November 24, 2014

Posts on national debt

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Tuesday, April 23, 2013 - 1:49 PM

The new budget plan released recently by Alan Simpson and Erskine Bowles once again demonstrates that it is possible to bring the deficit under control using a mix of spending cuts and revenue increases without harming the near-term economy.

It is not a plan for partisan purists, and that is why it could play a vital role in the coming months as Democrats and Republicans struggle to find a way forward on a budget compromise.

Unlike the original Simpson-Bowles plan, which was presented when the two men co-chaired the bipartisan National Commission on Fiscal Responsibility and Reform, this plan picks up where negotiations broke off last December between President Obama and House Speaker John Boehner.

“The plan we have put forward here is not our ideal plan, it is not the perfect plan, and it is certainly not the only plan,” they wrote. “It is an effort to show both sides that a deal is possible; a deal where neither side compromises their principles but instead relies on principled compromise. Such a deal would invigorate our economy and demonstrate to the public that Washington can solve problems, and leave a better future for our grandchildren.”

Simpson and Bowles acknowledge that some...

Friday, March 1, 2013 - 10:19 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...

Wednesday, February 27, 2013 - 3:15 PM

Among budget wonks who discuss the long-term fiscal challenge, there is something of a consensus -- the projected upward trajectory of our debt is caused primarily by the projected growth in federal health care programs.

For some, this consensus has developed into short-hand: The nation’s fiscal challenge is really “just a health care problem.” This leads to the conclusion that the nation’s unsustainable fiscal future can only be redirected by reforming the entire health care sector of the economy. Or perhaps by simply converting Medicare into a “premium support” program.

The latest CBO report, which takes into account three consecutive years of dramatically slower health care cost increases, should serve as a warning (and a reminder) that it is misleading to say the problem with the federal budget “is just a health care problem.”

If one only looks at the two CBO updates over the last six months, projected 10-year Medicare spending has been revised downward by $306 billion. Projected Medicaid spending has been revised downward by $273 billion (not counting revised estimates of lower Medicaid enrollment due to the Supreme Court’s ruling on Medicaid expansion in the Affordable...

Tuesday, February 26, 2013 - 9:22 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...

Friday, February 22, 2013 - 12:50 PM

Over many years of grassroots outreach, The Concord Coalition has learned to count on the passion and creativity of its members. Those of us who spend time traveling the country know that Washington doesn't have a monopoly on good ideas -- that often the public is ahead of the politicians in recognizing the need for action and cooperation on important public policies. That is why we are happy to announce that our friends at the Peter G. Peterson Foundation have launched a new grassroots competition called "I'm Ready."

The foundation is soliciting videos from people across the country, in which they tell Washington why fixing the national debt is so critically important to our future. The two best videos - as determined by views, public votes, and review by a panel of experts - are eligible for a $500 prize. 

These videos will bring together a range of voices to show that wherever you go, Americans understand the importance of...

Monday, January 28, 2013 - 8:36 PM

The Concord Coalition, which has long viewed public engagement as essential to U.S. fiscal reform, is partnering with the Campaign to Fix the Debt to present  a series of public forums around the country in the coming weeks.

This joint project will focus its efforts on ten programs in six states: Colorado, New Hampshire, Iowa, Wisconsin, Florida and Tennessee. These events,  open to the public, will take a variety of forms.

We at Concord are delighted to be involved in a project that we believe can help lay the groundwork for comprehensive fiscal reform in the near future. The Campaign to Fix the Debt, which was launched last year, has been working with business leaders, political figures and hundreds of thousands of citizens from across the ideological spectrum who want to see elected officials step up to solve the nation’s fiscal challenges. The impact is being felt in Washington already.

The speakers at the upcoming events will include both national and regional experts on the rapid growth of the federal debt and related issues, including the need for fundamental reforms of the tax system and entitlement programs. There will also be an emphasis on the need to curb future increases in health care costs. Some of the speakers hold either...

Friday, January 18, 2013 - 1:32 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...

Monday, January 7, 2013 - 11:00 AM

On his way out the door, retiring Senate Budget Committee Chairman Kent Conrad (D-N.D.) had a lot to say. It was a final reminder -- he called it a challenge -- from one of the Senate’s foremost deficit hawks of why deficits matter and why much more must be done to do bring them under control.

Conrad voted for the fiscal cliff deal in the early hours of Jan. 1, but he explained that he did so only because going over the cliff would risk a recession and higher unemployment. Moreover, 2 million people already out of work would have lost unemployment benefits.

And yet, Conrad said, “I hate this agreement. I hate it with every fiber of my being because this is not the grand bargain I had hoped and worked for and believe is so necessary to the future of the country.”

While Conrad and many others, including The Concord Coalition, had pushed for a deal that would start the nation down the road to a more sustainable fiscal future, the end result was “not, by any standard, a deficit reduction plan,” he said. “As necessary as it is, no...

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...

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 “...