The Bottom Line

November 5, 2010
All Eyes on the Fed, But Our G-20 Partners Want Signs of Fiscal Discipline

All eyes have been on the Fed this week. And the Fed delivered, with more ammunition than expected for its second round of quantitative easing (known as QE2). On Wednesday, it announced a bold move to jump-start the economy by buying $600 billion in Treasury securities between now and June. The Fed also confirmed a decision from August: it will continue to reinvest principal repayments from its Fannie and Freddie-related holdings in Treasuries.

November 4, 2010

With the election behind us, our elected leaders are beginning to outline an agenda for the incoming Congress (though lawmakers cannot overlook the fact that there is so much to do in the upcoming lame-duck session). Will both parties find common ground, or will there be more gridlock? Positive statements from the White House and House Republican leaders are worth highlighting.

November 3, 2010

With the mid-term election behind us, the current Congress still has work to do. Lawmakers may address a huge number of issues when they return in two weeks. And it all will cost money.

Here is what lawmakers are likely to address in the next two months:

 

November 3, 2010
Is monetary policy the only game in town?

As widely expected (and priced into the markets), the Fed decided at its monetary policy committee meeting today that it would increase purchases of Treasury securities to boost the weak economy.

November 3, 2010

 

CRFB President Maya MacGuineas has another commentary on CNN Money, urging policymakers to get specific on ideas to solve America's debt crisis. You can check it out here.

November 3, 2010

Andrew Biggs has an interesting piece out at the American Enterprise Institute that has been generating some attention (see Ezra Klein’s comments here, Andrew Samwick’s contribution here, and Andrew Sullivan’s addition here). Biggs states that raising the early retirement age (or EEA, for Earliest Eligibility Age) from 62 to 65 would increase retirement security, increase non-Social Security tax revenue, increase economic growth, and (believe it or not) increase Social Security benefits. Sounds like a win-win-win-win.

November 3, 2010

Last week, the heads of the EU governments agreed on groundbreaking steps to prevent Greece-style fiscal meltdowns from ever happening again and to put their countries on more fiscally sustainable paths for the medium and long run.

November 3, 2010

Bob Rubin, former Clinton Treasury Secretary, had an opinion piece in the Financial Times on Monday that made a lot of points we certainly agree with. Some of his major points (emphasis ours):

November 2, 2010

Our Stabilize the Debt budget simulator, which allows users to try their hand at deficit reduction, has become an important tool for understanding the magnitude of our fiscal challenges and considering potential solutions. We recently worked with the Dallas Morning News in encouraging its readers to try their hand at our simulator and in analyzing the results of those who voluntarily submitted their choices.

November 1, 2010
Questions to Ask the Candidates

The Bottom Line today concludes its blog series highlighting our Ten Questions to Ask the Candidates on fiscal responsibility.

9. Rejecting Pledges. Rather than saying what you would not do, will you focus on what you would do to fix the problem? Committing to pledges—whether to oppose tax increases, or not to touch Medicare or Social Security benefits—reduces lawmakers’ ability to properly evaluate solutions and budget tradeoffs and govern effectively.

November 1, 2010

Tricks and Treats Not Done Yet – Halloween was celebrated last night and Election Day is tomorrow. Which day is scarier likely depends on your political view, but Tuesday will be filled with plenty of tricks and treats for political junkies. The election results will significantly influence the fiscal policy agenda.

November 1, 2010

The Heritage Foundation recently came out with a detailed paper with over $300 billion in spending cuts that can be put in place in FY 2012.

October 31, 2010
Questions to Ask the Candidates

The Bottom Line presents the next installment in our series highlighting our Ten Questions to Ask the Candidates leading up to Election Day.

7. Controlling Health Care Costs. Will more have to be done to control federal health care costs? If so, what? Health care costs remain the biggest threat to our fiscal health in the long run and are set to continue growing faster than the economy.

October 30, 2010
Questions to Ask the Candidates

The Bottom Line continues its blog series highlighting our Ten Questions to Ask the Candidates ahead of the mid-term elections.

5. Strengthening Social Security. Do you believe that Social Security is in financial trouble? If so, what should be done to strengthen it? The Social Security Trustees’ most recent report says that Social Security will run a cash-flow deficit of more than $40 billion this year, $100 billion by 2020, and more than $450 billion by 2030.

October 29, 2010

Yesterday was a big day for getting specific as the National Taxpayers Union and the United States Public Interest Research Group, as well as the Heritage Foundation, came out with their own specific fiscal plans!

The NTU/USPIRG report offers a specific plan to cut $600 billion by 2015. This plan goes beyond the low-hanging fruit and tackles important areas like tax expenditures, Medicare and defense.

October 29, 2010
Questions to Ask the Candidates

Continuing in our discussion of (what we believe to be the most important!) Ten Questions to Ask the Candidates leading up to this coming Tuesday's mid-term elections, let's take a look at questions 3 and 4.

October 29, 2010

Fixing the Nation's Four-Tranche Universal Health System

October 29, 2010

All eyes are on next week’s meeting of the Fed’s Open Market Committee (FOMC), the monetary policy setting body of the Fed. As priced in by the markets, the FOMC is widely expected to agree at its meeting November 2-3 to start on a second phase of quantitative easing (ie, the purchase of long-term assets, which have been government securities – primarily Fannie and Freddie instruments) in order to support the economy.

October 28, 2010
Fiscal Questions for the Candidates

Last week CRFB provided Ten Questions to Ask the Candidates on fiscal policy as a way to help voters gauge how serious a candidate truly is regarding fiscal responsibility. While the federal budget deficit has been prominently featured during this election season, it has been little more than a talking point for most candidates as they have avoided discussing specifics.

October 28, 2010

“Virtually all advanced economies are likely to conduct fiscal consolidation at some point in the future to put their fiscal positions back on a sustainable footing.” - International Monetary Fund, World Economic Outlook, October 2010, p.21

The United States, like a number of other countries, needs to figure out how to best design a fiscal recovery package that will not derail a lackluster recovery, while at the same time, phases in debt reduction policies soon enough and aggressively enough to reassure credit markets.

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