August 1, 2014

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Monday, July 14, 2014 - 11:18 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...

Monday, July 7, 2014 - 11:31 AM

In a move that many saw as inevitable unless lawmakers acted, the Department of Transportation announced recently that the dwindling Highway Trust Fund would have to begin delaying payments to state governments in August.

In a press release, Transportation Secretary Anthony Foxx said “there is still time for Congress to act on a long-term solution,” adding that he hoped “Congress will avert this crisis before it is too late.”

Delayed payments would mean financial difficulties for the states, postponement of planned highway projects, and delays on the projects that are already underway. Yet Washington lawmakers continue to struggle over how to replenish the trust fund.

Foxx also said Tuesday there is “no good option when we're...

Saturday, June 28, 2014 - 9:58 AM

Short-term improvements in the federal government’s finances have led to widespread complacency in Washington about fiscal reform.

But a panel discussion this week highlighted the continuing need for such reform, with former members of Congress lamenting the sharp political divisions within the two major parties as well as between them that hinder constructive change.

“We have a fiscal challenge which is really a political challenge which really is a societal challenge. . . .the two parties are more polarized than ever before,” said Evan Bayh, a former senator (D-Ind.). “The Democratic Party has moved further left, the Republican Party has moved even further right.”

Mike Castle, a former congressman (R-Del.), sounded a similar theme, noting the pressures faced by moderates in both parties. “The Congress of the United States today,” he said, “is a difficult place.”

The panel discussion took place in Washington on Wednesday night, when The Concord Coalition honored Senators Dick Durbin and Tom Coburn with the 2014 Paul E. Tsongas Economic Patriot Award.

Joining Bayh and Castle for the panel discussion were former senator Judd Gregg (R-N.H.), former House member John Tanner (D-Tenn.) and Concord Coalition Executive Director Robert L. Bixby.

Castle and Tanner are Concord’s co-...

Tuesday, June 24, 2014 - 10:00 AM

Following last year’s bipartisan budget agreement, this was supposed to be the year of a harmless fiscal ceasefire on Capitol Hill. Unfortunately, the ceasefire is becoming a retreat for fiscal responsibility.

On issues ranging from tax and entitlement reform to highways and veterans health, Congress has backtracked, ducked and gimmicked its way around hard choices. This pattern does not bode well for any attempt to put the budget on a sustainable track after the fall elections.

Backing away from military retirement reforms. The first sound of retreat came in February with overwhelming votes in the House and Senate to repeal a provision included as part of their budget agreement just a month earlier that limited cost-of-living adjustments for working-age military retirees.

The minor change supported by the Pentagon would not have saved a huge amount of money (roughly $7 billion over 10 years) but represented the type of difficult choice necessary to reduce defense spending. However, in the face of complaints from veterans groups, Congress quickly backed down. To save face, lawmakers replaced the savings on paper with unspecified automatic cuts 10 years from now, but it was still a clear case of kicking the can down the road.

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Friday, June 20, 2014 - 1:44 PM

More than 7,000 students, retirees, political leaders and other citizens have played The Concord Coalition’s updated Federal Budget Challenge since we put the updated version online a month ago.

The exercise lets players decide for themselves how they would reduce the nation’s projected budget deficits over the next 10 years by choosing among 40 different policy options, each with its own price tag or savings.

The updated version, built with our partners from the California-based non-profit Next Ten, takes into account what policymakers have done to reduce the deficit over the last two years and showcases several additional options that are available for further deficit reduction.

The Federal Budget Challenge, based on our interactive group exercise Principles and Priorities, also provides participants the opportunity to learn about some of the policy options available to create a more sustainable fiscal future.

In the updated Federal Budget Challenge, the most unpopular choice by players thus far is an increase in discretionary spending -- the part of the budget Congress...

Tuesday, June 17, 2014 - 9:19 AM

The Congressional Budget Office (CBO) cost estimate for the Senate’s expansion of veterans’ health care has been getting a lot of attention from budget groups and members of Congress. As illustrated by the Committee for a Responsible Federal Budget, when fully implemented, the part of the legislation that provides broad access to care providers outside the VA system might cost up to $50 billion a year -- more than doubling what is currently spent for veterans’ health. This new “mandatory appropriation” would increase the deficit by more than the prescription drug benefit under Medicare Part D.

While there has been a lot of misplaced consternation among members of Congress about CBO’s scoring accuracy, there has also been some constructive discussion about the need to find offsets for the new spending. However, there has not been nearly enough discussion about whether the entire congressional strategy and this rushed “fix” are misguided.

The first problem is that Congress, in trying to rapidly...

Monday, May 5, 2014 - 4:00 PM

A book titled “Dead Men Ruling” is not the place you would expect to find an optimistic message about our nation’s future. That is the case, however, with a new book from budget expert Eugene Steuerle of the Urban Institute. The critical connection he draws between renewed fiscal freedom and generational fairness casts the budget debate in a far more important context than deficit reduction for its own sake. This larger theme is one that The Concord Coalition has long embraced.

Despite the dismal fiscal outlook, which portends rising deficits and debt in perpetuity, Steuerle argues that “we no more live in an age of austerity than did Americans at the turn of the twentieth century.... Conditions are ripe to advance opportunity in ways never before possible, including doing for the young in this century what the twentieth did for senior citizens, yet without abandoning those earlier gains.”

The key to realizing these opportunities, he says, is “breaking the political logjam that…was created largely by now dead (and retired) men.”

As Steuerle puts it, “both parties have conspired to create and expand a series of public programs that automatically grow so fast...

Monday, April 21, 2014 - 11:17 AM

All dressed up and nowhere to go.

That’s the sad situation with the federal budget process.

We now have 10-year budget proposals from President Obama and the House of Representatives. They are quite different and would be very difficult to bring together in the best of circumstances. That doesn’t really matter, however, because there is nothing in the process to force a negotiation.

The President’s budget is merely advisory, although it has value in providing the administration’s vision of fiscal policy over the next 10 years.

The House budget is only one essential element in producing a concurrent congressional budget resolution. The other essential element is a budget from the Senate. And that is where the process ends this year because the Senate has decided not to write its own budget.

Some may consider this a politically smart move on the part of Senate Democrats because it allows them to take shots at the House Republicans’ budget, distance themselves from unpopular aspects of the President’s budget and avoid taking a stand on anything that might prove inconvenient in this fall’s elections.

Others may say that having a budget...

Tuesday, April 8, 2014 - 9:39 PM

Yesterday, the Centers for Medicare and Medicaid Services (CMS) released the 2015 government payment levels for the Medicare Advantage private insurance plans that are offered to seniors as an alternative to traditional Fee-for-Service (FFS) Medicare. In a bit of a surprise, CMS projects that total payments will increase by about 0.4 percent despite earlier CMS guidance suggesting payments would be cut by 1.9 percent.

The change follows months of lobbying by the private insurance industry -- fearful of lost profits -- along with members of Congress from both parties who are fearful of being attacked for cutting benefits to seniors.

Medicare Advantage plans have seen annual cuts to their payments from the government through a process set in motion by the Affordable Care Act (ACA), and cuts are scheduled to continue (despite the slight increase for next year). The payment reductions were intended to fix a fundamental financing disparity between FFS Medicare and the Medicare Advantage program; insurers are paid more per beneficiary than it would cost the government if the beneficiaries remained in FFS. 

The negative reaction from politicians and interest groups to these continual cuts...

Tuesday, April 8, 2014 - 12:28 PM

About a hundred people in Colorado’s 1st Congressional District tried their hands Saturday at federal deficit reduction through The Concord Coalition’s Principles and Priorities exercise.

Most eventually succeeded in slicing deficits over the next decade by several trillion dollars. It wasn’t easy, but their efforts highlighted the benefits of open discussion and a willingness to compromise. U.S. Rep. Diana DeGette hosted the event.

The participants gathered Saturday morning at Columbine High School in Littleton. They included people from across the political spectrum: Democrats, Republicans, conservatives, liberals and libertarians.

Divided into a dozen groups of five to nine people, they took on the role of members of Congress in considering dozens of budget options as scored by the Congressional Budget Office. The options fell into four categories: general government spending; military and homeland security; health care and Social Security; and revenue.

After a welcome by Rep. DeGette and a PowerPoint briefing on the federal budget’s history and trends, the participants dove into their assignment....