October 21, 2014

Posts on federal budget

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Monday, April 8, 2013 - 11:25 AM

Opening Day for the baseball season has come and gone in Washington but for the budget season it comes on Wednesday, when the President officially unveils his Fiscal Year 2014 proposals. Will he get a hit or be sent back to the bench?

Early indications are that he will at least put the ball in play, and that’s a promising start.

Some Republican leaders in Congress have already declared, in effect, that the President’s budget is a whiff or a foul ball at best. Even among Democrats, there are those who seem to regard the forthcoming budget as a sacrifice bunt because of its apparent concessions to Republicans on entitlement cuts.

Clearly, there will be a vigorous debate. However, there is reason to be optimistic that the President’s budget may help move budget discussions in the right direction.

If preliminary reports are correct, the budget will include a mix of spending cuts and revenue increases that would bring the deficit down to 1.7 percent of GDP by 2023. That’s higher, but more realistic, than the House Republicans’ balanced budget goal and more ambitious than the Senate Democrats’ goal of bringing the deficit down to 2.2 percent of GDP.

 In other words, it aims for a compromise, albeit one closer to the Senate Democrats’ goal, which is hardly surprising.

The key, of...

Tuesday, March 26, 2013 - 11:22 AM

Most plans to put the federal budget on a more sustainable path make a crucial assumption: That today’s younger workers will pay more of their own retirement costs than previous generations have.

By setting aside more money for retirement, the thinking goes, these younger workers can enable the federal government to reduce the high projected growth of Social Security and Medicare. They should theoretically be able to do this because they have more time to save large amounts of money and to let those savings compound.

As The Concord Coalition has often noted, however, Washington already favors older generations in many ways. And younger Americans face a number of financial hurdles and future challenges that must be kept in mind.

Many of them have been hit hard by the last recession, struggling with a poor job market and – thanks to skyrocketing tuition costs -- large amounts of student debt. With companies cutting back on retirement and health care programs, many younger people who have jobs  do not receive the compensation or employee benefits that their parents did.

The large and growing federal debt, meanwhile, means that younger Americans can expect higher taxes and less assistance from the federal government...

Monday, March 25, 2013 - 11:52 AM

President Obama is back home after a diplomatic mission to the Middle East in which he exhorted the Israeli people, particularly young Israelis, to ignore the competing claims of extremists and take the push for peace into their own hands. His speech on this topic at the Jerusalem International Convention Center seems to have hit a responsive chord.

It got me thinking that the President should repackage some of the same themes for a national address as Washington enters a crucial phase in negotiations over a budget deal between Democrats and Republicans. While the policy choices in each situation are not directly comparable, some of the points he made in the Jerusalem speech could resonate in this country as well.

Obama could begin by addressing America’s youth with the same message he had for Israelis.

“Part of the reason I like talking to young people,” he said, “is because no matter how great the challenges are, their idealism, their energy, their ambition always gives me hope. ... I believe that you will shape our future.”

Next, he could remind Americans that even deep differences can be bridged if the ultimate...

Thursday, March 14, 2013 - 5:03 PM

Today the Senate Budget Committee considered the budget resolution that Chairman Patty Murray released yesterday. The blueprint calls for a mix of spending cuts and tax increases to reduce the deficit and lower the debt-to-GDP ratio. Under Murray’s plan, the deficit would fall to $566 billion (2.2 percent of GDP) by 2023. Debt held by the public would slowly but steadily fall from 78.5 percent in 2014 to 70.4 percent by 2023.

These are important goals, but whether the favorable trend shown on paper would continue beyond the 10-year window depends on the specific policies adopted by the relevant congressional committees in implementing the plan. As with any budget resolution, policy details are omitted. Yet the details that are available suggest that the plan avoids the type of reforms that would allow debt levels to continue to decline beyond the budget window -- the time period most crucial when looking at the nation’s real fiscal challenges.

For example, the proposed cuts in discretionary spending outweigh the health care savings by $100 billion. Moreover, total mandatory outlays show no reduction at all over the 10-year period relative to the CBO baseline despite the fact that mandatory programs represent a much larger fiscal challenge than discretionary programs. Murray’s budget thus continues the recent...

Friday, March 1, 2013 - 11:19 AM

Back in August of 2011, with the nation’s debt bumping up against its statutory limit and an election year looming, President Obama and Congress made a deal.

They would empower a special committee (the “super committee”) to reach a long-term budget deal worth $1.2 trillion to $1.5 trillion in deficit reduction and give that deal a fast-track path to enactment. All options for cutting spending or raising revenues would be on the table.

To provide an incentive, other than simply doing the right thing, they agreed that if the super committee failed, or if Congress rejected its plan, a fallback mechanism known as “sequestration” would initiate spending cuts worth $1.2 trillion from non-exempt programs over 10 years. Half of the cuts would come from defense spending and the other half from domestic programs. The idea was not to craft rational policy but to install a back-up so arbitrary that no one would want it to go into effect.

The deal provided a grace period throughout 2013 during which a more comprehensive plan could be reached, if the super committee failed.

Here we are, 18 months later, still awaiting a “grand bargain.” The committee failed to produce a plan, nothing has been done to replace the 2011 deal, and the sequester...

Tuesday, February 26, 2013 - 10:22 AM

In his State of the Union Address President Obama declared: “Our government shouldn’t make promises we cannot keep, but we must keep the promises we’ve already made.”

It was good applause line, but it glossed over a key point: The promises we’ve already made are the ones we cannot keep.

It is widely accepted that current fiscal policy is unsustainable. By definition, that means something has to change. Yet, if we decide that all promises must be kept, we can’t change anything without “breaking a promise.”

The dilemma for policymakers in Washington is that for years they have made unfunded promises and there is no politically convenient way to reverse this.

The first thing to do is just face up to it.

That’s why a bipartisan group of former members of Congress included this warning among their findings from their Strengthening of America forum series last fall: “We cannot put our debt on a sustainable path without reductions in the projected cost of entitlement programs, cuts in discretionary spending and higher revenues.”

Strictly speaking, any of those things could be characterized as breaking a promise.

It could be argued, for example, that...

Monday, February 11, 2013 - 10:24 AM

By David M. Walker

Over the past 20 years The Concord Coalition has worked to build an impressive grassroots network. Given our nation’s poor financial condition and fiscal outlook, it is more important than ever to inspire action within that grassroots network. The next three months are critical in regards to addressing our nation’s huge and mounting fiscal challenge.

There are many fiscal issues that need to be resolved in the next 100 days, and the action, or lack of action, taken will largely determine whether a fiscal “Grand Bargain” is going to be reached in 2013. While the debt ceiling was extended until May 19, the sequester (across the board defense and other spending cuts) will take place on March 1, unless there is congressional action. Presently, it does not appear that Congress will reach a deal to avert the sequester, but even if it did, there are other key deadlines ahead. The continuing resolution that is funding all government agencies expires on March 27, and that’s not even on Congress’ radar at the moment. A joint budget resolution is supposed to be achieved by April 15, and the debt ceiling issue will come up again after that.

These issues must be dealt with, and we must quit moving from one...

Friday, January 18, 2013 - 2:32 PM

In his press conference this week, President Obama suggested that policymakers only need to pass another $1.5 trillion worth of deficit reduction, on top of the $2.5 trillion already enacted, to stabilize the growth of the nation’s debt and, in his words, “finish the job.”

The Center on Budget and Policy Priorities and The Committee for a Responsible Federal Budget, two well-respected fiscal policy organizations, basically agree with the President’s math, and there is nothing to quibble about in those calculations regarding stabilizing the debt.

However, that level of deficit reduction would hardly mean the “job is finished.” In fact, the whole idea that we can pinpoint a specific amount of deficit reduction necessary within a 10-year time frame can be a distraction from the fiscal sustainability conversation we need to have.

Getting caught up in exactly when the debt-GDP-ratio stabilizes, or whether we might miss that goal by a few percentage points at the end of the 10-year window, assumes a precision in economic and technical estimating that no entity actually possesses (even the CBO, whose respect and skill in these matters is second-to-none).

Our main emphasis...

Tuesday, January 1, 2013 - 3:46 AM

Once again we have a political punt.

With no time left on the clock, Senate Democrats and Republicans have approved a deal to avoid the most immediate consequences of the so-called “fiscal cliff.” The defining feature of the deal, however, is that it leaves much more to be done.

The deal -- which the House must still vote on -- requires no hard choices and solves no difficult problems.  

There is no entitlement reform, no tax reform and no framework or process for addressing these critical needs in 2013. Meanwhile, the indiscriminate and disproportionate discretionary spending cuts mandated by last year’s Budget Control Act are postponed, creating a new cliff.

And with no increase in the statutory debt limit, it still looms as the next self-imposed crisis to remind everyone of how dysfunctional the legislative process has become on Capitol Hill.

So we have a deal, but not a grand bargain. The best that can be said for it is that it smoothes out a portion of the cliff. That will benefit the economy in the very near term, but aside from some relatively minor tax increases on the highest of income earners, the net result of the fiscal cliff deal is to preserve an unsustainable status quo. 

The unfinished business has not gone away. It has simply been handed off to the new...

Friday, December 28, 2012 - 4:08 PM

For the third week in a row, I will be discussing the nation’s fiscal challenges on C-SPAN’s Washington Journal, this Sunday at 7:45 a.m. (Here is the first week, and here is the second.) Stan Collender, who among other things writes the Fiscal Fitness column in Roll Call and the Capital Gains and Games blog, will again be my co-panelist.

One thing that might help you get ready for another fun hour of viewing would be to play The Concord Coalition’s budget exercises to see how you would replace the fiscal cliff.

Our online exercise, The Federal Budget Challenge, is a great single-player experience. If you want fun for the whole family gathered for the holidays, you can print out our pen-and-paper exercise Principles and Priorities. In either case...