The Bottom Line

May 4, 2011
A Midweek Update on Federal Fiscal and Budget Policy Developments

Bumping Up on the Debt Ceiling – On Monday, Treasury Secretary Tim Geithner sent a letter to congressional leaders saying that his department this week would begin the “extraordinary measures” necessary to stave off a U.S. default absent an increase in the statutory debt limit, which will be breached around May 16.

May 4, 2011

Since President Obama put the idea of a debt trigger in the public's mind, it has become a hot topic. Third Way recently put out a piece detailing different types of triggers, including the recommendation from Peterson-Pew Commission on Budget Reform.

May 4, 2011
Raise the Debt Ceiling...With Strings

In an op-ed in The Hill today, CRFB co-chairs Bill Frenzel and Charlie Stenholm propose a fiscally responsible approach to raising the debt ceiling. They recommend including a comprehensive fiscal reform plan along the lines of the Fiscal Commission's proposal as part of a debt ceiling increase.

May 3, 2011

From the President's recent deficit-reduction framework to policy forums on Capitol Hill, budget process reform has recently become an increasingly popular issue in the world of politics.

May 2, 2011

Wedding Vows and Vows Kept – Last week the royal wedding in England between William and Kate garnered a great deal of attention on this side of the pond. Meanwhile another union seemed to blossom in this country – the pairing of a debt limit increase with some type of trigger mechanism. Now, the word that Osama Bin Laden has been killed and buried at sea puts an end to the quest for the man most responsible for the 9/11 attacks and finally fulfills a promise to bring him to justice that spanned two administrations.

May 2, 2011

The Chairmen of the Joint Chiefs of Staff, Admiral Mike Mullen, made some important statements recently regarding our national debt and defense spending (hattip to Gordon Adams over at Capital Gains and Games).

There are four main budgetary points he brings up:

April 29, 2011

Last week we issued an analysis of the fiscal framework that President Obama recently unveiled. We noted that, while it was a strong step in the right direction, it still fell short of the debt reduction required. Well, the Onion has stepped in to fill the hole.

April 29, 2011

At 3:15 p.m. today, as part of the New America Foundation's 2011 Retreat, Slate Group Chairman Jacob Weisberg will moderate The Moment of Truth: America's Fiscal Crisis, featuring several fiscal policy experts--including CRFB president Maya MacGuineas.

It's sure to be an interesting and informative discussion, so don't forget to check it out!

 

Click here to watch the live video.

April 29, 2011
How to Add Teeth to Obama's Plan for a Debt Failsafe

Today's Washington Post features an op-ed by CRFB president Maya MacGuineas on ways to improve President Obama's debt failsafe proposal. She writes that in order to succeed, debt targets and triggers need to be "well structured and politically realistic" and lays out several suggestions to make the President's failsafe proposal more effective. She states:

April 28, 2011

“Trigger” has become the term du jour in the budget world as of late, particularly as it relates to the debt limit, and it doesn’t refer to shooting ourselves in the foot. On the contrary, agreement on a debt or deficit trigger could be just the thing to help us come together on raising the statutory debt ceiling and avoid facing the firing squad.

April 28, 2011

Yesterday, Senate Majority Leader Harry Reid (D-NV), proposed adding a "deficit cap" to forthcoming legislation to increase the debt ceiling.  While the details of this deficit cap are as of yet unknown, in theory, it sounds like a mechanism similar to the "debt failsafe" that President Obama proposed within his Budget Framework.  A deficit trigger would presumably require deficits to be at or below a

April 27, 2011

In early 2009, lawmakers enacted an economic stimulus package to help stem the economic freefall which was shedding hundreds of thousands of jobs per month as the unemployment rate was on a quick climb towards ten percent. Regardless of the merits or size of a fiscal stimulus package, we at CRFB warned against supposedly temporary provisions lasting much longer than the stimulus dictated.

April 27, 2011

UPDATE: Gordon Adams over on CG&G argues that Panetta is the right man for the job for three reasons: he knows budgets, he's a decisive administrator, and he's bipartisan. Overall, he thinks it's a great appointment.

April 26, 2011

Megan McArdle at The Atlantic writes about what happens if China stops buying U.S. Treasury bonds. She points out that a fiscal crisis is unlikely to be foreshadowed by signs such as a gradual rise in interest rates or other countries merely slowing down lending. Rather, citing the studies of Carmen Reinhart, she argues that changes would be much more precipitous.

April 25, 2011
The Bipartisan March to Fiscal Madness

In Sunday's New York Times, CRFB board member David Stockman wrote an op-ed discussing the recent budget proposals from President Obama and House Budget Committee Chairman Paul Ryan and how "the resulting squabble is not only deepening the fiscal stalemate, but also bringing us dangerously close to class war." He writes,

April 25, 2011

After the Bunny – Easter has come and gone. Chocolate-induced comas are being overcome and many -- though not Congress -- return this week from spring break. Are there still hidden Easter eggs waiting to be found? The debt ceiling and negotiations over a debt reduction deal will continue to be top items of interest.

April 22, 2011

Yesterday, CBO released a report on the effect of automatic stabilizers on the deficit, showing that in recent years, they have added hundreds of billions to the deficit. This report follows a report they released last year on the same subject.

April 22, 2011

Yesterday, CRFB released an analysis of President Obama's new deficit reduction framework meant to save $4 trillion dollars over 12 years. Using CBO's economic and technical assumptions and looking at a standard 10-year period, we find the plan would save $2.5 trillion and would result in a slightly increasing debt-to-GDP ratio toward the end of the decade.

April 21, 2011

This morning, CRFB released a paper analyzing President Obama's new budget framework which the President laid out last week in a speech at the George Washington University. In this paper, we find that the President's Framework saves $2.5 trillion over 10 years, a substantial improvement over the President's February budget request.

April 20, 2011

As our readers know, CRFB is a big proponent of the Independent Payment Advisory Board (IPAB) created under health reform to control Medicare cost growth. In the health care paper from our Let's Get Specific series, we suggested potential ways to strengthen IPAB.

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