The Bottom Line

November 25, 2014

Congressional negotiators are reportedly nearing a deal to address the year-end tax extenders while adding $500 billion to the debt. By reinstating, making permanent, and in some cases significantly expanding a number of tax provisions, this deal would give away half of the revenue raised from fiscal cliff deal or about half the savings generated from the sequester, undoing some of the progress that has been made toward long-term deficit reduction. Horse trading one permanent provision for another and adding other "sweeteners" reportedly under consideration could push the price tag even higher.

Policymakers should fully offset the cost of any new spending or tax breaks, especially permanent ones. But perhaps most disconcerting about these discussions is that they are apparently considering expanding a number of provisions beyond what a permanent extension would cost – the expanded version of the R&D credit under discussion would double its pricetag. The table below outlines the reported deal with cost estimates for each provision (though based on reports of the total cost, some provisions may not have been reported yet).

Because of expanding the provisions, the deal will cost about $120 billion (after interest) than a straight extension.

Potential Tax Extenders Deal (Ten-Year Cost)

Policy Cost of Reported Deal
Incremental Costs Above Straight Extension
Expand and make the research & experimentation credit permanent ~ $160 billion ~ $ 85 billion
Restore 2013 levels of small business expensing permanently (Section 179) $73 billion $4 billion
Extend the American Opportunity Tax Credit permanently and index to inflation ~ $73 billion ~ $5 billion
Permanently allow state residents to deduct sales tax instead of income tax $34 billion -
Extend the Wind production tax credit for 2 years, and phase it out over the next two ~ $20 billion -
Permanently extend increased deduction for mass transit commuters $2 billion -
Permanently extend tax-free charitable donations from retirement plan $8 billion -
Extend 2 S-Corporation provisions $2 billion -
Create a category of tax-free savings account for disabled individuals (ABLE Act) $2 billion $2 billion
Permanently extend a provision for businesses donating food $2 billion -
Extend more generous limits for donating conservation easements  $2 billion  -
Extend the rest of the tax extenders through the end of 2015 $43 billion -
Other unreported provisions ~ $20 billion ?
Potential Costs of the Lame Duck
~ $440 billion ~ $100 billion
Interest Costs  ~ $90 billion  ~ $20 billion
Total Debt Impact
 ~ $530 billion ~ $120 billion

Source: JCT, CBO, CRFB calculations

November 25, 2014

In October, the National Academy for Social Insurance published a study on Americans' preferred solution to making Social Security solvent. CRFB responded with a post questioning the study's option choices and description of some of the options. NASI's Board Chair Bill Arnone defended their methodology in a subsequent post. The following response was posted by CRFB President Maya MacGuineas.

The National Academy of Social Insurance has done a real service by conducting “trade-off analyses” to better understand how Americans would fix a Social Security program quickly headed toward insolvency. By forcing Americans to fully understand and weigh various options, rather than just asking about them in isolation, a trade-off analysis has the power to better simulate the tough choices that lawmakers will face in adjusting the program.

As we wrote in our blog, however, NASI’s trade-off analysis falls short in some areas that cause us to question the results. As we explained, the survey omits the single largest and most prominent set of benefit options – gradual adjustments to the initial benefit – which have been in nearly all plans that restore solvency by slowing benefit growth or with a balance of revenue and spending options. On top of that, many of the choices are framed in fashions that are not parallel with each other, likely leading participants to favor certain choices over others.

November 24, 2014

Recent press articles report that policymakers are negotiating a deal to accompany a temporary restoration of most of the 55 expired tax extenders with a permanent extension of a few provisions. The most commonly mentioned provision is the Research & Experimentation (R&E) credit, which would add $77 billion to the deficit if made permanent. Making the R&E credit permanent without offsets would be a costly and fiscally irresponsible mistake, but not as bad as what some reports suggest policy makers might do: expand the R&E credit and more than double its cost to $156 billion.

The unfortunate reality is that once policymakers abandon pay-as-you-go (PAYGO) rules, it makes it easier to throw budget discipline out the window. The Tax Reform Act of 2014 put forward by Ways & Means Chairman Dave Camp – which did abide by PAYGO – reformed the R&E credit and cut its cost in half to $34 billion over ten years. Meanwhile, the House-passed R&E credit, which appears to be on the negotiating table, would increase the credit from 14 percent to 20 percent of the incremental increase in research expenses and cost $79 billion more than simply making the current credit permanent.

Reinstating expired provisions for any period of time without offsets is fiscally irresponsible, which is why our PREP Plan combined a temporary continuation of the extenders with offsets from tax compliance and a process for tax reform. Making a provision permanent without offsets, however, is worse than a temporary continuation. Even worse is an unoffset (and unadvertised) expansion.

November 24, 2014

According to the latest CBO Budget Options report, adopting the chained CPI – an inflation index that most economists believe is a more accurate measure of inflation than the current CPI – would reduce the deficit by $332 billion through 2024, or $375 billion including interest. Those savings include $150 billion of revenue, $116 billion from Social Security, $66 billion from other mandatory spending, and $45 of interest savings.

As we’ve explained before, the current method used to index most tax and spending provisions is flawed. The measure overstates inflation by failing to account for the fact that consumers substitute similar products based on relative prices – so that if the price of steak falls, they might buy more steak and less chicken. As a result, the federal government currently overspends and undertaxes relative to the intent of the law, which is to index various provisions to actual changes in cost of living (such as cost-of-living adjustments, or COLAs). The Moment of Truth Project paper "Measuring Up" more fully explains the economic rationale for switching to the chained CPI and which programs and tax provisions would be affected.

In addition to being more accurate, adopting the chained CPI also results in huge amounts of deficits reduction. The $116 billion of Social Security savings would eventually accumulate to 0.56 percent of payroll over 75 years, which is enough to close one-fifth of the combined solvency gap and is nearly twice as large as the entire disability insurance gap (though most of the savings would accrue on the old-age side).

Savings from the Chained CPI (billions)
  2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2015-2024
Social Security $0 $2 $4 $7 $10 $13 $16 $19 $22 $25 $116
Other COLAs $0 $1 $1 $2 $3 $3 $4 $5 $5 $6 $29
Health Care $0 $1 $1 $2 $2 $3 $4 $5 $7 $7 $32
Other Spending $0 $0 $0 $0 $0 $1 $1 $1 $1 $1 $5
Revenue $1 $5 $7 $8 $11 $16 $20 $23 $27 $32 $150
Subtotal $1 $8 $14 $18 $26 $36 $44 $52 $62 $71 $332
Interest
$0 $0 $0 $1 $2 $4 $5 $8 $10 $13 $44
Total $1 $8 $14 $19 $28 $39 $50 $60 $72 $85 $376

Source: CBO

November 21, 2014

With the national debt at record highs and projected to increase, lawmakers need to find ways to reduce the long-term budget deficit. Fortunately, CBO has just released an updated book of options to do just that in advance of lame duck legislation and the new Congress being sworn in.

The report updates 79 options from last year's report, providing a selection of ways to either increase revenue or decrease spending. Since all of the options are very similar to those presented last year, the report simply updates the budget estimate, so readers will want to look at the previous report for the pros and cons of each option.

With so many options, we have highlighted just a few in each budget category to illustrate the savings options available to consider. See the report for more options.

November 21, 2014
People who wanted market-driven health care now have it in the Affordable Care Act

Alice Rivlin is a former Director of the Congressional Budget Office and Office of Management and Budget. She has served as a member of the National Commission on Fiscal Responsibility (Simpson-Bowles) and a co-chair of Domenci-Rivlin Debt Reduction Task Force. She currently is on the board of the Committee for a Responsible Federal Budget and is the Director of the Engelberg Center on Health Care Reform at the Brookings Institution.  She recently wrote an Op-Ed in the Washington Post entitled "People who wanted market-driven health care now have it in the Affordable Care Act".  It is reposted here.

As the Affordable Care Act moved into its second open enrollment period on Nov. 15, critics seized on the fact that some beneficiaries are in for unpleasant surprises. Some of those who enrolled last time will face higher premiums if they stay with their current plans. They will have to shop around on the exchange to find a plan with a lower price. When they return to the Web site, they are likely to find more plans to choose from than they did last year. More choices — how confusing!

When shoppers find a cheaper plan, they may find they have to pay more of their health-care bills out of their own pockets. The cheaper plan may also have a narrower network of providers. If they want to stick with a more expensive doctor or hospital, they might have to pay more. If they opt for the higher costs and are eligible for a federal subsidy, they will find that the subsidy will leave more of their premiums uncovered than it did last year.

November 20, 2014

CQ is reporting (subscription required) that the main obstacle to the defense appropriations authorization, which must be addressed during the lame duck session, are a pair of Defense Department proposals to slow the growth of military personnel spending. These recommendations would save $16-$18 billion over five years, providing room for other spending under the defense caps. However, while the Senate Armed Services Committee accepted these proposals, the House rejected them. If Congress requires the Pentagon to cut its budget but keeps rejecting the Pentagon's ideas for budget savings, they will ultimately need to make even more difficult choices.

The first policy, which would slow the rapidly rising cost of health care, would increase co-pays for pharmaceutical drugs in TRICARE. Co-pays for 30-day supplies would gradually increase over ten years from $5 to $14 for generic drugs and $17 to $45 for brand-name drugs. For 90-day mail-orders, they would increase similarly from $0 to $14 for generic drugs and $13 to $45 for brand-name drugs. Non-formulary brand-name drugs would see co-pays of $90, up from $43. The Pentagon has stressed that these increases are necessary to control health care costs and further encourage the use of cheaper generic drugs.

The second policy would slow the growth of the Basic Allowance for Housing (BAH) so that its coverage would fall on average from 100 percent of housing costs to 95 percent. The 5 percent of housing expenses that servicemembers would be expected to cover would still be well below the 20 percent they had to cover in the 1990s.

November 20, 2014

Policymakers are considering using the lame duck session to substantially worsen the nation's budget. A commonly discussed package would add potentially as much as $1.5 trillion over the next 10 years. According to news reports [last one is behind a paywall], politicians of both parties have talked about deficit-financing a permanent continuation of tax breaks that expired last year and a replacement of the Medicare SGR.  A lame duck session is not an excuse to throw fiscal responsibility out the window. We recently released the PREP plan, which shows one way lawmakers could pay for these changes.

Failing to offset these policies would add a huge amount to the debt. Continuing the extenders would wipe away all the new revenue raised in the fiscal cliff deal, while failing to offset the SGR reprieve would break with years of precedent, as the doc fix has been paid for 98 percent of the time since 2004.

A moderate-sized package that includes the SGR and health extenders, plus one of the most-often discussed combinations of tax extenders, would add $640 billion to the debt ($760 billion with interest), increasing the debt by another 3 percent of GDP. In a worst case scenario if lawmakers take the most costly approach (described below), debt would rise from a near record-high 74 percent of GDP today to 83 percent of GDP by 2024. Conversely, if policymakers follow current law spending levels, debt will be much lower – still growing, but reaching 77 percent of GDP by 2024.

November 19, 2014

Congress and the President need to prep for some important upcoming fiscal moments, and CRFB has a plan to help them do just that. The Paying for Reform and Extension Policies Plan, or the PREP Plan shows a path to restoring the expired tax extenders and avoiding the Medicare Sustainable Growth Rate cuts without adding $1 trillion to the deficit.

The PREP Plan assumes (but does not endorse) the passage of the Tricommittee SGR reform bill and a two-year tax extenders package. The plan includes over $250 billion of offsets, roughly two thirds from reforming incentives to slow health care cost growth and one third from improving tax compliance, along with a fast-track process for tax reform.

You can read the full plan here and view some of the details in the table below.


`Due to interactions, policies can't be scored on an individual basis
*Savings are less than $500 million

In addition to putting forward a plan, CRFB released a number of principles that should apply to any effort to continue extenders or reform the SGR.

November 18, 2014

Following a final rule issued by the Centers for Medicare and Medicaid Services (CMS), CBO has updated its estimate of various "doc fix" policies to replace the Sustainable Growth Rate (SGR) formula. The new estimates show mixed news for policymakers depending on the type of approach they wish to take.

CMS determined that the SGR would cut Medicare physician payments by 21.2 percent in April when the current doc fix expires. Simply freezing physician payments at today's levels would cost $119 billion over ten years, somewhat less than the $131 billion CBO estimated in its August baseline. Providing 0.5 percent annual payment increases, as Congress did for 2014, would cost $140 billion.

Importantly, CBO re-estimated the bipartisan agreement on a permanent SGR replacement at $144 billion, $6 billion more than projected in February – and that estimate included $16 billion of new spending that was passed in the doc fix this past spring, although some of the savings within the SGR replacement bill were used to help offset the temporary fix. 

November 17, 2014

This post is a letter from CRFB President Maya MacGuineas about the passing of former Congressman and CRFB co-Chair Bill Frenzel. You can also view the letter here.

Dear Friends,

It is with great sadness that I inform you that former Congressman and CRFB co-Chair Bill Frenzel died this morning.

November 14, 2014

The CBO has updated its data on the distribution of income and taxes. This analysis contains a wealth of data detailing changes in household income, tax rates, and other statistics since 1979. Below are some of the highlights from the report, drawing out trends since 1979 and how the new 2011 data factored in.

Tax rates have fallen for everyone since 1979 but have risen since 2011. This statistic is no surprise to those who noticed the relatively low revenue intake during and after the Great Recession.  In 1979, the average tax rate was 22 percent, but after the tax cuts in the early 2000s, they fell to around 20 percent. Since the Great Recession, they have fallen further to around 18 percent as individuals' income declined and temporary tax cuts were put in place. The rate decreases were largest for the middle quintiles but were also fairly sizeable for the lowest earners and the top 1 percent. The one major change between 2010 and 2011 – the replacement of the Making Work Pay (MWP) tax credit with the payroll tax cut – made tax rates slightly more regressive, since many of the lowest earners benefited more from MWP, and the highest earners who didn't benefit from MWP could get the payroll tax cut. However, CBO's preliminary numbers for 2013 also show that changes in tax law since 2011, namely the fiscal cliff deal and taxes in the Affordable Care Act, have partially reversed the longer trend, raising tax rates for the bottom 99 percent by 1 percentage point and by 4 percentage points for the top 1 percent.

Income has risen much more for the top 1 percent than for everyone else.  Inflation-adjusted after-tax income (which included government transfers) has risen by 58 percent overall since 2011, but the bottom 90 percent of earners on average have seen income growth below that (a low of 35 percent for the middle quintile). The next 9 percent of earners (90th to 99th percentile) have seen their income grow by more than that, but less than the top 1 percent, who saw their income grow by 200 percent. As a result, the Gini index, a commonly used measure of income inequality, has increased from .358 to .436. Although taxes and transfers do more to reduce inequality than they did in 1979, the underlying distribution of income is much more skewed.

November 13, 2014

Henry Aaron – Chair of the Social Security Advisory Board and a Senior Fellow at the Brookings Institution – recently weighed in on the Social Security Disability Insurance (SSDI) debate. Given the imminent depletion of the program’s trust fund – leading to an across the board cut in benefits in 2016 absent congressional action – experts and policymakers are starting to wonder how to best address the program’s needs.

As we have argued before, many experts agree that SSDI is facing more challenges than insolvency. Many aspects of the program could be improved, from the incentives created by the eligibility criteria to the determination process to the efforts to encourage beneficiaries to return to work.  While policymakers could simply inject funds into the program – through a payroll tax reallocation from the old-age fund, an inter-fund loan, or a general fund transfer – this would waste an opportunity to enact reforms that would make the program better for beneficiaries, workers insured by the program, and society as a whole. As Aaron explains:

Whether out of compassion or an instinct for political survival, Congress is quite unlikely to cut benefits for disabled Americans, a group that contains some of the neediest of our fellow citizens… Simply reallocating payroll taxes is not acceptable to many members of Congress in both parties. A consensus has arisen that both the design and administration of disability benefits are flawed. Critics of the program have promised to insist on reforms as a condition for agreeing to shift taxes around. Alas, agreement on just what the flaws are and what to do about them is elusive. Even worse, we lack information to undergird well-considered reforms.

The program faces challenges in a number of areas, including its core tenet, the definition of disability. To qualify for benefits, insured workers must be unable to earn above a certain threshold ($1,010 a month in 2012 for non‐blind individuals) due to a “medically determinable physical or mental impairment” (or combination of impairments) that is expected to last at least 12 months or result in death. By defining disability as the inability to work, the program discourages beneficiaries who could potentially go back to the workforce from trying, out of fear that they may lose benefits.

November 11, 2014
Pushing on Air in a Balloon: Health Cost Growth and $1,000 Pills

Dr. Eugene (Gene) Steuerle is the Richard B. Fisher chair and Institute Fellow at the Urban Institute and a member of the Committee for a Responsible Budget.  He wrote a column today on his blog - The Government We Deserve. It is reposted below.

Numerous recent articles have tried to address whether health cost growth is slowing more permanently. Though I have entered that debate at times , I must admit that it’s a complex question for which there is no definite answer. Policymakers and private practitioners have improved some of the ways that health care is priced and delivered, and more improvements are no doubt forthcoming. But the stories of Gilead and its $1,000-a-pill Hepatitis C drug make one point entirely clear: improving health care costs selectively is like making indentations in a full balloon. Pushing down the air in one place merely makes it pop out somewhere else.

Consider how the government has designed health insurance, particularly Medicare. Essentially, it has delegated its constitutional powers of appropriation to private individuals and companies like Gilead. Congress doesn’t vote to spend more on hepatitis cures. It lets Gilead, along with patients and doctors, make that decision and then shift the costs back to other citizens. As long as Congress refuses to exercise its appropriations responsibility, every cost-saving measure could be nullified by a new Gilead.

The original sin of health insurance, public or private, has been to allow patients to demand and providers to supply more health care while pushing charges onto others. In the extreme, at a zero price to the patient per service received and a potentially unlimited supply of services for which more compensation and profits can be made, it is not surprising that health costs in this country have grown from about 5 percent of GDP in 1960 to around 17 percent today.

November 10, 2014

As expected, the Obama Administration today issued amendments to its FY 2015 war spending (Overseas Contingency Operations) request, adding $5.6 billion for ISIS-related operations to the $65.8 billion already requested. The request includes $5 billion for the Defense Department and $520 million for support for opposition in Syria, Lebanon, and Jordan as well as humanitarian assistance in Iraq and Syria.

The Pentagon spending mostly goes to operations and maintenance accounts in support of the Army and Air Force. The request also includes a $1.6 billion Iraq Train and Equip Fund, which would provide military support and training for the Iraqi government through FY 2017. Other items include support for the moderate Syrian opposition and support for the Jordanian and Lebanese governments in securing their borders.

Administration Amendments to War Spending Request by Category
Category FY 2015 Spending
Previous OCO Request $65.8 billion
Military Personnel $0.1 billion
Operations and Maintenance $2.3 billion
Iraq Train and Equip Fund $1.6 billion
Procurement $0.8 billion
Research, Development, Testing, and Evaluation $0.1 billion
Syrian Opposition Funding $0.2 billion
Jordan and Lebanon Funding $0.3 billion
Humanitarian Assistance $0.1 billion
Amended OCO Request
$71.4 billion

 Source: OMB
Numbers may not sum due to rounding.

November 7, 2014

Two of the biggest items among the tax extenders that Congress may consider before the end of the year are two provisions that allow accelerated write-offs of investments: section 179 expensing and bonus depreciation. Section 179 expensing provides an immediate write-off for small businesses for a certain amount of investment; both the amount and the level at which the favorable tax treatment phase out decreased significantly when the extenders expired at the end of last year. Bonus depreciation allows all businesses to write off half of certain investments immediately. Both provisions are among the costliest in the tax extenders package, costing a combined $315 billion over ten years if extended permanently.

These two policies, and in particular bonus depreciation, are generally justified as stimulative measures, and since they effect only the timing of write-offs, their temporary nature is central to their effectiveness in that regard. However, the Congressional Research Service's Gary Guenther in a recently updated report finds limited short-term economic benefit.

Though there appear to be no studies that address the economic effects of the enhanced Section 179 allowances enacted in the previous eight years, several studies have examined the economic effects of the 30% and 50% bonus depreciation allowances that were available from 2002 to 2004. The findings indicated that accelerated depreciation is a relatively ineffective tool for stimulating the economy during periods of weak or negative growth. [emphasis added]

Guenther sees many reasons why the effect of accelerated write-offs may be limited, including both their design and the economic context.

November 6, 2014

The White House this week requested an additional $6.18 billion in discretionary appropriations for the current fiscal year to cover the costs associated with mitigating the Ebola outbreak.

Of the additional funding, three-quarters is for the immediate response to tackle Ebola, while the remaining amount is part of a contingency fund to “ensure that there are resources available to meet unforeseen changes in the epidemic.” The emergency spending would go to various health agencies as well as international efforts to combat the spread of Ebola. The full breakdown of the request is as follows.

Administration Supplemental Spending Request by Category
Category FY 2015 Spending
Department of State and International Assistance Programs $2.1 billion
     US Agency for International Development (USAID) $1.98 billion
     Diplomatic Operations (Department of State) $36 million
     Contributions to International Organizations $85 million
     Bio-safety Training $5.6 million
Department of Defense (DARPA) $112 million
Department of Health and Human Services $2.43 billion
     Centers for Disease Control and Prevention $1.83 billion
     Public Health and Social Services Emergency Fund $333 million
     National Institutes of Health $238 million
     Food and Drug Administration $25 million
Contingency Fund $1.54 billion
Total, President's Request $6.18 billion

Source: OMB

November 5, 2014

With the 2014 midterm elections mostly in the books, the current Congress will return from weeks of campaigning to finish some remaining items before the end of the year and the swearing in of the new Congress. This year's lame duck session will likely to be less busy than some years, but there are still a few key things to get done before the 114th Congress begins.

To-Dos

Enact Appropriations

The current continuing resolution funding the government will expire on December 11, so policymakers will have to either extend it, enact appropriations bills, or cause a shutdown. This is the most important to-do list item for the lame duck Congress. Prior to the recess, appropriators indicated they wanted to get an omnibus appropriations bill done instead of a CR extending funding into the next Congress, and the chances of that look good -- thanks to the Murray-Ryan agreement setting defense and non-defense spending levels, House and Senate funding allocations are relatively close. Key questions that remain include whether lawmakers will provide supplemental funding for Ebola or ISIS and also what level of war spending they will provide (hopefully below the current level -- see "to-don't" list below).

For background on the appropriations process, see our Appropriations 101 document.

Pass Defense Authorization

Somewhat related to appropriations, lawmakers will also have to pass a defense authorization bill. For the budget world, this may be important to see if Congress will consider codifying a strict definition of war spending -- as the House budget resolution and an amendment to the House defense appropriations bill did -- or consider personnel savings policies that the Pentagon has long called for. Doing either of those things may help policymakers stay within the defense spending caps in the future and better ensure the integrity of those caps.

November 3, 2014
Despite gains, much work remains on entitlement programs

Over the long term, the country's debt is projected to grow to unsustainable levels. This outlook has not changed for the last two decades, according to a recent Washington Post op-ed authored by former Senators Bob Kerrey (D-NE) and John Danforth (R-MO), co-chairs of the 1994 Bipartisan Commission on Entitlement and Tax Reform. Entitlement trends contributing to dramatic growth in debt over the long term were considered unsustainable then, and they still are.

Kerrey and Danforth note that there has been some good news, notably the slowdown in health care spending and (temporarily) low interest rates reducing the amount the government pays in interest. However, the core drivers of our long-term problems – population aging and rising health-care costs – remain. The problems have become harder to address:

Meanwhile, the passage of time, the failure to take more ambitious actions and the enactment of new obligations have combined to limit our choices and placed the government in a more difficult position to address the challenges than it was in 20 years ago.

The debt burden has grown sharply. Debt held by the public has gone from 48 percent of gross domestic product in 1994 to 74 percent in 2014. This limits our fiscal flexibility and constrains the policy choices of future generations.

Demographics are working against us. The baby boom generation, which was coming into its peak earning years when we were on the commission, has begun to retire, slowing potential economic growth, lowering potential revenue and increasing spending on retirement and health-care benefits.

Because of the delay in addressing entitlements, it will be more difficult to turn the titanic trends in these budget programs. Social Security has run cash deficits since 2010, and every year of delay increases the shortfall which must eventually be addressed. The senators note that health care programs have expanded, income tax rates have been cut, and the amount lost annually to "tax expenditures" has increased. At the same time, discretionary spending will be at its lowest level in 50 years (as a percentage of the economy), making it increasingly difficult to find savings in that area.

October 31, 2014

Happy Halloween! For the spookiest day of the year (though some might argue that's April 15th), CRFB is thinking about scary costumes and wondering what budget polices they represent.

Frankenstein—What could be more fitting than comparing our nation’s tax code to a monster cobbled together by a mad scientist?  Comprehensive tax reform should be an essential part of the next Congress' agenda.  Its spark of life is just what this country and the economy needs.

Zombies—The undead rising from the grave is just like one of the more pressing issues in the upcoming lame duck Congress. More than 50 tax cuts known as "tax extenders" lapsed at the end of 2013, yet Congress is considering retroactively bringing them back from the dead for 2014. If a two-year extension (2014 and 2015) passes Congress after the election, the impact is a trick, not a treat, of about $85 billion added to the national debt over ten years.  But of course there could be an even scarier deal

Vampires—Interest on our national debt will suck the life out of our budget, leaving little room for important spending. Right now, interest rates are low and we pay relatively little. But Dracula is hovering above us: Interest payments are projected to nearly quadruple in nominal dollars by the end of the decade (increasing as a share of the economy from 1.3 percent in 2014 to 3.0 percent in 2024). At the same time, discretionary outlays will shrink from 6.8 percent to 5.2 percent of GDP in 2024.  The essential roles of government are being bled dry by interest on our national debt.

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