The Bottom Line

November 11, 2010

With the White House fiscal commission Co-Chair's proposal out in public, it's time to continue looking at the specifics of the plan. For this blog, we will look at the tax proposals.

Right now, revenue sits at an unusually low 14.6 percent of GDP due to the effects of the recession. Under the tax proposals, revenue would rise to 19.3 percent by 2015, 20.5 percent by 2020, and 21 percent by 2030. Revenue is capped at 21 percent so it does not go higher than that. Over the next decade, the proposal would increase revenue by about $1 trillion.

November 10, 2010

Continuing our analysis of the President’s Fiscal Commission Draft Report, let's look at what the Co-Chair proposal does on the spending side of the budget.

Overall, the proposal identifies $2.2 trillion in spending savings from 2012-2020, with about $730 billion coming from mandatory programs and about $1.5 trillion from discretionary programs, relative to the President's FY 2011 budget request.

On the discretionary budget, the Co-Chairs propose:

November 10, 2010

In a move much earlier than we expected, the Co-Chairs of the White House Fiscal Commission released their plan on how to get control of our national debt. The proposal is a drastic change from our current fiscal course and should be a document of great significance in the fiscal policy discourse. Before we get into specifics, we should point out that this is not the plan--14 out of 18 Commission members still have to agree to the recommendations.

November 10, 2010
Getting Back in the Black

The Peterson-Pew Commission on Budget Reform today called on Congress and the President to overhaul the federal budget process in a new report, Getting Back in the Black.

November 9, 2010

Today, the Peterson Foundation announced a new ad campaign targeted at helping Americans understand the ramifications of our growing deficit. OweNo.com has launched a series of television ads featuring “Hugh Jidette,” a fictional presidential candidate running on the platform of increased federal spending and pushing the debt burden onto future generations. The humorous ads convey a serious message about the facts of our growing deficit situation in a lighthearted manner.

November 9, 2010

Nearly a year ago, in its first report, Red Ink Rising, the Peterson-Pew Commission on Budget Reform raised the alarm about the impact of our exploding federal debt. Since then, the debt has reached a post-World War II high of more than 60 percent of GDP. Under reasonable assumptions about current and future policies, debt is projected to exceed 180 percent by 2040.

November 8, 2010

Noted economist Brad DeLong is asking: where are the technocrats of the center? In a recent blog post, he laments the lack of a concrete plan among more centrist technocrats to get the economy going in the near-term while, at the same time leaving it better off in the long-run. He outlined a seven-point plan to accomplish this goal:

November 8, 2010
Our Newly Elected Tax Collectors

Call it happenstance, but in the gospel proclaimed in many Christian churches on Sunday, October 24—about a week before the election—Jesus admonishes those "convinced of their own self-righteousness," then makes a tax collector the hero in the parable cited.

November 8, 2010

As part of its work over the last 2 years, the Peterson-Pew Commission on Budget Reform looked at how other governments facing big fiscal challenges reinvented their budget processes. It turns out that several nations – often in far less dire fiscal straits than we now face – have successfully reformed their budget processes with good results.

November 8, 2010

After the Voting – In case you were sleeping, there was an election last week. As a result of the mid-terms, Republicans will control the U.S. House of Representatives when the 112th Congress convenes in January. With the heat of the campaign now subsiding, attention is turning to agenda setting. Many candidates who successfully ran on cutting the federal budget deficit while also creating more jobs will have to offer concrete proposals to accomplish these goals.

November 5, 2010

The fiscal implications of Tuesday’s election are enormous. With pressure to improve the economy continuing to mount, the 112th Congress will arrive deeply divided, with one party controlling the House, another the Senate and the White House.

November 5, 2010

With fresh faces coming to Capitol Hill next year, it is a perfect time for innovative thinking. Given Congress’s recent dismal track record on fiscal issues, we think this should include rethinking the way the federal government develops and adopts budgets. The presumptive leaders of the new House are talking about reexamining their rules and procedures. The President has promised to listen to their ideas. They may not be able to bridge their deep differences on many matters of substance, but on one point they should agree: the budget process is not working.

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):

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