August 22, 2014

Washington Budget Report: Nov. 21, 2012

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Rudman Remembered as Champion of Fiscal Responsibility

The nation this week mourned former U.S. Senator Warren B. Rudman, a tireless champion of responsible federal budget policies and a founding co-chairman of The Concord Coalition.

President Obama called Rudman, who died Monday night at age 82, “one of our country’s great public servants” who should be considered a good model for elected officials in both parties.

“As an early advocate for fiscal responsibility, he worked with Republicans and Democrats alike to call attention to our nation’s growing deficit,” Obama said. “And as we work together to address the fiscal challenges of our time, leaders on both sides of the aisle would be well served to follow Warren’s example of common-sense bipartisanship.”

Rudman, a lifelong New Hampshire resident, built a distinguished record over 12 years in the Senate and remained active in public affairs after leaving office. In 1992 he founded The Concord Coalition with former Senator Paul Tsongas and former Commerce Secretary Peter G. Peterson.  

“Warren Rudman was an outstanding Senator and an outstanding citizen,” said Concord Co-Chairman and former Senator Sam Nunn. He said Rudman “faced hard truths with courage and candor, and he worked with members from both political parties who were willing to put America’s interests first.”

“He knew that America had to face up to our current and long-term fiscal challenges,” Nunn added, “and he believed that if the American people were given the facts by courageous leaders, our fiscal problems would be confronted and solved.”

Bob Kerrey, a former senator and former Concord co-chair, said Rudman was “a leader who always put the nation’s interest ahead of politics” and who left “a remarkable living legacy: a stronger, safer, more prosperous and more just America.”

Robert L. Bixby, Concord’s executive director, said: “With his courage, wisdom and focus on the broad public interest, Senator Rudman exemplified the kind of political leader that the country needs so much today. He was both a man of strong principles and an advocate of thoughtful compromise. We will sorely miss his guidance and his friendship.”

Positive Signals on Federal Budget Talks

Prospects for constructive budget talks between President Obama and congressional leaders seem to have brightened after an initial meeting at the White House late last week. The signals that came out of that meeting were “very good,” according to Concord Coalition Executive Director Robert L. Bixby.

“There were no lines in the sand, no threats, and no impugning each other’s motives,” Bixby points out in a recent blog post. “Beyond the low bar of politeness, President Obama and his guests appeared to be focused on the right priority -- achieving a long-term fiscal plan and not just a quick fix to the immediate pressure of the ‘fiscal cliff.’ ”  

The fiscal cliff refers to a year-end combination of scheduled tax increases and spending cuts that could throw the U.S. economy back into recession.

Elected officials have been talking about a two-step process, with a down payment on deficit reduction this year while putting together a framework for a long-term deal to be enacted next year, along with a credible back-up mechanism in case Congress fails to act. Concord and many other outside observers have recommended that basic approach.

An apparent consensus on the fundamental point that everything must be on the negotiating table, including revenues and entitlement spending, was also encouraging.

“Whether the promising tone of this start can be maintained through the tough negotiations ahead depends on whether these leaders are truly prepared to make some compromises that will be hard for their respective party bases to swallow,” Bixby writes.

He also says elected officials must keep focused on the big picture and not get derailed by disputes over individual policies – such as tax rates for the highest incomes -- that have “more political significance than economic consequence.”

Obama has also held recent meetings about the budget at the White House with labor leaders and business executives, including some members of Fix The Debt, a campaign aimed at fiscal reform.

Last week the Peter G. Peterson Foundation convened some of the nation’s leading experts on fiscal and economic issues at a Washington forum entitled “Post-Election: the Fiscal Cliff and Beyond.”

Speakers who called for more responsible budget policies included former Federal Reserve chairmen Paul Volcker and Alan Greenspan as well as Alan Simpson and Erskine Bowles, founders of Fix the Debt and co-chairs of the National Commission on Fiscal Responsibility and Reform.

Read more with A Good Start

Summers Discusses Key Considerations in Tax Reform

The country needs a very different type of tax reform today than it did when Congress passed the Tax Reform Act of 1986, according to former Treasury secretary Lawrence Summers.

"There are a number of aspects about the current context that stand out as quite unique -- very different from where the world was in 1986 and at most other moments when tax reform has been a prominent area of work," Summers told the annual conference of the National Tax Association last week in Providence, R.I. Diane Lim, chief economist for The Concord Coalition, attended the conference and discusses Summers’ views in a new blog post.

In contrast to the full-employment economy of the 1980s, Summers said, the economy is now constrained on the demand side. He also noted that income distribution is becoming considerably more unequal. Another factor: The aging of the population and other trends point towards a substantial increase in the size of government over the next 20 years.

Summers urged policymakers to put more focus on three areas:  Tax policies that more effectively promote aggregate demand and employment,  taxes that discourage behaviors that generate social costs, and tax increases on the financial sector.

Concord Economist Becomes President of Tax Association

Diane Lim, chief economist of The Concord Coalition, became president of the National Tax Association for the coming year at the NTA’s annual conference last week in Providence, R.I.

Founded in 1907, NTA is the leading organization of tax professionals dedicated to advancing the understanding of the theory and practice of public finance. It has a diverse membership of government, corporate, academic and independent tax professionals.

Lim (formerly Rogers) writes frequently on a variety of fiscal and economic issues for Concord and is quoted by news organizations around the country. She also writes the Economist Mom blog (EconomistMom.com). She has served as a vice president of NTA for the past two years.

“The coming year will be a critical time for tax policy, so I am especially honored and thrilled to be serving as NTA president,” Lim said. “With taxes now such an essential part of the broader debates about fiscal and economic policy, if we can shine a bigger spotlight and hold up a larger megaphone to the collective wisdom of the NTA, I believe tax policy will be made better by it.”