The Bottom Line

July 12, 2012
The Fiscal Cliff: A Hard Landing Becomes More Likely

Today on the Brookings Institution website, CRFB co-chair and former Congressman Bill Frenzel (R-MN) wrote an op-ed about the looming fiscal cliff. In it, Rep. Frenzel argues that there may not be enough time to avert the fiscal cliff during the "lame-duck" session of Congress. He believes that there is hope for a solution, but both parties will need to compromise.

July 12, 2012

The defense portion of the sequester that will hit on January 2 of next year has garnered a lot of attention, but it is not the only part of the automatic cuts. The sequester will also make cuts to non-defense discretionary spending and and certain other mandatory programs (many low-income programs are exempted). Recently, other parts of the sequester have started to receive attention.

July 11, 2012

Today, CBO has released yearly estimates of the long-term budget projections for the Department of Defense. The DoD provides a plan to Congress called the Future Years Defense Program (FYDP), in which DoD lays out its plans and the needed appropriations for the next five years. CBO uses this report to project future defense spending through 2030, using their own assumptions for variables like health care costs and weapons system prices that affect the defense budget.

July 11, 2012

As Senator Mark Warner pointed out last week in the Christian Science Monitor, the United States is still in a position where long-term debt reduction is much easier than in several European countries now in fiscal crisis.

July 11, 2012

Much of the focus on budget plans has revolved around the two presidential candidates, but Members of Congress have a tremendous impact on the federal budget. In conjuction with the Boston Globe, CRFB's U.S.

July 10, 2012

Often when tax reform is discussed these days, policymakers are gleeful to detail the ways in which they will cut tax rates or otherwise lower tax burdens under the current system, but much less forthcoming about how they will otherwise raise taxes to meet a certain revenue target (see here, for example).

July 10, 2012

In light of President Obama reigniting the tax debate yesterday, Dylan Matthews of Wonkblog has a very informative blog post showing the course of tax policy since President Obama took office three and a half years ago.

July 9, 2012

In a press release today, CRFB examines President Obama's announcement that he will push Congress for one year extension of the 2001/2003/2010 tax cuts for those making less than $250,000. This comes as Republicans in the House move to extend all of the tax cuts for a year with a vote this month.

July 9, 2012

The latest edition of CQ Weekly has a piece on the "low-hanging fruit" of the budget debate -- provisions that have been proposed or negotiated by members of both parties. A table from the article is a very welcomed addition to our own overlapping policy grid, which also shows a surprising level of commonality between some budget plans and discussions.

July 6, 2012

In yesterday's Washington Post, Jonathan Rauch writes that President Obama should propose a bill, that would among other things, tackle long-term debt reduction. That plan, as the title of this post would indicate, is Simpson-Bowles. He explains:

July 6, 2012

Keith Hennessey examines a provision of the two-year transportation bill that may have reduced deficits on paper, but only by potentially increasing liabilities in the future. The full blog post is well worth a read and offers an interesting example of the budget gimmicks that politicians use in the PAYGO process.

July 6, 2012

Correction: The original post incorrectly stated the change that the House bill made to the Standard Utility Allowance. It does adopt the provision from the Senate bill to set a $10 threshold.

July 5, 2012

Last week, the Supreme Court released its ruling on the constitutionality of the Patient Protection and Affordable Care Act (PPACA). As the initial discussion over the ruling for the individual mandate has subsided, experts are now weighing in on the potential federal budgetary impacts of the Court’s decision which enables states to opt out of expanding Medicaid coverage to low-income adults.

July 5, 2012

The New York Times has an article today entitled "In Washington’s New Mood of Austerity, Legislating Turns Into a Zero-Sum Game," detailing how the recent surface transportation/student loan/flood insurance bill involved some pay-fors that had avoided the budget axe in the past. As the author Jonathan Weisman describes it:

July 4, 2012

On behalf of the Committee for a Responsible Federal Budget and its Board of Directors, we wish everyone a happy Independence Day and hope for a day where we can celebrate independence from excessive debt.

We will return to our regular blogging schedule tomorrow, July 5th.

July 3, 2012

Today, the IMF released the concluding statement of its Article IV Consultation, calling for the U.S. to pass a deficit reduction plan quickly but phase in implementation to avoid unduly harming the recovery. Their economic forecast shows a continued slow recovery ahead--even with much of the fiscal cliff averted--as real GDP growth is projected to average 2.0 and 2.3 percent in 2012 and 2013, respectively.

July 3, 2012

In an appearance on Bloomberg TV, Honeywell CEO and Fiscal Commission member David Cote made the case for a fiscal plan, saying that it would be beneficial for the economy to remove uncertainty and put in place pro-growth policies. Specifically, he praised the Simpson-Bowles tax plan for simplifying the tax code while raising revenue. In addition, he said that reductions in the major health spending programs--Medicare and Medicaid--would be essential to getting our fiscal house in order.

July 2, 2012

A few members of Congress are now proposing House-Senate working groups to try and negotiate a compromise that would avoid the squester. From The Hill:

Sen. Kelly Ayotte (R-N.H.) said that forming the bipartisan working groups would be a critical piece in getting lawmakers in both chambers on the same page, regarding the automatic defense cuts under sequestration.

June 29, 2012

This week the OECD released its biennial Economic Surveys on the United States, with the organization's economic recommendations for policymakers. The report identified needed short-term reforms in response to the sputtering U.S. economy but also examined the unique challenges of the U.S. in the future. Not surprising, fiscal issues were prominently featured in the OECD report.

June 29, 2012

In a new report released yesterday, the Congressional Budget Office looked at the difference in accounting methods used to score federal credit programs. This was a follow up to a previous report which we analyzed back in March about how the costs of federal loan and loan guarantee programs would look if we changed the way we accounted for them.

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