - 9:56 PM

With the latest exchange of offers, President Obama and House Speaker Boehner have moved closer to a deal that would reduce the deficit by about $2 trillion over the next decade.  On the surface, the split between spending cuts and tax increases seems relatively even and this is likely to be a point of resistance for those who argue for greater spending cuts.  Lost in the rhetoric, however, is that some policies traditionally defined as “tax increases” are really “spending cuts.”

If that fact could be acknowledged by both sides, they might find that bridging the gap is an easier task.

The current tax code is riddled with "tax expenditures" -- exemptions, deductions, credits, exclusions and preferential rates that function much like entitlement spending.

At a recent public forum convened by Strengthening of America – Our Children’s Future, former Treasury Secretary Larry Summers explained, "There are long-standing privileges in the tax code that perhaps should be thought of as misguided entitlements and...reform of entitlements should also extend to the tax entitlements that benefit many of those who are best off. If we take that approach and we recognize that the idea of expenditure, like the idea of entitlement, is a notion that applies both to what has traditionally been the spending side of...

Tuesday, November 27, 2012 - 11:50 AM

The long-standing impasse on tax policy has basically boiled down to this: Democrats want more revenue, raised entirely from households with incomes over $250,000. Republicans don’t want any new revenue, and especially not from higher tax rates on the rich. It seems like an irreconcilable difference.

But if you get beyond the predicable partisan rhetoric there is room for optimism that a deal can be reached.

Republicans have begun to shed their single-minded devotion to anti-tax advocate Grover Norquist’s “no new taxes pledge”. Notable examples are Senators Bob Corker (R-TN), Saxby Chambliss (R-GA) and Lindsey Graham (R-SC) along with Representative Peter King (R-NY).

Many Republicans aren’t so enamored with Grover’s “no new taxes” pledge these days, because they don’t agree with the “no new revenue” interpretation. These Republicans recognize the economic difference between raising revenue by raising marginal tax rates, and raising revenue by broadening the tax base and reducing “tax expenditures”– the subsidies in the tax code. The former increases the size and influence of government; the latter reduces it.

For any Republican who feels the same way that Corker, Chambliss, Graham and King do, the common ground they share with the Obama administration on tax policy and...

Wednesday, November 21, 2012 - 12:34 PM

At last week’s 105th annual conference of the National Tax Association in Providence, R.I., former Clinton Treasury secretary and Obama economic advisor Lawrence Summers explained that the tax reform needed today is very different from the Tax Reform Act of 1986.
 
"It seems to me that the tax community will fail the broader economic community if, at this crucial juncture that lies ahead over the next several years, it remains entirely preoccupied with its most traditional concerns," Summers said at the conference, which I attended. "There are a number of aspects about the current context that stand out as quite unique -- very different from where the world was in 1986 and at most other moments when tax reform has been a prominent area of work." Summers sorted these differences into four factors:
 
(1)    Now our economy is constrained on the demand side, operating below its full productive capacity so that we are looking for policies that can quickly boost the aggregate level of economic activity. That is in contrast to the full-employment economy of the mid-1980s, when the focus was mainly on improving efficiency in the allocation of economic activity to promote more longer-term, supply-side growth.

(2)    In recent years, the income...

Monday, November 19, 2012 - 11:50 AM

Signals from the first post-election budget meeting between the President and congressional leaders, which took place at the White House on Friday, were very good.

Congressional leaders of both parties appeared together after the meeting. There were no lines in the sand, no threats, and no impugning each other’s motives.

Beyond the low bar of politeness, President Obama and his guests appeared to be focused on the right priority -- achieving a long-term fiscal plan and not just a quick fix to the immediate pressure of the “fiscal cliff.”  

They spoke of a two-step process with a down payment on deficit reduction this year while putting together a framework for a long-term deal to be enacted next year along with a credible back-up mechanism -- more credible than a new cliff -- in case Congress fails to act. That basic approach has been recommended by many outside observers, including The Concord Coalition.  

Topping off the pre-Thanksgiving cheer was that a consensus seems to have been reached on the fundamental point that everything must be on the table, including revenues and entitlement spending.

We're still far from a long-term “grand bargain,” let alone a way around the fiscal cliff, but this is an essential starting point for fruitful negotiations.

Whether the...