The Bottom Line

March 30, 2011
A Midweek Update on Federal Fiscal and Budget Policy Developments

Shutdown Coming? – With most March Madness brackets in shambles, the new office pool of choice in Washington involves wagering on if the federal government will shut down. The current stopgap measure funding government operations expires on April 8 and whether an agreement can be reached on federal spending for the rest of the fiscal year before then depends on who you talk to, and when.

March 30, 2011

If the current budget drama in Washington ever becomes the stuff of a feature film--yes, a real stretch, but we've seen worse from Hollywood--maybe it could be a buddy film. Senators Tom Coburn (R-OK) and Dick Durbin (D-IL) could be cast as the main protagonists--unlikely partners thrust into a difficult quest.

March 30, 2011

Back in December, we had surmised that due to recent developments with Citigroup, GM, and AIG, CBO's cost estimate of TARP would come down further from the $25 billion it estimated in November.

March 30, 2011

Today, a group of fiscally conservative House Democrats known as the Blue Dog Coalition released a set of targets for long-term fiscal reform. CRFB praised the Blue Dogs in a press release earlier today, commending them for their "bold and balanced framework". The benchmarks include:

March 30, 2011

Today, Bill Galston of Brookings wrote a public letter in The New Republic arguing that, while there are many pressing national issues, deficit reduction should still be one that President Obama focuses on. Further, rather than demonizing Ryan's budget next week, President Obama should lead the charge for negotiating an alternative deficit reduction package. As Galston writes:

March 29, 2011

The term "shutdown" is being tossed around in Washington as much as "Cinderella" has been on ESPN as of late. With the current continuing resolution (CR) funding the federal government expiring on April 8th and the appetite for more stopgap measures waning, current negotiations over federal spending for the rest of the fiscal year are taking on more importance.

March 29, 2011

Today, The National Journal debuted its Economic Insiders Poll, a "periodic poll of veteran experts on the policy and political dynamics of key issues in the economy." This group of policy experts from across the political spectrum responded to questions about current events related to the US economy, with all responses kept anonymous.

March 28, 2011

Today, our friends over at the Concord Coalition wrote an interesting blog in which they pulled out the key fiscal dates from GAO's re-issued long-term projections of the federal budget, deficits, and debt. Take a look at 2019 -- GAO projects federal debt to exceed GDP!

March 28, 2011

In Bloom – Spring is officially here, though the weather would have one think otherwise. Frigid temperatures and even a little snow in the Washington, DC area early Sunday are indicative of how Washington often seems to resist the trends. Yet the inexorable change of seasons is upon us. The snow is already gone and the Cherry Blossoms are blooming. The Cherry Blossoms are a uniquely Washington tradition, drawing tourists by the thousands to experience their beauty and the promise of renewal that they represent.

March 28, 2011

In Sunday's New York Times, Gregory Mankiw, a Harvard economics professor and former chair of the Council of Economic Advisors (CEA) under President George W. Bush, had an interesting op-ed. Mankiw's piece shows an illustrative presidential speech that would be delivered in 2026 if we fail to correct our fiscal course. At that time, bond markets would demand immediate fiscal adjustments given such high debt levels.

In the speech, the hypothetical President explains:

March 25, 2011

There have been a number of pieces lately that have offered perspectives on how to view the recent debate surrounding the Social Security program. Is it part of the budget or not? What happened to the money in the Trust Fund? Does Social Security add to the deficit? Different authors frame the debate in different ways, but many have come to the same conclusion: Social Security needs to be reformed -- and quickly.

March 25, 2011
Tax Expenditure Review Report

In this installment of our Spotlight on the States blog series, focused on Minnesota, we take a slightly different look at the state's fiscal situation. In the past this series has given brief looks at states' fiscal problems and the different ways they've gone about solving them--mostly through examining their respective budgets and new budget proposals. We thought that this recent development in Minnesota, however, deserved its own unique blog in our series.

March 25, 2011
Meet 41 Year Old Kate

Meet Kate, a fictitious 41 year old Generation X member. How will our leaders’ fiscal choices affect her life? In our fifth and final installment of our “Meet the Generations” series, we look at Kate’s fiscal future, based on the two alternative futures scenarios from our recent paper “America’s Fiscal Choices at a Crossroad: the Human Side of the Fiscal Crisis”.

March 25, 2011

Safe haven worries that had dominated trading last week have eased so far this week – and investor appetite for greater risk rose a little. The yield on the benchmark 10 year Treasury bond rose from just above 3.25 percent on Monday to over 3.40 percent by close of business Thursday. A greater appetite for risk was indicated by record sales of corporate debt, including high yield debt (sometimes known as "junk bonds").

March 24, 2011

Meet John, a 56-year-old fictional Baby Boomer "profiled" in the fourth installment of our "Meet the Generations" blog series, inspired by our latest paper "America's Fiscal Choices at a Crossroad: The Human Side of the Fiscal Crisis.

March 24, 2011

In light of the recent debates over Social Security, CRFB's latest paper attempts to clarify how the program relates to the federal budget and budget deficits. Some say that Social Security is a completely independent program and contributes nothing to the budget deficit, while others argue that it is in fact the largest government program and adds to overall deficits since it spends more than it takes in. So who's correct?

March 24, 2011

A bipartisan group of ten former chairs of the President's Council of Economic Advisors (CEA) published an op-ed in Politico today stating that the federal budget deficit "is a severe threat that calls for serious and prompt attention".

March 24, 2011
The Pointless Debate Over the Social Security Trust Fund

Once again, policy-watchers and policymakers are fired up over whether Social Security needs to be fixed anytime soon. Some resort to pretty arcane debates over the trust fund to make their point. Won't it take years to exhaust the trust fund? Are the bonds in the trust fund real? Is the trust fund a fiction? Was the trust fund raided? You know, it scarcely matters. All these debates are over a tiny sliver of the Social Security System—not over where the real action is.

March 23, 2011

The recent introduction of the BUILD Act to create a national infrastructure bank to help finance infrastructure improvements has started a needed debate over how to pay for such investments. Our New America Foundation colleague Jason Delisle today sheds some light on the new proposal in a commentary at e21.

March 23, 2011

Meet Edna, a 75-year-old fictitious senior citizen. In the third installment of our "Meet the Generations" series, we take a look how policymakers' action (or inaction) could affect her life, as outlined in CRFB's March 10 paper "America's Fiscal Choices at a Crossroad: The Human Side of the Fiscal Crisis".

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