The Bottom Line

August 1, 2011

We have a deal (pending votes, of course). (UPDATE: CRFB has a press release on this deal here)

August 1, 2011
A Weekly Update on Fiscal Policy Developments

Breakthrough? – There were tough negotiations. Deals were made. Big names were moved. It wasn’t just the MLB and NFL that saw frenetic action ahead of deadlines. The approaching August 2 debt limit deadline has had policymakers scurrying to reach an agreement as nervous voters and markets watch. Yet, unlike Donovan McNabb and Albert Haynesworth, the debt ceiling remains a presence in DC as the deadline nears.

July 30, 2011

Update: CBO has just released its own comparison table of the Reid and Boehner plans, where it now breaks out the war and non-war interest savings under Reid's plan. This blog has been updated from its original posting to reflect the new numbers.

 

July 29, 2011
Listen Up Washington; We've Been There

CNN recently invited several former Washington leaders to offer their thoughts on Washington's debt-ceiling gridlock, and we are proud to say that three out of seven are CRFB board members: Alan Simpson, David Stockman, and CRFB co-chair Bill Frenzel. All three had interesting perspectives on the debt standoff.

Sen. Simpson wrote about his frustation that no meaningful action has been taken to stabilize and reduce our debt. He highlighted the importance of the Gang of Six proposal, saying:

July 29, 2011

During the debt ceiling debate, what the credit ratings agencies have said can get lost in the shuffle. So, a summation of what each of the three major agencies has said about the debt ceiling and the enactment of a fiscal plan:

July 29, 2011

With the Bureau of Economic Analysis releasing tepid GDP numbers of only 1.3 percent growth and last night's failure of the House of Representatives to bring up Speaker Boehner's (R-OH) debt limit proposal, the markets opened down.

July 28, 2011
And don’t take credit for policies already in place

As CRFB has certainly been making clear, we would prefer a "big deal" that dealt with all areas of the budget and reduced debt as a share of the economy. But given the time constraints and the need to raise the debt ceiling, we’ve also argued that a two-step process with strong enforcement mechanisms could be the next best way to achieve a sustainable debt path.

July 28, 2011

Many of the fiscal plans produced over the last several months -- including the Gang of Six plan and the President’s budget -- propose selling excess federal property to help reduce our nation’s debt (see CRFB’s Comparison Tool to compare all the different fiscal plans).

July 28, 2011

Fed’s latest Beige Book, released yesterday, pointed to slowing growth (but still positive growth) across many economic sectors and regions. On a region by region basis, the Fed found that Fed districts nearest the Atlantic seaboard were most affected by the economic slowdown while other districts such as the Atlanta District and the Dallas District felt their growth less impeded.

July 27, 2011

Speaker of the House John Boehner has released an updated version of his debt ceiling proposal which, according to a new CBO score, achieves an extra $66 billion in deficit reduction, totaling $917 billion in savings.

July 27, 2011

As the debt-ceiling proposals from Rep. Boehner and Sen. Reid continue to be debated, support for the comprehensive, balanced proposal offered by the Senate's Gang of Six early last week continues to build.

July 27, 2011

A recent report from the Associated Press Global Economy Tracker found that the U.S. national debt (as a percentage of GDP) is the fifth largest among the world's major economies. According to the Tracker, which analyzes financial and economic data from thirty of the world's largest economies, U.S. debt in the first three months of the year equaled 95 percent of GDP.

July 27, 2011

Earlier this week, the International Monetary Fund (IMF) released its annual report The United States: 2011 Article IV Consultation, highlighting the need for the United States to enact a comprehensive fiscal reform plan that would stabilize and reduce our debt.

July 26, 2011

In a new op-ed published in Investor's Business Daily, CRFB co-chairs Tim Penny and Bill Frenzel offer insight into how Democrats and Republicans in Washington can come together in the debt negotiations to avoid economic disaster, suggesting that the way out is by coming to "the type of principled compromise in which both parties are willing to accept things they don't like for the good of the nation."

July 26, 2011
Common Ground and Subtle Differences

If you take a look at House Speaker John Boehner's proposal and Senate Majority Leader Harry Reid's proposal -- both of which increase the debt limit and enact deficit reduction in a two-part process -- you'll see that they are more similar than they are different (see below for a comparison table of elements within the proposals). Boehner has been promoting his proposal as one that would reduce deficits by $3 trillion, with $1.2 trillion in discretionary cuts upfront and $1.8 trillion to come out of a special process this fall.

July 26, 2011

Update: CBO has scored Boehner's legislation, showing it to reduce deficits by a total of $850 billion from 2012-2021. The discretionary caps are $1.1 trillion below CBO's March baseline over ten years, but only $840 billion below a baseline that incorporates the final CR.

July 25, 2011

The state of play in the debt negotiations has been an ever-evolving spectacle over the last several weeks. First the Biden group negotiations, then talks between Congressional leaders and the White House, then negotiations between the President and Speaker of the House John Boehner, then the Reid-McConnell proposal, then the Gang of Six proposal, then additional negotiations between the President and the Speaker--just to mention a few.

July 25, 2011

Tonight, President Obama will address the nation at 9 PM EST about the current negotiations going on between him and Congress over how to raise the debt ceiling and begin to control rising federal debt. Let us hope this speech furthers the current impasse currently strangling Washington and helps lead towards a comprehensive and bipartisan deal. You can watch the address live at www.whitehouse.gov/live.

 

July 25, 2011

Although this idea isn't brand new, CBO director Doug Elmendorf has a blog post that concisely illustrates the trade-offs that must be made in order to get our fiscal policy back in line. In other words, we're going to have to make some choices about the size of government and the allocation of resources within that constraint. 

July 25, 2011

Elmer B. Staats, a Senior Advisor of the Committee for a Responsible Federal Budget and former comptroller general of the United States, died peacefully on July 23 in Washington, DC. Mr. Staats was 97 years old and died as a result of congestive heart failure.  During the Truman, Eisenhower, Kennedy, and Johnson administrations, Mr. Staats served as deputy director of the budget before becoming the comptroller general, where he served from 1966 through 1981.

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