November 23, 2014

Posts on federal budget

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Tuesday, January 1, 2013 - 2:46 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 - 3:08 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...

Monday, December 17, 2012 - 8:56 PM

With the latest exchange of offers, President Obama and House Speaker Boehner have moved closer to a deal that would reduce the deficit by about $2 trillion over the next decade.  On the surface, the split between spending cuts and tax increases seems relatively even and this is likely to be a point of resistance for those who argue for greater spending cuts.  Lost in the rhetoric, however, is that some policies traditionally defined as “tax increases” are really “spending cuts.”

If that fact could be acknowledged by both sides, they might find that bridging the gap is an easier task.

The current tax code is riddled with "tax expenditures" -- exemptions, deductions, credits, exclusions and preferential rates that function much like entitlement spending.

At a recent public forum convened by Strengthening of America – Our Children’s Future, former Treasury Secretary Larry Summers explained, "There are long-standing privileges in the tax code that perhaps should be thought of as misguided entitlements and...reform of entitlements should also extend to the tax entitlements that benefit many of those who are best off. If we take that approach and we recognize that the idea of expenditure, like the idea of entitlement, is a notion that applies both to what has traditionally been the spending side of...

Tuesday, November 27, 2012 - 10:50 AM

The long-standing impasse on tax policy has basically boiled down to this: Democrats want more revenue, raised entirely from households with incomes over $250,000. Republicans don’t want any new revenue, and especially not from higher tax rates on the rich. It seems like an irreconcilable difference.

But if you get beyond the predicable partisan rhetoric there is room for optimism that a deal can be reached.

Republicans have begun to shed their single-minded devotion to anti-tax advocate Grover Norquist’s “no new taxes pledge”. Notable examples are Senators Bob Corker (R-TN), Saxby Chambliss (R-GA) and Lindsey Graham (R-SC) along with Representative Peter King (R-NY).

Many Republicans aren’t so enamored with Grover’s “no new taxes” pledge these days, because they don’t agree with the “no new revenue” interpretation. These Republicans recognize the economic difference between raising revenue by raising marginal tax rates, and raising revenue by broadening the tax base and reducing “tax expenditures”– the subsidies in the tax code. The former increases the size and influence of government; the latter reduces it.

For any Republican who feels the same way that Corker, Chambliss, Graham and King do, the common ground they share with the Obama administration on tax policy and...

Monday, November 19, 2012 - 10:50 AM

Signals from the first post-election budget meeting between the President and congressional leaders, which took place at the White House on Friday, were very good.

Congressional leaders of both parties appeared together after the meeting. There were no lines in the sand, no threats, and no impugning each other’s motives.

Beyond the low bar of politeness, President Obama and his guests appeared to be focused on the right priority -- achieving a long-term fiscal plan and not just a quick fix to the immediate pressure of the “fiscal cliff.”  

They spoke of a two-step process with a down payment on deficit reduction this year while putting together a framework for a long-term deal to be enacted next year along with a credible back-up mechanism -- more credible than a new cliff -- in case Congress fails to act. That basic approach has been recommended by many outside observers, including The Concord Coalition.  

Topping off the pre-Thanksgiving cheer was that a consensus seems to have been reached on the fundamental point that everything must be on the table, including revenues and entitlement spending.

We're still far from a long-term “grand bargain,” let alone a way around the fiscal cliff, but this is an essential starting point for fruitful negotiations.

Whether the...

Monday, November 12, 2012 - 12:00 AM

Example isn’t the main thing in influencing others – it is the only thing. – Albert Schweitzer

Increasingly alarmed by the nation’s deteriorating fiscal outlook and the failure of our political system to produce timely, common sense solutions, some state officials have begun to show leadership. They can do much more.

This year, the United States Conference of Mayors and the two leading associations of state legislators issued compelling resolutions that urge action by their federal counterparts. 

In September the mayors called for “a bipartisan and balanced approach to deficit reduction by incorporating spending cuts with additional revenue from sources such as tax code reform and closing unfair corporate tax loopholes.” In October the mayors reiterated their call for “a balanced plan for recovery that has the potential to restore the confidence of our people, and the world, in the leadership of our national government.”

The bipartisan Council of State Governments-West unanimously passed a resolution at its annual meeting in July urging Congress “...

Wednesday, November 7, 2012 - 10:01 AM

Congratulations to the Election Day winners. So what do Tuesday's results mean for the fiscal outlook?

Think of it this way.

If the country is on an unsustainable fiscal path, which it is, and if continued partisan bickering will not solve this problem, which it won’t, and if divided government has been re-elected, which it has, then the only choices are calamity or compromise.

The Concord Coalition urges compromise.

That must begin immediately as the two parties negotiate a responsible alternative to the “fiscal cliff” – a combination of tax increases and spending cuts that will hit with such suddenness that it could throw the still-fragile economy back into recession.

But they can’t just kick the can down the road -- again. The year-end fiscal cliff is bad, but eventually we will need the longer-term deficit reduction produced by the policies comprising the fiscal cliff. It just needs to be phased-in in a more rational way, as proposed by the bipartisan Simpson-Bowles and Domenici-Rivlin recommendations.

The key is to agree on a process for dealing with the serious and structural imbalance between spending and taxes that, if left on autopilot, will damage the economy, stress the social safety net, diminish our world leadership and leave future generations saddled with a debt burden...

Wednesday, October 31, 2012 - 8:32 AM

This is Part II of a two-part series of posts on the presidential candidates' fiscal policies. Part I examines Governor Romney's plans.

The first part of this blog post series looked at the unanswered questions in Governor Romney’s overall fiscal policy, tax reform plans and health care reform plans. This second part will look at President Obama’s budget plans in addition to some areas of uncertainty.

Simply by virtue of being the President, with the requirement to submit an annual budget, Obama has had to provide more details about his fiscal plans. Yet, what those details clearly show is an inadequate long-term fiscal goal. Over ten years, federal debt held by the public would only stabilize temporarily, and at a higher level than it is today.

To the President’s credit, he supports negotiating a long-term, bipartisan “grand bargain” on fiscal issues with both spending cuts and new revenues. Yet, such explicit support has come only after his initial tepid reaction to the Simpson-Bowles report when it was released. Nevertheless, if Obama is re-elected, the upcoming...

Wednesday, October 31, 2012 - 8:31 AM

This is Part I of a two-part series of posts on the presidential candidates' fiscal policies. Part II examines President Obama's plans.

As election day approaches, it is appropriate to look at what we know and what we don’t know about the two candidates’ fiscal policy proposals -- especially since it is unlikely we will get any more details prior to election day.

In many respects, the crucial differences between the two candidates are defined by their fiscal policies, and it is almost certain that the winning candidate’s fiscal policy choices will be as immediately consequential as any president’s in history.

In this blog post, I will review Governor Romney’s proposals and in Part II, I will cover the President’s proposals looking at three key areas: The overall budget goal, tax policy and health care.

It is difficult to overstate how little we know about where Governor Romney’s policies will lead. The basic problem is that he has...

Monday, October 15, 2012 - 9:36 AM

Watching the recent Strengthening of America forums online from my office in Wyoming, I was encouraged by how former Democratic and Republican members of Congress, Cabinet secretaries and other national experts could find such so much common ground on a course for fixing the national debt.

As the western states regional director for The Concord Coalition, I was struck by how this matches what Concord has found working with local leaders and the public here in the West and across America.

It also matches recent statements by national associations of mayors and state officials. While there remain some differences on details, it became evident that there is a much more bipartisan agreement than one sees from watching the 2012 political campaigns.

Four public forums were presented in Washington and New York City between September 12 and October 1 by Strengthening of America – Our Children’s Future, a bipartisan initiative co-sponsored by The Concord Coalition.

These forums featured a diverse collection of business leaders, former members of Congress and former government officials. They identified the key components to a comprehensive fiscal solution: tax reform that generates more revenue for deficit reduction, slower growth in health care costs, sustainable Social Security and Medicare programs,...