June 30, 2015

The (Tab)ulation

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Monday, June 29, 2015 - 12:54 PM

Federal officials could take some lessons from the success that many state leaders have had in putting together responsible budgets, according to former elected officials and others at a recent  panel discussion in Washington.

“There is something about being a governor that seems to force hard choices that don’t always happen in Congress,”  said Robert L. Bixby, executive director of The Concord Coalition. Concord presented the panel discussion Thursday in connection with giving its 2015 Economic Patriot Award to former Indiana governors Mitch Daniels and Evan Bayh III.

In addition to the award winners, other panel members were Michael Castle, a former Delaware governor; Tim Penny, a former Minnesota congressman with experience in state budgeting as well, and Maya MacGuineas, president of the Committee for a Responsible Federal Budget. Bixby served as...

Tuesday, May 19, 2015 - 10:52 AM

At a forum last week on Capitol Hill hosted by The Concord Coalition and the Bipartisan Policy Center (BPC), experts from across the political spectrum shared their thoughts about retirement security in America. While several different policy proposals were discussed, one area of broad consensus was that Social Security is a critical component of retirement security -- and that lawmakers must act to strengthen the program.

Sen. Kent Conrad, who co-chairs the BPC’s Commission on Retirement Security and Personal Savings, kicked off the event by pointing out that "ultimately, almost all of us will rely on Social Security for the base of our retirement income needs."

"Social Security has serious financing problems," Conrad also said. "We've not really grappled with these issues, and the longer we wait, the more draconian the solutions will have to be."

However, he suggested an even broader reform agenda: “While fixing Social Security will involve tough decisions on revenues and benefits, we shouldn't just be looking at this through the lens of making the program solvent. Social Security, many of us believe, also needs to be modernized...

Thursday, March 12, 2015 - 1:15 PM

In less than three months, the highway bill enacted last July will expire and the program’s trust fund will face imminent depletion. At that point, Congressional failure to act would cause tens of thousands of infrastructure projects to be put on hold and would jeopardize construction jobs across the country.

The highway trust fund has historically operated on a “user pays” principle, where motor vehicle and fuel taxes paid by those who directly benefit from roads fund programs to maintain and improve the system. However, when Congress last raised the federal gas tax in 1993, lawmakers chose not to index it to inflation. As a result, the gap between revenue and expenditures has grown as the real value of the tax has declined.

As the chart above shows, there would be no shortfall in the highway trust fund today had its dedicated revenue source been allowed to grow with inflation. But instead of rectifying this problem or finding an alternative source of dedicated revenue, Congress has largely relied on fiscally irresponsible patches funded by...

Thursday, March 5, 2015 - 1:25 PM

The New Democrat Coalition, a group of 46 House members who describe themselves as the "pro-growth, fiscally responsible wing of the Democratic Party," have announced a new platform designed to strengthen the role of moderates in Congress.

Among the many items on their “American Prosperity Agenda,” the New Dems pledge to "pursue a long-term, pro-growth fiscal reform that prioritizes investments in our future." If the New Dems really want to make good on this plank of their platform, here are five things they can do in this Congress.

1. Propose a Responsible Sequester Replacement

Lower discretionary spending caps will go back into effect on Oct. 1, enforced by an across-the-board sequester. But these lower caps were never supposed to actually take effect: they were designed to be so irrational that lawmakers would be induced to agree on a so-called "grand bargain" that addressed the real long-term drivers of our debt.

Because Congress could not agree to curb entitlement spending or raise more revenue, the discretionary budget -- the part of the budget that funds the "investments in our future" supported by...

Tuesday, March 3, 2015 - 10:58 AM

A hearing by the House Ways and Means Social Security subcommittee last week drew attention to the impending insolvency of the Disability Insurance (DI) trust fund in 2016. While there were some disagreements, there was also a clear bipartisan consensus that something must be done to shore up the finances of Social Security.

The hearing featured testimony from Charles Blahous, a public trustee for Social Security, Ed Lorenzen of the Committee for a Responsible Federal Budget, and Webster Phillips from the National Committee to Preserve Social Security and Medicare.

All three agreed that, given the limited time between now and the exhaustion of the DI trust fund, it would be impossible to avoid a draconian cut in disability benefits without reallocating some of the payroll tax from OASI (the retirement program) to DI. Congress last reallocated the payroll tax in 1994.

However, both Blahous and Lorenzen strongly advocated that...

Monday, January 12, 2015 - 10:27 PM

A looming crisis is facing Social Security’s Disability Insurance (DI) program: Unless Congress takes action, the DI trust fund will run out next year and beneficiaries will suffer an across-the-board cut of 19 percent.

Some advocates suggest that a “simple fix” would be for Congress to shore up the DI trust fund by reallocating a portion of Social Security’s payroll tax revenue from the Old Age and Survivors Insurance program (OASI). But this approach would ignore the fact that OASI has growing problems of its own. 

Last week, as part of a rules package marking the start of a new Congress, House Republicans included a rule that would prohibit reallocating payroll taxes from OASI to DI unless steps are also taken to strengthen both funds.

While House rules are easily waived, this one points policymakers in the right direction. Social Security as a whole is on an unsustainable course, with its larger piece, OASI, running a cash deficit that is projected to grow larger and larger as the population ages and workforce growth slows. 

Disability Insurance is depended on, primarily by workers over age 50 because they are more vulnerable to medical conditions that impede work. This demographic continues to grow with the aging of the baby boomers and now consists of almost three in four DI...

Tuesday, December 2, 2014 - 11:23 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 - 9:33 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 - 1:55 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 - 10:36 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...