The Bottom Line

April 4, 2011

Cleaning out the House – Spring is often associated with housecleaning. Congress is long due to clear out the FY 2011 budget seeing as we are now half way through the fiscal year. This week may be the week, with a deadline looming on Friday and both sides reportedly close on a deal. The continuing resolution funding the federal government expires on April 8 and many lawmakers have indicated they are unwilling to approve of more stopgap measures.

April 1, 2011
Job Gains but Uncertainty Overseas

As events continue to develop both at home and abroad -- fiscal, humanitarian and otherwise -- the markets are sending and receiving mixed messages. The world and many economies have been rocked by political unrest, natural disasters, and (in the case of Europe) uncertainties over some countries’ fiscal outlooks. The U.S. government is locked in a fierce budget battle with a shutdown looming, while at the same time new economic data shows that the recovery continues to build momentum -- albeit not as fast as anyone would like.

April 1, 2011

Yesterday, Reps. Jim Cooper (D-TN) and Paul Ryan (R-WI) introduced H.R. 1252, the “Medicare Information Act” (MedInfo Act). The legislation aims to better inform taxpayers about their individual Medicare contributions and benefits by including information in a yearly statement they already receive about Social Security. The overview of the bill states:

 

April 1, 2011

One of the biggest challenges in getting public support for deficit-reduction measures has always been knowledge about the composition of the federal budget. After all, if people think that cutting foreign aid and government worker benefits is enough to solve our deficit issues, they will be skeptical of reforms to more popular areas of the budget or tax increases. A new CNN poll is another in a long line of polls that have attempted to gauge public knowledge of how their tax dollars are spent.

March 31, 2011

Today Senate Republicans unveiled legislation (S.J. Res 10) to adopt a balanced budget amendment to the U.S. Constitution that has the support of all 47 members of the conference. Republicans had been previously split between two competing versions (S.J. Res. 3 and S.J. Res. 5). The united group will now work on gaining Democratic support. Senate Minority Leader Mitch McConnell (R-KY) wants a vote on the proposal to accompany a vote to increase the debt limit.

March 31, 2011

Update 4/4: The Blue Dog Democrats sent a letter to President Obama calling for a compromise on a long-term spending bill to prevent a government shutdown in order move onto "a more serious conversation about the structural issues that plague our nation's fiscal health."

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").

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