May 23, 2015

Posts on federal budget

Subscribe to this feed Subscribe to this feed

 

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, March 17, 2014 - 12:46 PM

House Ways and Means Chair Dave Camp (R-Mich.) remarked recently that there are some similar ideas in the tax reform proposals that he and President Obama have suggested. Normally overlap between Republican and Democrat ideas is a welcome occurrence.

But at least one feature in the Camp and Obama tax reform plans is an exception: Their plans to shore up the Highway Trust Fund by using one-time revenue from changes to the corporate tax system.

Unless lawmakers do something, later this year the largest part of the Highway Trust Fund -- the Highway Account -- will be unable to meet all of its obligations. The Congressional Budget Office recently projected that the entire trust fund will become insolvent in 2015.

While lawmakers need to come up with a solution, using short-term revenues from tax changes on unrelated corporate profits earned abroad is not a good approach and would only delay...

Monday, February 24, 2014 - 3:52 PM

As we await the full release of the President’s Fiscal Year 2015 Budget, some important specifics have been slowly made public. It looks like this budget, as is usually the case, will contain a mixture of sensible reforms and politically expedient omissions.

The first bit of news is that this year’s budget will not contain a proposal -- included last year -- to switch the government-wide formula for measuring inflation to a more accurate index called the “Chained CPI.” 

Switching would save money in numerous spending programs, including Social Security, that provide cost-of-living increases. That’s because the government’s current formula, according to most economists, overstates inflation. The Chained CPI addresses this problem while ensuring that the value of federal benefits still keep up with citizens’ purchasing power.

Because tax brackets are indexed to inflation, switching to the Chained CPI would also increase revenue.

The President’s budget does not have the force of law and does not normally form the basis for the congressional budget resolution. It is a stylized world in which the administration proffers a multi-faceted policy course and projects where that would lead the nation fiscally.

In that world last year, the administration rightly identified that the country has a...

Friday, February 14, 2014 - 11:46 AM

The House Budget Committee last week approved a bill on a bipartisan 22-10 vote that would switch the annual congressional budget process to a biennial (two-year) cycle.

The legislation, introduced by Rep. Reid Ribble (R-Wisc.), a committee member, has attracted 100 co-sponsors, roughly a third of whom are Democrats. The Concord Coalition has commended Rep. Ribble for pursuing this option.

The difficult struggle each year to pass appropriation bills has made it harder for lawmakers and federal agencies to focus on structural problems in the budget and develop more responsible long-term fiscal policies.

Ideally, biennial budgeting would help Congress improve its allocation and oversight of discretionary spending, which makes up one-third of the budget.

During the first year of a 2-year cycle, lawmakers would set funding levels for federal agencies. Congress would then use the second year to concentrate on oversight, examining how federal agencies administer various programs, how effective the programs are and whether...

Friday, January 31, 2014 - 11:34 AM

For those interested in a vision of fiscal sustainability, the State of the Union Address was a major disappointment.

President Obama noted that the deficit has been cut in half, which is a positive development, but he offered no strategy for making further progress. At $680 billion and 4.1 percent of the economy, last year’s deficit was still quite high. More troubling is that fiscal policy remains on an unsustainable path -- a projection that deserved at least some passing mention.Obama briefly acknowledged that more could be done to bring down the deficit “in a balanced way,” but the general sense was that it was time to move on.

Few would dispute that creating new jobs is a top priority, but that task is compatible with a continued focus on fiscal sustainability. Indeed, a properly phased-in fiscal sustainability plan would improve the economic outlook. Moreover, the budget agreement hailed by the President did little to address either.  

When the President did mention fiscal issues in his speech it was mostly to promote new spending or tax cuts with no cautionary reminder that even a “pay-as-you-go” standard will...

Friday, January 17, 2014 - 1:52 PM

Many state and local governments have done little to address growing structural problems in their budgets that have been aggravated by federal deficit-reduction efforts, according to the State Budget Crisis Task Force.

The bipartisan organization released its final report last week, reiterating a stark warning from its previous reports: “The existing trajectory of state spending, and administrative practices cannot be sustained.”

Former Federal Reserve Chair and Concord Coalition board member Paul Volcker co-authored the report along with Richard Ravitch, a former lieutenant governor of New York. They urged state and local governments to deal with their budget problems and suggested that federal policymakers should focus more attention on how their own deficit-reduction efforts will impact other levels of government.

The task force’s work has concluded with this report, but Volcker plans to start a new organization, the Volcker Alliance, that will follow up on the recommendations and issues raised by the task force.

The task force recommends that Congress create an office to monitor and analyze how federal actions will affect state and local budgets, possibly as part of the Congressional Budget Office.

...

Tuesday, January 14, 2014 - 11:14 AM

A new report by the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) found that health care spending over the past four years grew at the slowest rate recorded in more than half a century. The spending grew by 3.7 percent in 2012; since 2009 the annual rate has been between 3.6 percent and 3.8 percent.

That's down from the 5.5 percent average increase over the past decade, and well below the average annual increase of 11 percent observed in the 1980s and 13.1 percent average annual increase observed in the 1970s.

The recent slower growth contributed to the first reduction in health care costs as a share of the economy in 15 years, down to 17.2 percent of GDP in 2012 from 17.3 percent in 2011.  

It is good news that we are bucking the historical trend on health care cost growth. But the causes for this are not completely understood and thus we have uncertainty as to the sustainability of the trend.

Several factors are at work, including: the last recession and subsequent slow recovery, programs and policies initiated by Obamacare, structural changes in the health care...

Thursday, December 12, 2013 - 10:12 AM

President Obama hailed the two-year budget deal reached by House Budget Committee Chair Paul Ryan (R-Wis.) and Senate Budget Committee Chair Patty Murray (D-Wash.) as a “good first step.”

If he meant a good first step toward broader reforms needed to put the nation’s finances on sounder footing for the long-term, let’s hope he is right.

It is not clear, however, that Capitol Hill leaders, or the President for that matter, have any plans to follow up this very modest achievement with anything more.

Under the terms of the agreement, spending caps for appropriations would be adjusted upward for 2014 and 2015, resulting in an outlay increase of $62 billion over 10 years, according to the Congressional Budget Office (CBO)

That increase, however, is calculated from the “sequestration” level that neither party ever intended to go into effect. The new caps would still be lower than the original caps put in place by the Budget Control Act of 2011 and lower than the levels under the Simpson-Bowles plan or the original Ryan budget.

The spending increase would be more than offset by an array of future cuts in mandatory (non-appropriations) spending and higher user fees together totaling $78...

Friday, December 6, 2013 - 3:19 PM

Extending emergency unemployment compensation for another year would add 200,000 jobs but carries a price tag of $25 billion, according to an analysis released recently by the Congressional Budget Office (CBO). Such an extension now appears to be a central focus of negotiators trying to reach a budget deal before Congress adjourns for the year.

Emergency unemployment compensation (EUC) provides more “bang for the buck” than many other policies aimed at improving the economy. It provides an immediate surge in economic activity due to recipients quickly spending their benefits on consumer goods and services, which boosts aggregate demand and induces businesses to increase production and hire more workers.

CBO noted that part of this positive effect is offset as some workers reduce the intensity of their job searches in response to the extension of benefits.

Emergency unemployment compensation was approved in 2008 as the unemployment rate was rapidly rising due to the recession. It provides at least 14 additional weeks of benefits to individuals who have exhausted...