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What matters is "marginal" job creation and "marginal" deficit reduction
Wednesday, February 17, 2010 - 9:39 PM

With today being the one-year anniversary of the American Recovery and Reinvestment Act of 2009 (more commonly referred to as “the stimulus”), and President Obama expected tomorrow to announce his Presidential commission for deficit reduction, I’m hearing a lot of claims and rhetoric about what has “worked” versus what has not, and what has to be done going forward versus what should remain “off limits.”

In all these arguments and politically-colored “evaluations”, I hear misplaced focus on (the stark and easy-to-talk-about) absolutes, averages, and aggregates, when what matters economically are relatives, marginals, and individuals.

Let me elaborate a bit with the two issues at hand…

On the Stimulus: Republican critics of the stimulus argue that the “proof” that the stimulus hasn’t worked lies in the still-bad numbers of the unemployed–-that since ARRA’s passage last year, total jobs in the economy have decreased, not increased.  As the New York Times’...

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"It isn't fiscally irresponsible to raise the debt limit..."

Wednesday, January 20, 2010 - 2:57 AM

"It isn't fiscally irresponsible to raise the debt limit, I think it would be rather irresponsible not to raise the debt limit because we have already incurred the bill."

That quote, from Concord executive director Bob Bixby, is one of many from our new videos highlighting some of the key points driving fiscal discussions in Washington.

We recorded the videos because the Senate is set to begin debate on increasing the debt ceiling while all of Congress awaits the President's budget proposal, which will purportedly contain the Administration's ideas for how to reduce the country's budget deficits. 

The first shows a discussion about the basics behind increasing the debt limit and how there are a few key budget process reforms tied to fiscal responsibility that have become part of the debate as the Senate approaches a difficult vote. We talk about the possible Senate amendments...

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A fiscal commission: liberal or conservative plot?
Tuesday, January 19, 2010 - 6:52 PM

It’s a little amusing to see how badly the idea of a bipartisan fiscal commission has frightened some partisans at both ends of the political spectrum. That alone indicates the idea may have merit.

Some skeptics, of course, doubt that a special bipartisan panel would have any hope of success in steering the government onto a more responsible fiscal course. And there’s no question that this would be a very tough assignment.

But the strident opposition to a bipartisan commission from some critics on both the right and the left is rooted in fears that such a panel might actually succeed. They describe commission proposals in conspiratorial terms, as though serious bipartisan planning for the nation’s future would be merely a cover for shady plots to sneak reprehensible policies past Congress and the American public. Oh, the deceit of it all...

The Wall Street Journal, for example, recently ran an editorial conceding that “current federal commitments are unsustainable, starting with $37 trillion in unfunded Medicare liabilities.”

Yet the editorial ruled out a bipartisan commission that could tackle this...

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How the Homebuyer Tax Credit “Works” a Lot Like Cash for Clunkers
Thursday, November 5, 2009 - 4:18 PM

The news from Thursday’s Washington Post:

The Senate voted Wednesday to renew the government’s $8,000 tax credit for first-time home buyers through the first six months of next year as part of a broader bill designed to extend unemployment benefits.

For the first time, the tax credit program would also enable many homeowners who buy a new primary residence to receive a $6,500 refund.

The measure was attached to a bill that would provide 20 weeks of unemployment benefits in more than two dozen states with jobless rates above 8.5 percent and up to 14 weeks elsewhere. Another provision in the bill would allow businesses that had operating losses in 2008 and 2009 to seek refunds for taxes paid on profits over the past five years.

Why this legislation now?  Because despite signs that the economy as a whole, as measured by GDP, is growing again, most American households are still feeling the pain of a very weak labor market which all economists expect will be unusually slow to recover this time around.  Hence, the extension of unemployment benefits is easy to justify.

But what about the ...

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Sorry, Congress. There’s (Still) No Way to Raise Revenue Without Taxing (Real) People
Wednesday, October 7, 2009 - 10:37 AM

Well, it took a couple months, but those with a stake in health care reform have finally figured out that the idea of an excise tax on insurance companies instead of an any alternative tax on “real people” was no magic cure for the want-more-revenue-but-don’t-want-higher-taxes blues. From a story by Ben Smith and Patrick O’Connor in today’s Politico (emphasis added):

More than half of the Democrats in the House have signed on to a letter denouncing a key element of the Senate Finance Committee’s health care legislation as labor unions draw a line in the sand on paying for reform.

The Democrats are attacking a plan to finance expanded health care by taxing expensive health insurance plans. The plan, sometimes cast as a tax on “Cadillac” plans, would in fact include the health care plans of many public employees and union members and has triggered a revolt from Obama’s labor supporters and their many allies on the Hill.

The letter from 154 House Democrats to Speaker Nancy Pelosi urges her “to reject proposals to enact an excise tax on high-cost insurance plans that could be potentially passed on to middle-...

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What is "Plausible" for the Fiscal Outlook?
Sunday, August 30, 2009 - 8:53 PM

The first definition of “plausible” on dictionary.com is:

plausible
[plaw-zuh-buhl]

having an appearance of truth or reason; seemingly worthy of approval or acceptance; credible; believable: a plausible excuse; a plausible plot.

Note that it doesn’t say “likely” or “probable”–it connotes the notion of possibility not probability. I bring this up because many folks, especially the media, want to interpret the “Concord Coalition Plausible Baseline” as our best forecast of what the fiscal outlook will turn out to be. No, we’re not saying that’s the most likely outcome; we’re saying that’s a plausible, possible outcome. And it’s a worst-case scenario, because that’s what we do at Concord: we warn about the possible really bad outcomes if we don’t start making more responsible choices–because we don’t want them to happen.

On Saturday's front page of the Washington Post...

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Raising Taxes Without Taxing People?
Thursday, August 6, 2009 - 7:40 PM

Today’s Washington Post reports that the Senate Finance Committee has come up with a bipartisan plan that contains a new revenue offset (or “pay-for”) that’s more consistent with the goals of health reform (emphasis added):

Senate negotiators are inching toward bipartisan agreement on a health-care plan that seeks middle ground on some of the thorniest issues facing Congress, offering the fragile outlines of a legislative consensus even as the political battle over reform intensifies outside Washington.

The emerging Finance Committee bill would shave about $100 billion off the projected trillion-dollar cost of the legislation over the next decade and eventually provide coverage to 94 percent of Americans, according to participants in the talks. It would expand Medicaid, crack down on insurers, abandon the government insurance option that President Obama is seeking and, for the first time, tax health-care benefits under the most generous plans. Backers say the bill would also offer the only concrete plan before Congress for reining in the skyrocketing cost of federal...

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CBO: The Health Reform Slopes Don’t Add Up
Thursday, July 30, 2009 - 11:18 AM

The Congressional Budget Office once again validates some intuition many of us had about health care reform: when you have health costs rising much faster than the economy is growing, a package that expands coverage but is unwilling to tax health benefits to pay for it is not likely to add up to a deficit-neutral plan over the longer term. The basic problem is that the cost of coverage expansion will continue to increase at the same rate as health care costs, but the tax increase offsets will only grow (at best) at the rate of economic growth. Then you have an additional problem that many of the offsets might be one-time cuts or cuts whose value does not even keep up with economic growth or inflation. 

Quoting from pages 12-13 of the report (a letter to Congressman Dave Camp (R-MI) on the House tri-committee proposal), emphasis added:

Looking ahead to the decade beyond 2019, CBO tries to evaluate the rate at which the budgetary impact of...

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The President's Words
Thursday, July 23, 2009 - 9:19 PM

While the President's press conference Wednesday night got a lot of attention and focused substantially on health care, he also did an interview with Washington Post editorial page editor Fred Hiatt earlier in the day. The wide-ranging interview touched on health care reform, but also on a lot of the other subjects Concord Coalition members are interested in -- like deficits, debt, Social Security reform and a BRAC-like fiscal commission. It is worth a read.

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Obama Treasury Describes the Bush/Obama Tax Cuts
Friday, June 5, 2009 - 1:30 PM

I looked at the Treasury Department’s “green book” on the Administration’s revenue proposals only a few days ago, curious to see how the Bush (soon-to-be Obama) tax cuts would be described, considering that they comprise the single most costly policy in President Obama’s proposed budget (about $2 trillion over ten years according to CBO). Seems like a pretty significant “revenue proposal” to describe, right? The Treasury green book is 131 pages long, with each tax proposal described fairly thoroughly, over the course of 1 to a few pages each, in terms of current-law treatment, reason for change, and the specifics on the President’s proposal. Yet the extension of the 2001 and 2003 tax cuts is described in exactly two places–first, as a footnote in the table of contents (note, through the emphasis added, how...

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