May 29, 2017

Washington Budget Report: Oct. 19, 2010

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No Inflation Means No Inflation Adjustment Is Necessary

Last week the government announced that there would be no cost-of-living adjustment (COLA) in Social Security benefits next year because the consumer price index it uses shows no inflation over the last two years. In fact, the index shows a slight decline in prices over the last two years.

But this has not stopped the grumbling of many retirees who want more money next year. So with an election just around the corner, the White House and some congressional leaders are suggesting that the government should simply write $250 checks to Social Security beneficiaries. The Concord Coalition opposes this plan as fiscally irresponsible and unfair to younger taxpayers.

In a new blog post Diane Lim Rogers, chief economist for the Concord Coalition, explains why she takes a dim view of the $250 plan, noting that a similar proposal came up a year ago. It is, she complains, simply pandering to one segment of the population. Nor would the money be a particularly effective form of economic stimulus, she says.

She reiterates her argument from a year ago: “Because seniors are guaranteed to receive Social Security benefits regardless of the strength or weakness of the economy, they more than others have had a significant part of their income protected in this recession, and they received special aid in the (February 2009) stimulus package, too.”

A Two-Year Budget Cycle Could Save Time, Improve Efficiency

Once again, the Congressional budget process broke down this year.  The fiscal year ended last month without Congress passing a budget resolution or a single appropriations bill for the new fiscal year.  Cliff Isenberg, chief budget counsel for The Concord Coalition, sees merit in a reform proposal -- biennial budgeting – that would convert the budget and appropriations process into a two-year cycle.

A two-year cycle alone is no magic bullet, Isenberg wrote in a recent article in The Hill’s Congress Blog. It is no substitute for making tough decisions. But as part of a comprehensive plan to reform the budget process and reassess government priorities, he writes, it would be a sensible step that could avoid repetitious debates on Capitol Hill and provide more time for better congressional oversight and long-range planning.

“Biennial budgeting could also improve the efficiency of agencies where preparing detailed budget documents has become a year-round process,” Isenberg adds. “If less time were spent preparing budgets, more resources could be shifted to long-term management and oversight.”

Treasury Releases Final FY 2010 Budget Totals

Last week the Department of the Treasury released final budget numbers for Fiscal Year 2010, showing that it ended with a deficit of $1.3 trillion. This is $122 billion less than the preceding year, but still one of the highest in history.

Revenues in FY 2010 totaled $2.2 trillion, which was $57 billion or 2.7 percent higher than in FY 2009. Outlays were $3.5 trillion, $64 billion or 1.8 percent less than in FY 2009.

Read more with Happy New Year

Fiscal Solutions: Too Important to Just Leave to the Politicians

Earlier this month in Portsmouth, New Hampshire, experts on the federal budget emphasized the need for public engagement, long-range thinking and a range of policy changes to meet the country’s fiscal challenges.

“We can’t solve this problem doing just one thing,” said Isabel Sawhill, a senior fellow in Economic Studies at Brookings. She and three other experts spoke at a series of programs in Portsmouth, the fourth city to be visited this fall by The Concord Coalition’s Fiscal Solutions Tour. The tour is supported by The Peter G. Peterson Foundation.

Scores of community leaders, business executives, students, retirees and others attended three Portsmouth programs on Oct. 7. Their questions to the panel of experts reflected a range of perspectives and a keen interest in learning what average citizens could do to foster constructive change.

“Public engagement is real important,” said Robert Bixby, Concord’s executive director. Because they currently have such distrust of politicians, he said, average citizens must become involved in the search for fiscal solutions. If they are not, he warned, they will not trust whatever proposals come from elected officials.

David Walker, former comptroller general of the United States, said he was launching an effort called the Comeback America Initiative to help citizens understand that the country must “change course or crash.”

Douglas Holtz-Eakin, president of the American Action Forum, echoed the call for the public to become more knowledgeable and involved in encouraging political leaders to take appropriate action soon: “We’ve got to get our candidates, our elected officials, to understand these problems, and make it ‘good politics’ to do the right thing. . . . We've lost the luxury of time.”

The next two Fiscal Solutions Tour stops will be in Philadelphia on Friday, Oct. 22, and in Chicago on Friday, Nov. 12.

Two Members of President’s Fiscal Commission Offer Views to Wisconsin Students

College students around Wisconsin heard different perspectives on the federal budget this month at a forum that featured two members of President Obama’s fiscal commission: U.S. Rep. Paul Ryan, ranking Republican on the House Budget Committee, and Andy Stern, former president of the Service Employees International Union (SEIU).

The President appointed the bipartisan National Commission on Fiscal Responsibility and Reform early this year and asked it to make recommendations by Dec. 1 on how to rein in federal deficits.

The panel of speakers in Wisconsin also included Joshua Gordon, The Concord Coalition’s policy director, and Luke Repici, chair of Concord’s Youth Advisory Board. Panel members spoke at the University of Wisconsin Milwaukee on Oct. 12, with the program broadcast live to university branches at Oshkosh, La Crosse, Green Bay and Wausau. The program was co-sponsored by Concord and the Wisconsin Fiscal Advisory Council.

In a blog post today, Repici says he was “encouraged to hear Congressman Ryan and Mr. Stern acknowledge not only the gravity of the situation we face, but also the critical need for an ‘adult’ conversation about our policy options going forward.” He also says he would like to see the fiscal commission use the release of its report in December  as “a teaching moment -- an opportunity to shine a light on our nation’s unsustainable fiscal path.”

Don't Burden Our Children with Debt

Many baby boomers put a high priority on “investing” in their children by encouraging good health habits, getting them to doctors and dentists for regular check-ups, and preparing them for college.

But Diane Lim Rogers, The Concord Coalition’s chief economist, points out a contradiction: These same parents often ignore the growing burden of federal debt that they will be passing on to the next generation.

“That is why any parent should be particularly concerned about the budget outlook: it directly undermines all of our personal efforts to provide for our kids and set them on that good path,” Rogers says in a recently published monograph for a conference at the Naval War College.

Rogers also argues that Americans have become so accustomed to budget deficits that they have lost sight of the connection between what we want from government and the taxes we are willing to pay: “Often people who say they want a smaller government really don’t want a smaller government; they just want lower taxes."