November 21, 2014

Posts on national debt

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Monday, October 27, 2014 - 9:36 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 - 8:02 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 - 9:11 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...

Monday, July 14, 2014 - 10:18 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...

Thursday, February 6, 2014 - 3:07 PM

State lawmakers across the country are debating how to spend large surpluses after the economic recovery helped produce higher-than-expected tax collections for the second year in a row.

State legislatures and governors have welcomed this change after years of enacting painful spending cuts to balance their budgets. But they are waging battles both within and between their political parties about how to spend the extra money.

In a year when up to three dozen governors could run for re-election, as well as countless more state legislators who could be on the ballot, many of the proposals have unfortunately focused on short-term measures.

State officials should consider how to use at least part of their surpluses to improve the long-term health of their budgets instead of just haggling over whether to use the surpluses to finance short-term tax cuts or spending increases. A recent Concord blog post highlighted a report by the State Budget Crisis Task Force that said states have done little to address the long-term structural problems in their...

Thursday, December 12, 2013 - 9:12 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...

Sunday, October 13, 2013 - 12:10 PM

We will soon see whether there is any remaining capacity in the U.S. political system to reach compromise across partisan lines for the common good.

Republican congressional leaders say that if President Obama wants the government to reopen and the debt limit to be increased he will have to make concessions on spending and agree to negotiate a long-term deficit reduction deal. Obama says he will not negotiate anything until the debt limit is raised and the government reopened. After that, he’ll talk.

If neither side blinks, the government will remain shut and nation could begin defaulting on a portion of its obligations within a matter of days..

That disastrous outcome must be avoided. But how?

Backing down now would be politically perilous for either side. Failing to back down, however, would be perilous for the economy, the nation’s creditworthiness and the trust that citizens place in elected leaders to carry out the most basic functions of government.

Surely, both sides know that ultimately two things have to happen.

1.) The debt limit must be increased. There is no realistic alternative and any set of fiscal options, even Paul Ryan’s austere House Budget Committee plan, would require additional borrowing.

2.) There must be a meaningful negotiation over fiscal policy in...

Friday, August 30, 2013 - 11:55 AM

This year will mark the end of a four-year string of trillion-dollar-plus federal deficits that have troubled the American public and caused turmoil on Capitol Hill.

Fiscal Year 2013 is drawing to a close with a projected deficit of a little over $640 billion, down from $1.1 trillion last year. That’s good news, but it should hardly be considered an “all clear” signal on the nation’s fiscal and economic challenges.

Here are eight reasons why:

1. While the deficit is going down, the federal debt is still going up.

The government is still borrowing a substantial amount of money this year, and that is all being added to the accumulated debt, which is approaching  $17 trillion. That’s why elected officials -- despite their usual lamentations and finger-pointing -- have no choice but to raise the debt limit at some point in the next few months. The real question is what they will do to prevent the debt from growing in the future to unsustainable levels.

2. This year’s lower deficit can be largely attributed to short-term economic factors rather than systemic reforms in the federal budget

During difficult economic times with high unemployment, federal deficits rise as...

Thursday, June 20, 2013 - 12:31 PM

Chad Laurie is an intern at The Concord Coalition.

Historically low interest rates, held down by the Federal Reserve’s quantitative easing program, have recently begun to rise sharply. Over the past few weeks, the interest rates on the federal debt rose 67 basis points from 1.66 percent to 2.33 percent. The increase is on pace with what the Congressional Budget Office projected in its most recent budget outlook; CBO estimates there will be $223 billion in net interest payments this year. In that same outlook, the CBO’s baseline assumes an increase in interest rates due to a recovering economy, and projected that interest payments on the federal debt would be $823 billion, or 3.2 percent of GDP in 2023, a percentage that has been exceeded only once in the past 50 years. With rates approaching levels consistent with a growing economy, interest costs will be the fastest growing spending program in the federal budget.

Why Were Rates So Low and Why Are They Rising Now?

During and after the recession, the Federal Reserve bought mortgage-backed bonds and Treasury securities to make borrowing cheaper for consumers and the government...

Wednesday, April 24, 2013 - 12:52 PM

Last Thursday, the Bipartisan Policy Center’s (BPC) Health Care Cost Containment Initiative released a comprehensive plan to increase efficiency and reduce costs while reorienting the nation’s health care system to become more patient-centered. That combination would ideally lead not only to a more sustainable fiscal future but to better health care as well.

The plan targets the largest health care levers that federal policymakers have: Medicare and the tax code -- specifically the exclusion of employer-provided health care from taxation. The plan, as scored by health policy experts, would reduce budget deficits over the next 10 years and then continue to lower the trajectory of the federal debt.

Medicare would be transformed into a system that rewards value and coordination instead of the quantity of services, and the tax code would no longer encourage overspending on health care. Furthermore, these changes at the federal level are meant to encourage and incent a more rational private health care system.

These lofty goals were heralded by BPC’s health care leaders: former Senators Tom Daschle, Bill Frist and Pete Domenici, along with Dr. Alice Rivlin. Their agreement after a year of...