The Bottom Line

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.

April 20, 2011

As we have been looking at a number of fiscal plans for the US recently, the IMF has a useful appendix in its most recent Fiscal Monitor on what has worked and what has failed in past fiscal consolidation attempts (a topic we have delved into in the past).

April 19, 2011

The Congressional Budget Office has released its full analysis of President Obama's FY 2012 budget request. While the new report goes into greater detail, it contains no baseline changes or budget projection changes from the preliminary analysis CBO released in March. The main new analysis in this report is the economic analysis of the President's budget in which CBO analyzes what will happen to fiscal policy under the budget request. 

April 18, 2011

Today, the S&P has cut the US ratings outlook from stable to negative, while maintaining our triple-A rating. While this does not represent a direct hit to the nation's credit, it serves as yet another warning that a downgrade may be in the near future.

April 18, 2011

Happy Tax Day – Today is about the consequences of procrastination for the great many waiting until the last minute to file their federal income tax returns. It is also the time when the most consideration is given to the costs and benefits of the federal government.

April 18, 2011

In the spirit of Tax Day today the Bottom Line presents its own special “10/40” (don’t worry; we aren’t filing this with the IRS).

April 15, 2011

Congressman Ryan has come under attack, recently, for the tax reform framework in the House Republican budget proposal.

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