The Bottom Line

December 21, 2012

While most of the country is focused on the fiscal cliff, The New York Times is reporting on another cliff, this one involving the farm bill. Unlike the fiscal cliff, this one involves policies that will increase spending and deficits. If Congress is unable to agree on a farm bill before the end of the year, we would revert back to 1949 law, the last time the government made a permanent farm law.

December 21, 2012

Usually around this time, we say we wish this was the year a fiscal plan is enacted. But with the ongoing negotiations between the White House and Republicans along with the looming fiscal cliff, 2012 is not completely in the books yet.

December 20, 2012

We've talked before about the rational behind implementing the chained CPI, that the current index (CPI-W) does not incorporate substitution effects and therefore overstates inflation. And it turns out a good number of economists agree with us.

December 20, 2012

Because there has been a lot of talk about the chained CPI lately, CRFB has created a brand new "Chained CPI Resource Page" to give readers one place to see all that information.

The page has background on the current consumer price index and the chained CPI. It also shows analyses from a variety of sources about the effects of the chained CPI on the budget, taxes, and Social Security in addition to links to outside experts and organizations who support using the chained CPI for inflation calculations.

December 20, 2012

While Speaker Boehner and President Obama attempt to bridge their differences in the fiscal cliff negotiations, you can try your hand at creating a plan using the "Choose Your Own Fiscal Cliff Adventure" simulator from Wonkblog. The simulator offers users a chance to come up with their own plan to avoid the fiscal cliff while reducing the deficit in the long run to stabilize the debt.

December 20, 2012

The Internal Revenue Service has continued to warn Congress of the administrative consequences of going over the fiscal cliff.

December 19, 2012

UPDATE: The Joint Committee on Taxation has scored Plan B as costing $4.1 trillion over ten years, savings of $400 billion over a full extension. Both the text and the graph have been updated to reflect this score. Tax Policy Center has also produced distribution tables of Plan B.

December 19, 2012

The chained CPI has been receiving much attention lately after being included in the latest offers from both the GOP and White House. Some critics of the policy have been voicing their concerns, and yesterday, CRFB chimed in again to clear up the misconception that moving to the chained CPI would be regressive.

December 19, 2012

With time running out for a deal, the U.S. credit rating may be in jeopardy if lawmakers don't reach a compromise to replace the fiscal cliff. Fitch is the latest credit rating agency to warn that failure to come to an agreement would likely lead the U.S. to lose its AAA status. From Fitch's Global Sovereign Review (login required):

December 18, 2012

The recent offers from the White House and Republican House leadership have shown that both parties appear to be committed to finding a compromise. But lawmakers still have a long ways to go. Not only must Congress and the President find a way to replace the fiscal cliff, but they should do so with a plan that adequately addresseses our unsustainable debt problem. To do this, all ideas must be on the table.

December 18, 2012

After being included in both the most recent White House and Republican offers, the "chained CPI" has been front and center as a potential piece of any compromise to avoid the fiscal cliff.

December 18, 2012

With the fiscal cliff only two weeks away and the upcoming holiday season, negotiations for replacing the fiscal cliff with a sensible deficit reduction plan appear to have accelerated. Over the weekend, Speaker Boehner reportedly made an offer to the White House that included $1 trillion in spending cuts and $1 trillion of revenue – with some of it coming from letting the upper-income tax cuts expire on millionaires.

December 17, 2012
Steps to Fiscal Responsiblity

Former CBO Director and CRFB Board Member cautioned political leaders in a op-ed in The Hill, that merely finding just enough savings to repeal the fiscal cliff would be not only be a wasted opportunity but a sure sign that Washington is still not serious about controlling our unsustainable debt.

December 17, 2012
Weekly Update on Budget and Fiscal Policy Developments and a Look Ahead

Monday Morning Quarterbacking – The Washington Redskins stayed in playoff contention Sunday with back-up quarterback Kirk Cousins leading the team to victory. As DC basks in the glow of being in the division lead, there is also concern that it is behind in averting the fiscal cliff. With the end-of-year deadline just two weeks away, more of the discussion is turning to what the back-up plan is. While there is plenty of armchair quarterbacking going on, no one has yet taken command of the situation to lead the way to a solution.

December 14, 2012

Reducing federal health spending will play an important role in any long term deficit reduction plan debated over the next year. As lawmakers look to reform and put federal health programs on a more sustainable path for future generations, we've highlighted before that there is no shortage of options.

December 14, 2012

Senator Tom Coburn (R-OK) has released a new list of ten wasteful tax expenditures, totaling $130 billion over the next ten years. Whether it is tax breaks for NASCAR tracks, fishing tackle boxes, or films produced in the U.S., the list serves as a clear sign that there are plenty of places to look to raise revenue from tax expenditures. Coburn's list is below.

December 13, 2012

One option on the table that has great potential to be included in a final deal is the chained CPI. As we explain in our updated paper on the chained CPI, "Measuring Up," the current CPI overstates inflation because it doesn't account for substitution between different categories as relative prices change. Today, Marc Goldwein, CRFB's Senior Policy Director, further explained this policy in a CNN radio interview using the example of ham and turkey sandwiches. You can listen below:

December 13, 2012

In a bipartisan op-ed in the Chicago Tribune, Reps. Robert Dold (R-IL) and Daniel Lupinski (D-IL) endorse a two-part process that avoids the fiscal cliff and sets up a process for Congress to enact a fiscal plan next year.

December 13, 2012

With the fiscal cliff inching closer and still no clear deal in sight, a new Wall Street Journal/NBC News poll finds the American public overwelmingly want policymakers to reach a compromise.

December 13, 2012
A Real Debt Goal: 60 Percent by 2030

Michael Peterson, President and CEO of the Peter G. Peterson Foundation, writes in Politico that much of the coverage on the fiscal cliff has missed the real point. What the debate needs is a concrete target for debt reduction. He writes:

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