The Bottom Line

June 18, 2012

The AARP has just released a helpful new paper considering the pros and cons of different options to reform Social Security. Our fiscal outlook in the long run shows that the Social Security program is in need of change, but how to best address the issue remains up for debate.

June 18, 2012
Lawmakers Haven’t Run Out of Time to Craft a Bipartisan Deficit Deal

Former Senator Judd Gregg (R-NH) has an op-ed in The Hill this morning titled, "Lawmakers Haven't Run Out of Time to Craft a Bipartisan Deficit Deal." In it, Senator Gregg points out the need for a bipartisan deal, and notes that "Simpson-Bowles, was, and is the only bipartisan, substantive vehicle that actually reduces the deficit and the debt and makes viable our tax code and programs like Social Security."

June 15, 2012

The Urban Institute has a new report on the charitable deduction (co-authored by CRFB board member Eugene Steuerle) that details some options for reforming it. The charitable deduction, which has existed since 1917, is one of the largest tax expenditures in the code. The Joint Committee on Taxation estimates that from 2011 to 2015, it will result in about $245 billion of foregone revenue.

June 15, 2012

The Medicare Payment Advisory Commission (MedPAC) has released its June 2012 report, detailing ways in which Congress can improve Medicare to better control costs and improve care.

June 14, 2012

A POLITICO article reports on an effort underway at the Senate Finance Committee to negotiate an extension of the "tax extenders," narrow temporary tax provisions that are routinely extended. The article states that an agreement on an extension "could send a signal to financial markets that the two parties can find some common ground ahead of the looming fiscal cliff facing Washington at year’s end." Here's POLITICO's description of what happened:

June 14, 2012

CBO's latest report details the full effects on the federal budget of raising the federal excise tax on cigarettes. As they would when analyzing any tax policy, CBO estimates the revenue effect of this tax increase by looking both at how an increase in taxes would increase revenue, and how the subsequent reduction in cigarette purchases would reduce revenue.

June 13, 2012

Although budget projections had already been showing this, we now have more definitive numbers from the Treasury Department that this year's deficit will be smaller than last year's. At this time last year, the deficit through the first eight months equaled $927.4 billion compared to $844.5 billion this year.

June 13, 2012

Actuaries at the Center for Medicare and Medicaid Services have published a new report detailing their projections for health care spending growth from 2011 to 2021. The growth rates they project may be good news for the economy and the budget as well if they pan out.

June 12, 2012
A Weekly Update on Budget and Fiscal Policy Developments and a Look Ahead

Undead Ends – Recent reports of disturbing behavior have raised the specter of a zombie apocalypse, where the undead overrun civilization. Flesh/brain-eating creatures aren’t the only things that don’t want to die. Political gridlock also keeps coming back and threatens to make a wasteland out of the political system. Policymakers cannot agree on a budget blueprint at a time when we most need a fiscal plan that shows the way out of the depths of debt. The appropriations process lingers on; a slowly moving, virtually-lifeless corpse.

June 12, 2012

Today, the consulting firm Deloitte released a report on the scope and consequences of our federal debt. Deloitte, like the majority of researchers, has found that our debt is not sustainable and on its current path, will cause economic harm. Deloitte has five different arguments in the paper, all with their own implications for both the public and private sectors of the economy.

June 12, 2012

With the release of CBO's Long-Term Budget Outlook last week, CRFB has updated the Realistic Baseline to incorporate elements of CBO's long-term budget and economic projections.

June 11, 2012

The Tax Policy Center has released a new table showing the revenue impact of options to reform the mortgage interest deduction. The options shown all involve some form of converting the deduction into a credit.

June 8, 2012

It is encouraging to see the House Ways and Means Subcommittee on Select Revenue Measures hold a series of hearings on the many temporary tax preferences known as the "tax extenders." Far too often Congress intentionally waits until the eleventh hour so that they can extend them as a wholesale package without any review of the policies involved.

June 8, 2012

In our recent analysis of CBO's Long-Term Budget Outlook, we elaborated on how the overall federal debt is on an unsustainable path. Just twelve years from now, under CBO’s Alternative Fiscal Scenario (AFS), debt will surpass 100 percent of GDP, and by 2038, it will exceed 200 percent. Driving this debt growth are the increasing costs of Social Security and especially Medicare and Medicaid.

June 7, 2012

Earlier this week, about a third of the Senate met to open a bipartisan discussion about comprehensive fiscal reform and the impending fiscal cliff according to coverage from both the National Journal (subscription required), Politico, and Bloomberg.

June 7, 2012

CBO's Long Term Outlook includes a number of variables on how the budget would look over the next 75 years. But they also show how the economy would fare under the two baseline scenarios: the Extended Baseline and the Alternative Fiscal Scenario. The Extended Baseline assumes that various temporary spending and tax policies expire and the sequester takes effect, while the AFS assumes the opposite.

June 7, 2012

In Tuesday’s The Hill, former Comptroller General David Walker calls for a process that would lead to a comprehensive debt reform deal in 2013. He argues:

June 6, 2012

The CBO’s long-term projections offer an interesting look at future revenues and spending that show the stark implications of fiscal irresponsibility. With a comparison of spending and revenue under the Extended Alternative Fiscal Scenario (AFS) and the Extended Baseline Scenario (EBS), the future consequences of avoiding tough decisions in the present become clear.

June 6, 2012

Based on CBO's Long Term Outlook, one could conclude solely based on the debt levels projected that either we were headed on a sustainable path, with debt actually being paid off around 2070 (the Extended Baseline scenario), or we were headed for absolute disaster, with debt rising exponentially to 935 percent of GDP 75 years from now (the Alternative Fiscal Scenario).

June 6, 2012

Critics of CBO scoring like to cite past predictions that widely missed the mark. Sometimes, too, critics compare apples to oranges, and that is the case with the 2010 Affordable Care Act (ACA) again this week. As reported by National Journal, Congressman Phil Roe (R-TN) claims in referring to CBO's report on the fiscal cliff, "Remember that the CBO estimated two years ago that the Affordable Care Act would be $900 billion, and 24 months later it’s $1.7 trillion.

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