October 21, 2014

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Friday, September 14, 2012 - 11:45 AM

This week The Concord Coalition and several other organizations kicked off an initiative called Strengthening of America – Our Children’s Future focused on the nation's worsening fiscal situation. Former Senators Sam Nunn (D-Ga.), Pete Domenici (R-N.M.), Warren Rudman (R-N.H.) and Evan Bayh (D-Ind.) have convened a bipartisan group of former members of Congress for a series of forums in the weeks leading up to the presidential debates. Nunn and Rudman are Concord’s co-chairs.

Speakers at the first forum emphasized that the most difficult problems are more political than economic.

The country has the strength and capacity to deal with its budget challenges, they said. It is the political will to act that is in question, with many elected officials reluctant to make difficult choices and seek bipartisan cooperation.

James A. Baker III, a former Treasury secretary, said in the forum on Wednesday that a grand bargain to put the country on a more responsible path would require “something that’s become a dirty word” in Washington: “Compromise.” He called for a “heroic effort” to achieve such a deal for the sake of the country’s future.

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Thursday, September 6, 2012 - 12:19 PM

The ultra-low interest yields on U.S. Treasury bonds seem to suggest "not much." Some of this is because relative to the fiscal positions of other countries, the U.S. economy seems relatively more capable of supporting the public debt. But it may also be because the pricing of government bonds is less an efficient reflection of the inherent market riskiness of the bonds than it should be. According to a former Moody's analyst, bond rating agencies currently do not rate public bonds using the same kinds of objective measures used to rate private bonds, possibly understating the true risk in holding U.S. Treasury debt. 

Bond markets appear to be pricing Treasury debt as if it is risk free. However, if fiscal imbalances are not resolved, bondholders face the risk of losing value due to inflation and could suffer an outright default. While these risks are minimal in the short term, 30-year Treasury bond investors receiving sub-3% yields are not being compensated for the risks they are shouldering. Meanwhile, U.S. policymakers are only encouraged to keep deficit financing additional spending and tax cuts, because deficit financing seems nearly "free" compared with the alternative of proposing offsets (revenue increases or spending cuts) which have obvious costs.

But deficit financing is not ...

Monday, August 13, 2012 - 9:59 AM

Last week the Tax Policy Center (TPC) released this distributional analysis of the Romney tax plan, exploring how the plan could be made revenue-neutral, as Romney has claimed it would be.  The TPC analysis found that it is impossible to pay for Romney’s proposed additional tax cuts (which are skewed heavily toward upper-income households ) with base-broadening revenue offsets (which according to the Romney plan cannot include increasing the taxation of capital income) without increasing tax burdens on net for most Americans.

What does the TPC analysis actually tell us about the Romney tax plan?  It’s well summarized in Figure 2 of the TPC paper, which decomposes the bottom-line conclusion that a revenue-neutral Romney plan would give generous tax cuts to households with incomes above $250,000, paid for with net tax increases on everyone else, into two parts:

(i) how much the tax cuts from the tax rate reductions are skewed toward wealthier households, and

(ii) how much the revenue offsets from (Romney-limited) base-broadening are skewed toward lower- and middle-income households.

 Combined, we would end up with a revenue-neutral (relative to a business-as-...

Saturday, August 11, 2012 - 4:30 PM

Here are links to some previously published material by The Concord Coalition on proposals by House Budget Chairman Paul Ryan, who was named Saturday as Republican presidential candidate Mitt Romney's running mate.

Politico Op-Ed by Robert L. Bixby (April 17, 2012)

Concord Coalition Analysis of Ryan Budget Plan (March 20, 2012)

Blog Post by Robert L. Bixby on Wyden-Ryan Medicare Plan (Dec. 20, 2011)

Blog Post by Robert L. Bixby on Medicare Proposals (May 31, 2011)

Blog Post by Robert L. Bixby Comparing Obama and Ryan Budget Proposals (April 12, 2011)

 

 

Saturday, August 11, 2012 - 3:46 PM

 

This commentary originally appeared on The Concord Square May 31, 2011

As a matter of controlling Medicare costs, I find myself liking a bit of Rep. Paul Ryan’s approach and a bit of President Obama’s. Too bad the political climate is such that Democrats and Republicans don’t seem willing to acknowledge that the other might just have a good idea.

In Ryan’s favor, I think the premium support model holds out the best hope for reining in cost growth. It would allow us to set a Medicare “budget” and create incentives for a more efficient system. Without a budget, I worry that efficiencies found in the pilot programs and demonstration projects enacted last year will not be translated into real savings. Of course for premium support to work, the level of support and growth rate have to be realistic. In this regard, I’m with those who think that Ryan’s plan misses the mark. However, the concept should not be rejected just because the details are flawed.

Even if we move toward premium support, we should have a back-up mechanism to ensure that targets are met and that quality of care is improving. President Obama’s suggestion to strengthen the Independent Payment Advisory Board (IPAB) would fill this role. It’s pretty clear that politicians are not the best at cutting health care costs. If...

Friday, August 10, 2012 - 2:05 PM

Congressional procrastination could lead to chaotic decision-making on the federal budget after the November elections, but many economists believe this procrastination is already harming the economy.

The damage stems from widespread uncertainty over what elected officials will do, if anything, about the “fiscal cliff” – a combination of sharp “automatic” spending cuts and the scheduled expiration of tax cuts at year’s end.

The Wall Street Journal reported today on its survey of 47 economists, noting their widespread concern about the growing economic cost of congressional inaction. This “adds insult to injury to an economy already flirting with a stall rate,” said Diane Swonk of Mesirow Financial. Another analyst, Julia Coronado of BNP Paribas, said: “We are already feeling the effects in hiring and investment.”

The general expectation in Washington is that elected officials will not take action on the fiscal cliff until after the elections, despite encouragement throughout much of this year from The Concord Coalition and many other analysts and groups to work out a bipartisan action plan as soon as possible.

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Thursday, August 9, 2012 - 9:10 AM

Beginning in January, approximately $109 billion in across-the-board spending cuts are scheduled to automatically take effect. Known in budget policy circles as a “sequester,” these cuts are unusual in that the executive branch directs how the spending cuts occur, as opposed to the traditional locus for such cuts -- the congressional Appropriations Committees.

Because this sequester could have such a dramatic impact on many federal programs and the economy in general, Congress is eagerly awaiting specifics about how the administration plans to implement the cuts. On Tuesday President Obama signed the Sequestration Transparency Act, which requires him and the Office of Management and Budget to put forth a report in 30 days on how a sequester would be implemented. An overwhelming House majority passed the legislation last month, and the Senate approved it unanimously.

Sequesters have been part of the budget process for decades. Were this sequester to go into effect, however, it would be among the few that have ever actually taken place in this country’s history, and would certainly have the greatest budgetary effect.

The sequester was initially intended as a “Sword of Damocles” over the “super committee” created by the August 2011 deal to raise the debt limit. It was not actually designed to take effect;...

Monday, August 6, 2012 - 2:00 PM

Updated 8/17 with "History of Debt" infographic below

The Concord Coalition is proud to be partnering with a new effort called "Face the Facts USA." This nonpartisan initiative is a project of the George Washington University School of Media and Public Affairs and will be providing a new fact every day until the election (for 100 total).

The exciting part of the project is that along with their facts, they are producing great infographics and video content that make it easier to understand significant issues and trends that are (or should be) part of the national discussion as we approach election day.

They have also solicited involvement from some important organizations in the policy community to shed further light on the information in their facts -- and that is where The Concord Concord fits in. Many of the facts the project will be presenting falls into categories that Concord writes about and discusses, which allows us to add supplemental material to go along with the fact of the day.

Already, there have been two debt related facts. On...

Wednesday, August 1, 2012 - 6:04 PM

Rep. Steven LaTourette’s announcement this week that he will not seek re-election underscores the difficulties that face elected officials who try to take a constructive, bipartisan approach to dealing with the nation’s most important challenges – notably the need for fundamental fiscal reforms.

“For a long time now, words like compromise have been considered to be dirty words,” the Republican said in a press conference in his Ohio district Tuesday. “And there are people on the right and the left who think that if you compromise you’re a coward . . . . you’re an appeaser.”

LaTourette, who has served in the House since 1995, has built a reputation as a moderate who seeks bipartisan compromise and is willing to challenge members of his own party when he feels they are taking less constructive positions. His frustration, echoed by many other moderates in Washington, should serve as a warning to American voters that partisanship and political intransigence are clouding the country’s future.

That’s particularly true in fiscal policy, as LaTourette indicated in his press conference. He understands the need for sweeping changes to put the federal budget on a more responsible and sustainable course, as recommended by an array of bipartisan groups, including...

Friday, July 27, 2012 - 10:19 AM

The severe fiscal, financial and economic difficulties in Europe underscore the need for Washington to develop credible plans for comprehensive, long-term fiscal reforms -- in part because spillover problems from Europe could well aggravate U.S. budget challenges.

But Europe’s experience also cautions against excessive austerity measures that can turn a weak recovery into another recession. “These are critical times,” says Senate Budget Committee Chairman Kent Conrad, “and we’ve got to be smart about how we get back on track.”

These were among the key themes that emerged Thursday at a forum in Washington that focused on Europe’s perilous situation and its possible implications for the American economy and U.S. fiscal policy. The program was sponsored by the Committee for Economic Development (CED) and The Concord Coalition.

In addition to Conrad’s keynote speech, the forum featured Stephanie Riso, the head of the European Union's fiscal policy unit, and a panel of four American economists: Douglas Elliott, a fellow with the Brookings Institution; Simon Johnson, an MIT professor; Joseph Minarik, senior vice president and director of research with CED, and Diane Lim Rogers, Concord’s chief economist. Ed Andrews, a former New York Times economics correspondent, served as...