The Bottom Line

December 16, 2010

Update 12/17: The House approved of the tax cut package late Thursday on a 277-148 vote. The bill now goes to the White House for the president's signature. The Senate pulled the omnibus package from consideration and now plans another short-term Continuing Resolution.

December 16, 2010

An old cliche says that there are two things you should not watch being made--sausage and legislation. But right now, people should be watching the end-of-year process being used to allow the federal government to pay its bills. Then they'll know why we are in such a fiscal mess. Here's the current state of play:

December 15, 2010

Update: The Senate passed the tax cut legislation on a 81-19 vote. It now moves to the House, which may act Wednesday or Thursday.

December 14, 2010

The Senate is poised to pass a tax cut package that will add over $850 billion to our deficit. Meanwhile, a pork-laden $1.108 trillion omnibus spending bill was introduced in the very same chamber Tuesday in the latest chapter of the mockery that is the budget and appropriations process. Not good news by any means on the fiscal front.

December 14, 2010

With the Senate getting past a procedural vote in approving the tax deal, it appears more and more likely that this deal will soon become law.

December 13, 2010

 

In a new paper, “Creating a Fiscal Turnaround in the United States,” CRFB President Maya MacGuineas discusses our current fiscal situation and offers viable solutions for turning it around. MacGuineas suggests that lawmakers need to agree on a fiscal target, commit to a credible fiscal consolidation plan and offer specific ideas on deficit reduction. Click here to read the paper.

 

December 13, 2010

Update: The White House recently stated that the tax cut deal would create or save 2.2 million jobs, which would bring the budgetary cost to $390,000 per job, right in the middle of the cost per job range we estimated below.

December 13, 2010

Washington Drops the Ball – To many federal budget watchers, the tax cut debate has been more frustrating than watching the Redskins play. The expiring 2001/2003 tax cuts presented an opportunity not only to remake the tax code, but to transform the fiscal discussion in Washington.

December 13, 2010

In her latest commentary on CNN Money, CRFB President Maya MacGuineas discusses the challenges ahead with the recent deal on tax cuts and how lawmakers must come up with the specific spending changes and tax reforms that will improve the economy. Read it here.

"My Views" are works published by members of the Committee for a Responsible Federal Budget, but they do not necessarily reflect the views of all members of the Committee.

December 10, 2010

The Congressional Budget Office made an unusual jump into the fiscal fray back in the summer, spelling out the specific harm that excessive long-term debt does to our economy. Today, they released a report that attempted to quantify the effects of waiting to act to stabilize the debt.

December 10, 2010

The Senate began debate late Thursday on the tax cut compromise hammered out by some lawmakers and President Obama. The debate began even as House Democrats vowed to prevent bringing the current version of the deal to the House floor.

December 10, 2010
The Tax Cut Deal: Can We Escape Slow Growth Velocity without Hurting Our Fiscal Future?

Markets this week have been dominated by the White House announcement of a fiscal package deal with Republican Congressional leaders that would add over $800 billion in new measures over the next two years – mainly on the tax side – to support the economy.

December 10, 2010

Last week, we reported the good news from the Congressional Budget Office that the Troubled Asset Relief Program (TARP) would cost $25 billion, significantly less than any previous estimates. Now, the Treasury has announced the sale of its remaining Citigroup stock for $10.5 billion, another bit of good news for taxpayers.

December 10, 2010

Senator Tom Coburn (R-OK) had some pretty inspiring words on the floor of the Senate the other night. He spoke about that the challenges in front of us as a result of our rising debt, and made an urgent plea for lawmakers to quite digging the U.S. into a larger debt hole.

December 9, 2010

CRFB Board Member, Gene Steuerle, is co-author with Robert Friedman of a recent op-ed which discusses how to prioritize tax breaks to encourage savings and reduce national debt. Click here to read the article.

December 9, 2010

Continuing its year-long lesson in "How Not To Budget," the House Wednesday passed legislation that would freeze overall Fiscal Year 2011 discretionary spending at the Fiscal 2010 levels. However, the bill, which narrowly passed 212-206, would rejigger spending within the measure to fund several programs near and dear to members' hearts. The bill now goes to the Senate, which has its own ideas about how to end the budget debacle.

December 8, 2010

Today legislation to provide $250 payments to Social Security recipients in lieu of a cost-of-living adjustment (COLA) failed to garner enough votes in either chamber. The Social Security Trustees announced earlier this year that there would be no COLA because prices have not risen above the level of the last increase in 2009. The bill would have cost $14 billion.

December 8, 2010

James T. Lynn, a member of the Committee for a Responsible Federal Budget board and former budget director in the Ford administration died Dec. 6 in Bethesda, MD. Mr. Lynn was 83 years old and died as a result of complications from a stroke. During the Nixon administration, Mr. Lynn served as general counsel and undersecretary at the Department of Commerce before becoming secretary of the Department of Housing and Urban Development. In 1975, President Ford tapped Mr. Lynn as director of the Office of Management and Budget.

December 8, 2010
Good for short-run growth, but what does it signal about fiscal policy? February is a long time to wait for clarification

Financial markets have reacted to the new tax cut deal between the White House and Congressional leaders which would add some $800-900 billion to our national debt.

In the past two trading days since the deal was announced, we have seen the largest bond sell-off this year and so interest rates have gone up fairly dramatically. So far, yields on the benchmark 10 year Treasury bond have jumped by over 35 basis points (considered a sizeable rise), to the highest point since June. Money has shifted to the stock market, and the dollar is higher.

December 7, 2010

It appears that President Obama and Republican lawmakers have reached a deal to extend the tax cuts enacted from 2001 to 2003.

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