The Bottom Line

August 19, 2011

On OMB's blog, OMB director Jack Lew talked about his instructions to agencies to cut 5 percent off their 2011 budget for their FY 2013 request. In addition, they are instructed to list additional savings that would result in a 10 percent cut. 

August 19, 2011

In the Christian Science Monitor, Donald Marron argues that the distinction in fiscal policy should not be between hawks and doves, but rather foxes and hedgehogs. What separates a fox and a hedgehog, you ask?

August 18, 2011

Faithful readers of this blog know by now how the trigger contained in the Budget Control Act generally works. The BCA creates a twelve-member Joint Committee that is tasked with finding $1.2 trillion in savings over ten years. If the Committee fails or Congress fails to pass legislation that saves at least $1.2 trillion, a trigger will make up the difference starting in 2013 (unless a balanced budget amendment passes Congress).

August 17, 2011

The three Democratic Senators on the Joint Committee--Max Baucus (D-MT), Patty Murray (D-WA), and John Kerry (D-MA)--have a lofty op-ed in the Wall Street Journal. In it, they talk about the need for bipartisanship and their willingness to contribute to a plan that helps solve the deficit problem.

August 17, 2011

Yesterday, the United States Chamber of Commerce sent a letter to the members of the super-committee calling on it to exceed its mandate of $1.2 trillion in deficit reduction and create a plan that truly addresses our fiscal challenges.

August 17, 2011

Today at 1:30, the Budgeting for National Priorities Project at Brookings will host a distinguished panel to discuss the challenges that the new Joint Select Committee will face in their task to reduce the federal deficit. The panel will talk about the implications of choosing a baseline for measuring deficit reduciton, the history of previous "super committees," and the congressional politics involved in any debt deal agreement.

August 16, 2011

Today, one of the other big three credit rating agencies, Fitch Ratings, reaffirmed their AAA rating of the United States and held our outlook at "stable". This is, of course, a break from the recent S&P downgrade of the United States from AAA to AA+ with a negative outlook. For Fitch, AAA is their highest rating.

In a statement, Fitch said:

August 16, 2011

As the world continues to struggle with the economic recovery and increasingly overwhelming debt levels, many are looking to Switzerland’s rather novel method of controlling its government debt, the Swiss “debt brake.” Germany has recently adopted a partial debt brake rule, and there are some discussions taking place about a debt brake rule to cover the entire set of euro zone countries.

August 15, 2011
A Weekly Update on Fiscal Policy Developments and a Look Ahead

Fair Time – We are smack in the middle of fair season. Fair goers across the country are getting their fill of fried food and tractor pulls. It is fair time for the economy, too, as every day the markets seem to mimic a carnival ride with large fluctuations signaling uncertainty and volatility, and slow growth fueling fears of another recession.

August 15, 2011

In a commentary for CNN, CRFB co-chair Bill Frenzel lamented the small goal that the Joint Select Committee on Deficit Reduction (or the "super committee") is aiming for, arguing that it will not lead to the kind of grand compromise that we need.

August 12, 2011

Over at Ezra Klein's blog, Sarah Kliff writes about the "Maple Leaf Miracle," or how Canada was able to turn itself around after it was downgraded.

August 11, 2011

With the housing market still depressed almost five years after the housing bubble burst, the Obama administration is seeking input from private investors on methods to convert foreclosed properties owned by Fannie Mae and Freddie Mac into rental homes.

August 11, 2011

Considering recent developments, fiscal policy is likely to be the number one topic at tonight's debate in the race for the 2012 Republican presidential nomination, hosted at Iowa State University in Ames, Iowa just days before the much-ballyhooed Ames Straw Poll this Saturday.

August 11, 2011

Updated to reflect House Minority Leader Nancy Pelosi's appointments.

August 11, 2011

Tax Policy Center has two sets of interesting tables that have just come out in the past few days. They offer some great information for those of you who are eager to brush up on your knowledge of the tax code.

August 10, 2011

With the S&P downgrade of U.S. debt from AAA to AA+ on the books, CRFB has released a paper that goes into the credit rating system, the possible effects of the downgrade, and how other countries have fared in a similar situation.

We explain the reasons that S&P gave for the downgrade:

August 9, 2011

Who needs amusement parks when you can watch the volatility that is the stock market? Just a day after the Dow Jones posted its biggest one-day loss since the financial meltdown in 2008, the Dow bounced back with a 400+ point gain. In the middle of the day, there was the much-anticipated release of the FOMC's statement, which itself contributed to the up-and-down action.

August 9, 2011
Getting to Yes: The Case for a Centrist 'Super Committee'

In a new op-ed in Roll Call, former Congressman and CRFB board member John Tanner explains why America needs a centrist 'super committee.' Tanner writes that "[q]ualified Members should have a track record of bipartisanship, be devoid of ideological and inflammatory rancor, and be willing to roll their sleeves up and take some big risks," saying that we can not get to 'yes' if the members of the committee remain entrenched in partisan ideolog

August 8, 2011

With the Budget Control Act now in the books, it's time for us to update our CRFB Realistic Baseline from our projections a month ago. In addition to the discretionary spending caps contained in the legislation, we will also incorporate the effects of the final CR (which were excluded from CBO's Long Term Outlook and, thus, our original baseline).

August 8, 2011

The caps on discretionary spending were, of course, the concrete centerpiece of last week's budget deal. Considering the importance of the caps, CBO published a blog explaining how they work and what would happen to discretionary spending over the ten-year window.

First, they go into some background on the caps:

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