August 21, 2014

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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...

Thursday, May 21, 2009 - 2:28 PM

Steven Pearlstein has a column in Wednesday, May 20's Washington Post called “Budget Scolds Shouldn’t Drown Out the Chorus Calling for Health Reform.” We assume that The Concord Coalition is among his targets given his definition:

"In the political menagerie that is Washington, there exists a species known as the budget scold — analysts, advocates, editorial writers and politicians who possess a fierce determination to bring the federal budget into better balance.

Budget scolds have a wonkish demeanor and a skeptical outlook. They possess an undue fascination with rules and processes, and speak in the arcane language of baselines, sunsets and pay-fors."

Although we don't define ourselves by the fact that we occasionally "scold," the rest of his characterization isn't that far off -- just ask those who run into us at parties. But the point of his article is that Pearlstein is concerned that worries about the budget deficit are going to scuttle health care reform. He writes:

"There have been times when the budget scolds have saved the country from short-...

Wednesday, May 20, 2009 - 12:30 PM

The Concord Coalition is currently engaging in a Fiscal Stewardship Project that takes us to select cities across the country. This project is designed as a follow-up to our Fiscal Wake-Up Tour visits in those cities and as part of that we have created local Fiscal Advisory Councils (F.A.C.'s) -- groups of local citizens interested in doing more to promote and discuss fiscal responsibility. These councils meet regularly and are focused not only on talking about our fiscal future, but also in discussing possible solutions to our long-term budget challenge.

One of the event types we conduct in conjunction with these F.A.C. meetings is called a "Choice Dialogue." These are day-long public forums where randomly selected individuals, from the cities where the F.A.C.'s are located, come together to work through the information about our fiscal challenge and coalesce around common values and solutions. The goal is for the conclusions they reach to then be presented to the F.A.C. members, who then undergo a lengthy dialogue of their own, so that the ideas and solutions the F.A.C. coalesces around can truly be said to be informed by community thoughts...

Tuesday, May 19, 2009 - 4:26 PM

Over the last week and a half, I've watched the launch and rapid growth of a very promising movement. It is called "80 Million Strong for Young American Jobs" and represents the coalescence of over a dozen leading youth organizations to advocate for a new American economy.

This is the kind of movement, the kind of coordinated effort that America needs to tackle our greatest and most glaring problems. 80 Million Strong promises not just the organization and conviction to accomplish their goals, but the understanding and foresight to accomplish the right goals without compromising our future. It is the goal of The Concord Coalition to educate the public about the importance of fiscal sustainability. It is the goal of 80 Million Strong to be the voice of the Millennials so they can hold government accountable to the next generation. At the intersection of the two, I hope to see the political strength of young Americans used judiciously to advocate for sound government and a secure fiscal future.

As Concord's Youth Outreach Coordinator, I am proud to be a part of the 80 Million Strong coalition, and look forward to witnessing their continued growth over the coming months.

Be sure to...

Friday, May 15, 2009 - 3:26 PM

Today, the Concord Coalition released the first issue in our new Series on Health Care and Medicare entitled: "The Nation’s Health Care Conundrum: Where Do We Go From Here?"

This series is designed to illuminate how intertwined the health care challenge is with the nation's long-term fiscal challenge. As Congress and the President prepare to create legislation addressing health care reform, it is essential that this linkage is recognized in any reform package. The legislation must address health care cost control and Medicare cost control in a way that can work quickly to get the nation on a more sustainable fiscal path, especially since demographic changes by themselves will severely strain entitlement programs and the broader federal budget.

The multi-issue series was written by David Koitz, a former analyst for The Congressional Research Service and the Congressional Budget Office. It will be released over the next two months and will also be accompanied on our web site by video briefs highlighting the issues discussed in the series.

Late...

Friday, May 15, 2009 - 10:23 AM

While fielding a question from the audience during his town hall meeting on credit card reform, President Obama took an opportunity to emphasize the need for policymakers to focus on restoring fiscal responsibility within the federal government:

"What I'd like to do is just shift off -- pivot off your question to talk about this issue of debt and deficits one more time. During a recession of this severity it is important, as I explained, for the government to step in and fill the hole in demand that was created by consumers and by businesses, to get the economy kick-started.

But the long-term deficit and debt that we have accumulated is unsustainable. We can't keep on just borrowing from China, or borrowing from other countries -- (applause) -- because part of it is, we have to pay for -- we have to pay interest on that debt. And that means that we're mortgaging our children's future with more and more debt, but what's also true is that at some point they're just going to get tired of buying our debt. And when that happens, we will really have to raise interest rates to be able to borrow, and that will raise...

Thursday, May 14, 2009 - 12:22 PM

You might look at the title of this post and ask, "Why is The Concord Coalition upset about a small deficit -- shouldn't that be a good thing?"

Most of the time, the answer would be "yes," but when a deficit, even a small one, is reported for the month of April, that is unusually bad news.

The federal government typically sees a surge in revenue during the month of April because of the large amount of tax payments filed close to the April 15th deadline. Yet, in the Treasury Department's April monthly statement the federal government posted a $20.9 billion deficit -- the first April deficit since 1983.

This reflects abnormally high spending, and unusually low revenues. Spending was 17.5% higher than last April and tax receipts were 34% lower. Even more shocking is that individual income tax collections are down 24% for the fiscal year and corporate income tax receipts have dropped from $171 billion last year to $71 billion this year -- a 59% decrease!

All of that is happening against the backdrop of huge increases in government spending primarily due to the stimulus bill, TARP, and automatic counter-cyclical spending such as unemployment compensation. 

The month of April brings the federal deficit to $802...

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...

Tuesday, May 12, 2009 - 11:17 AM

The Obama Administration released the "final installment" of their FY2010 budget this week. The summary tables can be found here. On his blog, OMB director Peter Orszag explains what's changed from the February release.

Although the Administration has not revised the economic assumptions that go into the budget projections since their February release, they've still had to adjust downward their revenue forecast. This mostly stems from so-called "technical revisions" which reflect new thinking by the Administration about how much revenue the government will receive under the same macroeconomic forecast used in their initial budget document.

They now estimate that overall federal revenue will be less than was projected in February -- between $30 billion and $50 billion in each of this year and next, and $124 billion lower over ten years. The interest costs associated with the combined technical revisions (on net more than entirely accounted for by the revenue revisions) alter the 10-year outlook by $193 billion. Thus, the estimated deficits under the President’s proposals are now about $90 billion higher in each of...