December 20, 2014

The (Tab)ulation

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Tuesday, December 2, 2014 - 10:23 AM

Lawmakers are now focusing on extending a series of tax provisions mainly benefiting businesses for one year after a much larger deal that would have added hundreds of billions of dollars to the deficit collapsed last week.

Initially, lawmakers were considering making a few temporary provisions permanent while extending most other provisions through 2015 -- without offsetting a single dollar of lost revenue. If Congress were to pass legislation resembling that deal, it would have added roughly $530 billion to the deficit over 10 years.

These provisions -- collectively known as “tax extenders” -- are temporary measures that, like other tax expenditures, essentially subsidize certain special interests or activities. Making them permanent, or even just extending them again without offsetting the lost revenue, would be fiscally irresponsible. Any tax provision that decreases revenue should be offset by eliminating other provisions in the tax code or cutting spending. Unfortunately, neither the House nor the Senate seem to be concerned with finding offsets, even though offsets are required under pay-as-you-go (PAYGO)...

Tuesday, November 18, 2014 - 8:33 AM

Part of the long to-do list for the lame duck Congress is deciding whether to authorize new spending for operations against ISIS while setting broader defense priorities in a constrained fiscal environment.

The administration recently requested an additional $5.6 billion in Overseas Contingency Operations (OCO) funding for Fiscal Year 2015 to fight ISIS.  

The overseas contingency fund generally supports activities related to immediate war efforts and is exempt from federal spending caps. The new $5.6 billion request includes money for U.S. military advisors and to equip and train Iraqi and Kurdish soldiers.

Current funding for operations against ISIS is set to expire on Dec. 11, along with the continuing resolution keeping the government open.

Earlier this year the administration requested $65.8 billion for OCO spending for Fiscal Year 2015 -- $58.6 billion for the military and just over $7 billion for the State Department. The total request is $26 billion less than...

Friday, November 7, 2014 - 12:55 PM

Last Wednesday, President Obama requested approximately $6.2 billion to combat the Ebola epidemic. As Congress examines and debates this proposal, it is an important opportunity to reexamine our government’s budgetary policies.

Whether it’s Ebola, ISIS, or the child migrant crisis, our nation faced a number of unforeseen challenges this year that required action (and emergency spending) by the federal government. These challenges serve as reminders of a key underlying purpose of fiscal responsibility: To enable the country to deal with the unexpected.

We can’t predict the future. But having lower debt and deficits can give us the fiscal flexibility to act quickly when crises arise. Alternatively, irresponsible budget policies leave the government with higher borrowing costs and fewer resources to deal with changing circumstances.

Furthermore, responsible budgeting isn’t just about keeping spending in line with revenue. It’s about making sure our tax and spending policies reflect our priorities as a nation.

If federal investment in hospital and emergency preparedness is important to us, for example, we must be...

Monday, October 27, 2014 - 9:36 AM

An interesting poll this month in the Des Moines Register shows that Democrats and Republicans have very different opinions on the relative importance of the federal deficit versus unemployment and jobs as campaign issues. It might be, however, that the two sides just have different ways of expressing concern over the same issue: our nation’s economic future.

Almost one-quarter of Republicans in the poll of likely Iowa caucus-goers ranked the deficit as the top issue (23 percent). Only 11 percent of Republicans ranked unemployment/jobs as the top issue.

On the Democratic side, the numbers were nearly the reverse with 21 percent of likely caucus-goers ranking jobs as their top priority and 9 percent ranking the deficit first.

Taken together, roughly one-third of likely caucus-goers in both parties ranked these two issues at the top. 

The Register poll, though limited to Iowans, suggests that there could be a path to consensus if Democrats and Republicans reject the premise that concern about the deficit implies indifference to unemployment and jobs, and vice versa.

It is possible, and indeed it is perfectly...

Friday, October 17, 2014 - 8:02 AM

The administration trecently confirmed a bit of good news about the last fiscal year: the government borrowed substantially less than it did the year before.

But this drop, in line with a previous projection by the Congressional Budget Office (CBO), is no reason for complacency. The additional borrowing has still pushed the federal debt to well over $17.8 trillion, and the government remains on track to boost that by $7.2 trillion or more in the coming decade.

The final budget figures for Fiscal 2014, which ended Sept. 30, show the deficit at $483 billion, according to a joint statement by Treasury Secretary Jacob Lew and Office of Management and Budget Director Shaun Donovan. That figure compares to a $680 billion deficit in Fiscal 2013.

Lew and Donovan attribute the difference to higher government receipts and stable outlays. Receipts rose to 17.5 percent of GDP, up from 16.7 percent in 2013. Spending, while higher in absolute dollar terms, fell to 20.3 percent of GDP in Fiscal 2014. That is down from 20.8 percent the previous year.

The joint statement says spending “was lower than the previous year for many agencies and programs,” including the...

Tuesday, October 7, 2014 - 9:11 AM

On a recent day in Florida, hundreds of people gathered to examine federal budget issues, question former members of Congress and push for sustainable fiscal policy. For me, that sparked hope for our nation’s future, even in the face of mounting federal debt and changing demographics.  

The Concord Coalition and Fix the Debt partnered with two universities and eight former congressmen on Sept. 23 to present the programs and to help give members of the Millennial generation a larger voice on fiscal issues.

About 200 people -- mostly high school students -- attended a  program during the day that was part of the Lou Frey Institute’s fall symposium at the University of Central Florida in Orlando. That evening about 50 people attended a fiscal forum on the University of South Florida’s Tampa campus.

The Orlando program featured a panel that included Reverend John Allen Newman and former U.S. House members Bill Zeliff, Jason Altmire, Allen Boyd, Cliff Stearns and Tom Tauke.

“No political issue is more critical than the federal debt and deficit,” Altmire said. Boyd echoed that sentiment, saying today’s fiscal issues will determine what kind of America we and the next generation will live in.

Added Tauke: “The longer we wait to...

Tuesday, September 23, 2014 - 8:18 AM

In 2011, Medicare spent $170 billion, or 28 percent of its total expenditures, on services for beneficiaries in their last six months of life. But a new report says many of these patients are not receiving the care they want and are undergoing costly and unnecessary tests, procedures, and hospital visits.

Revamping the end-of-life care system in the U.S. could better satisfy the wishes of patients and families and make health care more affordable.

The report, “Dying in America,” was put together by a 21-member commission of doctors, nurses, religious leaders and aging experts. The panel was appointed by the Institute of Medicine, an independent research arm of the National Academy of Sciences that provides information to the public and policymakers.

The commission’s co-chairs are David Walker, former Comptroller General of the United States and former CEO of the Comeback America Initiative, and Dr. Philip A. Pizzo, a former dean of the Stanford University School of Medicine.

The report points...

Tuesday, August 26, 2014 - 10:05 AM

Our nation’s reliance on a 24-hour news cycle has bred an environment focused on quick stories with tag lines to keep us engaged. Listening to a recent panel discussion, I realized that the emphasis on sound bites needs to change if we are to have any hope of improving the nation’s fiscal footing. Enacting sustainable fiscal policy will take far more than a superficial exchange of partisan one-liners.

The panel discussion, which took place earlier this month at Dartmouth College in Hanover, New Hampshire, focused on the federal budget, the national debt and the political roadblocks to fiscal reform. The panelists were Robert Bixby, executive director of The Concord Coalition; Richard Swett, a former ambassador to Denmark who also served in Congress, and Charles Arlinghaus, president of The Josiah Bartlett Center for Public Policy.

The event was co-sponsored by Concord, the Bartlett Center, the Campaign to Fix the Debt, the Millennial Action Coalition and the Nelson A. Rockefeller Center for Public Policy.

Arlinghaus said that fiscal issues are “difficult to deal with, and do not easily fit in a 10-second sound bite.” He noted that human nature itself is an obstacle to fiscal reform because people will need to give up something they currently have. Politicians are reluctant to press difficult changes on the...

Tuesday, August 5, 2014 - 9:31 AM

For several years we’ve heard a familiar tune from the Social Security trustees: Its programs are unsustainable in their current form but insolvency is still years away. This time is different because the next Congress will face a deadline to act.

Social Security pays the benefits of retirees and disabled workers through a combined 12.4 percent payroll tax it collects from wage earners and their employers. Of that, 10.6 percent is obligated to pay Old Age and Survivors Insurance (OASI) benefits and 1.8 percent is obligated for Disability Insurance (DI). Additionally, income taxes collected on these benefits are funneled back into the program.

In years when more money was collected through these taxes than was paid out in benefits, the respective Social Security trust funds were credited with surpluses. When promised benefits exceed tax revenue, Social Security is authorized to continue paying full benefits until those trust fund credits run out. For Disability Insurance, that time will be upon us in 2016 when its trust fund becomes “insolvent.”

According to the trustees, Congressional failure to act by then will lead to an automatic, across-the-board benefit cut of 19 percent for disability insurance beneficiaries. Such a steep cut would impose...

Monday, July 14, 2014 - 10:18 AM

With the economy continuing its slow recovery, the administration’s Mid-Session Review budget projections released on Friday show little change in the overall outlook. Under the President’s policies, the Office of Management and Budget (OMB) anticipates a deficit for the current fiscal year of $583 billion, down $66 billion from the administration’s March projection and far below the trillion-dollar-plus deficits that came with the Great Recession.

It is important to remember, however, that the federal debt -- high by historical standards, at nearly $17.6 trillion -- remains a deep concern, even with quite favorable economic and political assumptions.

Under its proposed budget, the administration says, the 10 annual deficits over the next decade would add another $5.5 trillion to that total. That is up by nearly $600 billion over the March budget.

While the deficit is lower than the earlier projection for 2014-16, it is higher in all subsequent years. The biggest change is that revenues are now projected to be $760 billion lower over the coming decade.

As a result of higher deficits in the out years, debt held by the public is now projected to be slightly higher (72 percent of GDP) in 2024 than projected in the March...