The Bottom Line

June 30, 2011

As our nation’s debt continues along its unsustainable path, it has become increasingly essential for a comprehensive fiscal plan that targets all areas of the federal budget—including defense.

June 29, 2011

Yesterday the Government Accountability Office (GAO) released a study on the complexity of the federal tax code at a Senate Finance Committee hearing on tax reform. The GAO study shows that switching to a simpler, fairer, and more efficient tax code would be a relatively easy way to control the deficit while bolstering the economy.

June 28, 2011

Earlier today, Sens. Joe Lieberman (I-CT) and Tom Coburn (R-OK) released a Medicare reform proposal similar to one that Sen. Lieberman proposed a few weeks ago. This proposal, however, has more cost savings than Sen. Lieberman's first Medicare reform plan and would use some of the savings to offset a three-year fix for the SGR.

June 28, 2011

Yesterday CRFB President Maya MacGuineas appeared on Bloomberg Television to talk about how imperative it is to address our dire fiscal outlook while at the same time raising the debt ceiling on time. MacGuineas argued that the current debt ceiling debate has been different than previous ones:

June 27, 2011

Last week the Economist published an article entitled America's debt ceiling: The mother of all tail risks. This article explains what could happen if the United States defaults, in light of the August 2nd deadline being a mere five weeks away. Of paticular note, the Economist highlights the recent upward trajectory of credit-default swaps and provides further insight as to why even a technical default could cause turmoil in markets and how this would likely cost the government significantly.

June 27, 2011

In their recent Long Term Outlook, CBO shows the nation to be on an unsustainable fiscal path if we continue our current policies. Under its Alternative Fiscal Scenario, debt reaches 100 percent of GDP by the end of the decade and 200 percent by 2037.

June 27, 2011
What's Needed: A $4 Trillion Gimmick-Free Deficit Deal in Two Parts

In a recently published op-ed in The Hill, CRFB board members Erskine Bowles and Alan Simpson write that a serious fiscal reform plan must be agreed to and enacted in order to get our exploding debt under control.

June 27, 2011
A Weekly Update on Fiscal Policy Developments

Where Is Our Columbo? – Peter Falk, the award-winning actor best known for playing the rumpled, yet wily, Lt. Columbo, died on Thursday. Falk, who was an analyst with the Connecticut State Budget Bureau before embarking on a professional acting career, created an endearing and enduring character who used unique techniques to get the job done. Detective Columbo always got the bad guy using a brilliant mind and obsessive desire to tie up loose ends, all hidden behind a disheveled facade to lull the guilty party into a false sense of complacency.

June 24, 2011

Continuing our analysis of CBO's Long-Term Outlook, we looked yesterday at the policy assumptions under CBO's two budget paths and at spending and revenue projections in their analysis. Today, we will look at what CBO believes will happen to the economy as a result of our growing debt burden.

June 24, 2011

Despite House Majority Leader Eric Cantor’s (R-VA) decision yesterday to withdraw from the Biden-led negotiations to avoid default, there is still hope in Washington that lawmakers can reach an agreement by August 2nd. In response to Cantor’s withdrawal from the talks, Derek Thompson -- a visiting fellow at CRFB -- wrote an interesting article titled The Only Solution to the Budget Mess: Raising Revenues, Not Taxes.

June 23, 2011

Spending and revenues in the long-term outlook is always an interesting topic to discuss. Just like with debt, you find words and phrases like "unprecedented" or "extraordinarily high" used frequently. In this blog, we'll use those words a number of times while showing spending and revenue levels under the Extended-Baseline Scenario and Alternative Fiscal Scenario (AFS).

June 23, 2011
Drivers of Entitlement Growth in CBO'S Long-Term Outlook

As we explained in our recent analysis of CBO's Long-Term Budget Outlook, the debt is on an unsustainable path. Only a decade from now, under their Alternative Fiscal Scenario, debt will surpass 100 percent of GDP. And by 2037, it will exceed 200 percent.

Driving this is the increasing cost of entitlement spending -- Social Security, Medicare, Medicaid and (to a lesser extent) other health spending. But what drives the growth of these programs?

June 23, 2011

At 10am today, CBO director Doug Elmendorf will testify before the House Budget Committee on CBO's latest Long-Term Budget Outlook, released yesterday.

June 22, 2011

With the release of CBO's Long-Term Outlook, we thought it would be useful to break down the assumptions that the Extended-Baseline and the Alternative Fiscal Scenario make. Considering the huge divergence in the debt paths of these two scenarios, it is important to understand what they do.

June 22, 2011

Update: Our paper on CBO's Long Term Outlook has been released.

CBO has just released its 2011 Long Term Outlook, detailing spending, revenue, and debt levels over the next 75 years. The report shows a similar trend in both the Extended Baseline and Alternative Fiscal Scenarios: worsening in the short term, improvement in the long term compared to last year.

June 21, 2011

The Sustainable Growth Rate (SGR), the formula which sets provider payments for physcians under Medicare and which was originally enacted in 1997, calls for an unrealistic 30 percent cut in provider payments in 2012 if Congress does not act. Of course, it has acted frequently in the past decade to override the payment cuts that SGR has mandated. POLITICO has an article today talking about the difficult but necessary task of "weaning" Congress off of the SGR formula for Medicare.

June 21, 2011

Today, the Senate confirmed former CIA Director (and former CRFB Co-Chair!) Leon Panetta by a unanimous vote to become our new Secretary of Defense.

June 21, 2011

This afternoon, CRFB released a paper that lays out the dos and don'ts for the Biden group negotiations. We provide a list of goals to accomplish and a number of steps to avoid.

The things we need to see are:

  • An increase in the debt ceiling as soon as possible
  • A debt deal that calls for $4 to $5 trillion of deficit reduction
  • A deal that has a down payment that includes steps to reforming entitlement programs
  • A deal that includes a process for making the necessary further changes to entitlements and taxes

The things we need to avoid:

June 21, 2011

Recently, CBO Director Doug Elmendorf spoke to the Federal Reserve Bank of New York about current policies and how they affect the nation's fiscal future. Elmendorf’s presentation, titled Federal Budget Math: We Can’t Repeat the Past, highlighted key aspects of federal budget policy in the last forty years and of CBO’s projections for 2021.

June 20, 2011

Time ‘Fore’ Action – Golf, that favorite pastime of power players, was even more popular than usual in Washington last week. Not only did the U.S. Open bring the best professional golfers in the world to the D.C. area, but a powerful foursome also hit the links, perhaps linking fiscal policy matters to their conversation as they played their round. Yet, while the Congressional Country Club in Bethesda, Maryland saw a dominating U.S.

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