September 2, 2014

Posts on national debt

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Thursday, June 4, 2009 - 12:30 PM

Both Federal Reserve Chairman Ben Bernanke and Treasury Secretary Tim Geithner have been vocal this week regarding the need to rein in our growing federal budget deficits as the economy begins to recover and work to confront the structural fiscal imbalances projected over the coming decades.

Yesterday, Chairman Bernanke testified before the House Budget Committee and spent a portion of his testimony focusing on fiscal policy. He emphasized that it is necessary for policymakers to confront these challenges now more than ever. A failure to act, Bernanke noted, will result in economic consequences which will impede growth:

Addressing the country’s fiscal problems will require a willingness to make difficult choices. In the end, the fundamental decision that the Congress, the Administration, and the American people must confront is how large a share of the nation’s economic resources to devote to federal government programs, including entitlement programs. Crucially, whatever size of government is chosen, tax rates must ultimately be set at a level sufficient to achieve an appropriate balance of spending and revenues in the long run. In particular, over the longer term, achieving fiscal...

Tuesday, May 26, 2009 - 3:29 PM

In Nobel-prize winning economist and New York Times columnist Paul Krugman's column Monday, he makes an interesting point about California's budget woes that supports much of what The Concord Coalition's message has been for the last three years traveling the country on the Fiscal Wake-Up Tour. The irony is that he often protests much of what we stand for.

In writing about the political barriers to sound fiscal policy and governance in California, he expresses concern that it "foreshadows the future of the nation as a whole." He continues:

"Last week Bill Gross of Pimco, the giant bond fund, warned that the U.S. government may lose its AAA debt rating in a few years, thanks to the trillions it’s spending to rescue the economy and the banks. Is that a real possibility?

Well, in a rational world Mr. Gross’s warning would make no sense. America’s projected deficits may sound large, yet it would take only a modest tax increase to cover the expected rise in interest payments — and right now American taxes are well below those in most other wealthy countries. The fiscal consequences of the...

Tuesday, January 13, 2009 - 5:34 PM

There’s news from the Treasury Department today (monthly Treasury statement) on the federal budget deficit for the first quarter of fiscal year 2009 (i.e., 4th quarter of calendar year 2008). I guess this is what a year headed for a (way?-)more-than-a-trillion-dollars deficit looks like; AP reports:

The federal government already has run up a record deficit of $485.2 billion in just the first three months of the current budget year, the Treasury Department said Tuesday.

The deficit is on track to surpass $1 trillion for all of fiscal 2009 and some economists believe it could go much higher.

The deficit for December totaled $83.6 billion, a sharp deterioration from a year ago when the government managed a surplus of $48.3 billion…

All the red ink is occurring because of the massive spending on the $700 billion financial rescue program and a prolonged recession which has depressed tax revenues.

The imbalance from October through December is the highest on record for a first quarter and surpasses the...

Wednesday, January 7, 2009 - 3:17 PM

The big story today is that the non-partisan Congressional Budget Office updated their baseline estimate for the federal budget's ten-year outlook. Our analysis, based on their most recent data, shows that current policy trends could add $10.295 trillion to the national debt from 2010-2019. Note that the current national debt is $10.6 trillion, so this would double that in just 10 years!

The other big news from the CBO baseline release today is that they project this year's budget deficit (Fiscal Year 2009) will be $1.186 trillion (more than double the prior single year dollar record) or 8.3% of GDP--a post World War II high.

For over a decade, the Concord Coalition has taken CBO's estimates and made changes in order to produce a more "plausible" estimate based on current policy trends. These baselines are important tools on which to evaluate how proposed legislation effects the budget. Our press release today about the new CBO report and our analysis can be found here. For more information on Concord's plausible baseline...

Monday, November 10, 2008 - 11:33 AM

In the movie I.O.U.S.A., Warren Buffett affectionately labeled China “Thriftsville” in his parable about the dangers of the United States over-consuming and relying on foreign production and lending. The movie also introduced us to a young Chinese couple, who met each other while working in a light bulb factory. This couple boasts that "saving money is a Chinese tradition," and they save half of the $20-a-day they earn.

The problem is, in an economic downturn, increased saving can harm short-term economic activity. So, from the front page of the print edition of today’s Washington Post, we learn that China is apparently now pursuing more than half a trillion dollars in fiscal stimulus (emphasis added):

China on Sunday night announced an aggressive $586 billion economic stimulus package, the largest in the country’s history, at a time when it is struggling with increasing social unrest due to factory closings and rising unemployment.

In a wide-ranging plan that economists are comparing to the New Deal, the government said it would ease credit restrictions, expand social welfare services and launch an...

Wednesday, October 29, 2008 - 12:41 PM

There is a good article in the New York Times today, as part of their "If Elected..." series, that tries valiantly to add up the candidates' taxing and spending promises with an emphasis on their deficit implications. As a budget policy analyst, I know how tough such a task is during an election campaign, and empathize with any reporter who attempts to do so.

What I try to keep remembering to tell members of the media as I go through the numbers with them, is that the numbers are certain to change, and the candidates and their advisors know that, but what really matters is the commitment to fiscal responsibility once in office and what flexibility they have left themselves with, after the campaign ends, to alter their plans. 

Sometimes plans change because campaigns are two-year long processes, and the plans a candidate designed at the beginning, might no longer be what can be written into legislation and enacted once the campaign ends. I think that has clearly happened in the last couple months with the crisis in the financial markets.

Unfortunately, more often than...

Wednesday, October 22, 2008 - 12:45 PM

Today, the Concord Coalition released our second issue brief during the general election. In this one, called “Fiscal Policy Beyond Election Day: Nine Challenges for ’09," we discuss how the reality of the nation’s current economic and fiscal transformation will affect the plans the presidential candidates have developed. Additionally, we propose that recent events, and the unrealsitic nature of the plans even before the financial crisis required massive government intervention, will require whoever becomes president to re-prioritize to fit current circumstances and to improve the well-being of future generations.

Our first issue brief looked more closely at the specifics of the candidate's taxing and spending plans and how by accepting currently policy trends as the baseline by which their plans should be judged, they were setting lower expectations for themselves than they should, and certainly lower expectations than the American public should...

Monday, October 20, 2008 - 10:29 PM

Executive Director Bob Bixby is quoted in a good article on Time Magazine's web site about the growing budget deficit, where he argues that the rising deficit, and some of the most recent policy actions that have contributed to it, are "necessary evils" to keep the economy afloat as long as the actions are targeted and temporary.

What also stuck out, was the nice picture of the National Debt Clock in Times Square (probably the most famous "tabulation" related to Concord's mission). You can see more about the debt clock, and the family behind it, in the movie I.O.U.S.A.. The picture however, shows something you won't see in the movie. Since filming, the national debt has moved from $8.6 trillion to over $10 trillion, meaning they had to paint a dollar sign onto the clock to make room for the 14th digit. There is always hope though, this debt clock does have the capability to go backwards (the one in use in the 1980's and 1990's did not). Let's hope we can test that ability out someday.

--Josh Gordon

Monday, October 20, 2008 - 6:01 PM

Our Executive Director, Bob Bixby, recently participated in an online discussion on the "National Journal's Expert Blogs" focused on whether there is room for fiscal stimulus in the budget, given the extraordinary change in the fiscal position of the government due to the economic downturn and the government's already unprecedented response. Here is his post:

"Yes, there is room for fiscal stimulus -- so long as it sticks to the principles of being timely, targeted and temporary. What we don’t have room for are permanent new policies, either on the spending or tax side, that aren’t paid for. While the very real threat of a serious and lengthy recession justifies deficit-financed stimulus in the near-term, we need to keep in mind that our underlying fiscal policy is already on an unsustainable track. Treating the short-term problem should do as little harm as possible to the long-term outlook. Economically speaking, we need to walk and chew gum at the same time.

The goal of additional fiscal stimulus is to boost consumption and avoid a deep recession. Since...