July 4, 2015

Posts on federal budget

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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...

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...

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...

Friday, October 17, 2014 - 9:02 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 - 10:11 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, August 26, 2014 - 11:05 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...

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...

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.

...