July 29, 2014

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Wednesday, May 13, 2009 - 12:19 PM

It has been the beginning of a busy week for those closely following developments in the federal budget. On Monday, President Obama released the final installment for his FY 2010 budget. Then yesterday, the annual Social Security and Medicare Trustees' Reports were released.

This year, the Trustees' Reports received additional attention because analysts were curious how the current economic downturn would affect the finances for these programs. Early estimates were that it would have a significant impact. A few weeks ago, the Congressional Budget Office provided updated data showing that income for Social Security was expected to decline by $1.2 trillion over a 10-year period. Most of the lost revenue was a result of revisions in their economic forecast.

The Trustees' Reports reaffirmed the worsening financial position of these two programs. In last year's report, the Trustees noted that Social Security would begin to run cash deficits in 2017 and exhaust the trust fund in 2041. However, yesterday's report accelerated those dates...

Monday, May 4, 2009 - 3:36 PM

Now that the Congressional Budget Resolution has passed, there has been a lot of talk about how the reconciliation instructions included in the resolution will make it easier for a health care reform effort to pass.  Particularly since the mechanics of reconciliation provide for a simple majority vote for approval -- instead of the 60 votes that might be needed to overcome a filibusterer in the Senate.

Ironically, considering political motivations, it might be easier to round up 60 votes for a fiscally irresponsible health care reform bill, than to attain the 51 votes for a fiscally responsible bill -- which would be needed to utilize the reconciliation fast track procedure. 

Let me explain. When the modern budget process was established, the idea behind including a lower procedural bar under reconciliation was to facilitate legislation that contained difficult choices resulting in deficit reduction. Only in recent years have legislators deviated from this intention, most notably by the usage of reconciliation to pass large, deficit-increasing tax cuts.

The guidelines put in place by the budget resolution for reconciliation -- in a sense -- navigate this budget procedure closer to its original purpose. Specifically, for Congress to consider any health care reform bill, it must contain...

Friday, January 16, 2009 - 12:57 PM

Today’s Washington Post contains a very welcome front-page headline, “Obama Pledges Entitlement Reform.” The article explains that President-elect Obama plans to convene a fiscal responsibility summit in February. According to the Post story:

President-elect Barack Obama pledged yesterday to shape a new Social Security and Medicare "bargain" with the American people, saying that the nation's long-term economic recovery cannot be attained unless the government finally gets control over its most costly entitlement programs.

That discussion will begin next month, Obama said, when he convenes a "fiscal responsibility summit" before delivering his first budget to Congress. He said his administration will begin confronting the issues of entitlement reform and long-term budget deficits soon after it jump-starts job growth and the stock market.

"What we have done is kicked this can down the road. We are now at the end of the road and are not in a position to kick it any further," he said. "We have to signal seriousness in this by making sure...

Monday, December 15, 2008 - 3:15 PM

Although the report doesn’t speculate on the size of the potential cost savings that could be obtained from some of the reform proposals (most of which are not terribly comprehensive or economically “bold”–although elimination of the employer-provided health care tax exclusion would surely be politically “bold”), I found the discussion on pages 118-119 of the health care chapter most interesting:

Spending a rising share of income on health, as has occurred in the United States and other developed countries and is likely to continue occurring, makes economic sense as rising incomes increase the relative benefits of investing in health-care consumption to extend life…[H]ealth care consumption is a superior good…The large and growing size of health spending underscores the importance of ensuring that the sector functions efficiently and equitably.

Today I spoke at an event on Capitol Hill where the OECD’s Economic Survey of the United States was released.  (The policy brief, a condensed summary, is here.)  I was a discussant on the survey’s chapter on health care reform, which explains that the U.S. health...

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...