The Bottom Line

May 17, 2012

UPDATE: This blog has been updated to include CBO's brief about the fiscal cliff.

May 16, 2012

We have been warning for a few months now about the potential consequences of the fiscal cliff -- and adding to the debt by averting it all together. As it turns out, the short-term economic consequences may already be occurring, according to a recent Washington Post article.

May 16, 2012

Former President Bill Clinton joined the Announcement Effect Club at the Peter G. Peterson Foundation's Fiscal Summit yesterday in a Q&A session with Tom Brokaw (you can see the video of it here).

May 15, 2012

On Sunday, Fiscal Commission co-chair and former White House Chief of Staff Erskine Bowles delivered a speech at American University's School of Public Affairs Commencement. Apparently, the message hit home for Ben Ritz, Chair of Fiscal Policy and Policy Caucus Director of AU's College Democrats.

May 15, 2012

The 2012 Fiscal Summit presented by the Peter G. Peterson Foundation is today. Watch live here now and follow on Twitter with #FiscalSummit.

Speakers include former President Bill Clinton, Speaker of the House John Boehner, House Budget Committee Chair Paul Ryan, House Budget Committee Ranking Member Chris Van Hollen, Treasury Secretary Timothy Geithner, Senator Rob Portman, Travelers Companies, Inc. Chairman and CEO Jay Fishman, and former Senator and Fiscal Commission Co-Chair Alan Simpson.

 

May 14, 2012
A Weekly Update on Budget and Fiscal Policy Developments and a Look Ahead

Winter is Coming – HBO’s “Game of Thrones” has a legion of devoted fans. The show deftly combines mystical elements with real-world political intrigue. Of course, the gratuitous sex and violence may also play a role in its popularity. The fictional capital of King’s Landing could be mistaken for Washington, DC except for the (slightly) better sanitation in our capital. King’s Landing is filled with plotting and backstabbing and is currently under siege.

May 14, 2012

On Friday, Lawrence Korb, Alex Rothman, and Max Hoffman of the Center for American Progress wrote "The Top 10 Things to Know About Military Compensation," which provides context for compensation within the defense budget and how reforms can be done in minimally harmful ways.

The ten things are:

May 14, 2012

Former Sen. Judd Gregg (R-NH) weighs in on the impact of "taxmaggedon" in The Hill today. While the tax increases would likely lead to more revenue, he said, the sudden rise of the payroll tax, expiration of the 2001/2003 tax cuts, and other tax increases could have a devastating impact on a still weak economy. Gregg explains:

May 11, 2012

Reps. Allyson Schwartz (D-PA) and Joe Heck (R-NV) have introduced a bill to overhaul the Medicare physician payment system. The bill includes a number of laudable reforms, but it does not have a legitimate pay-for, since it uses the war drawdown gimmick to pay for its costs.

May 11, 2012

At Wonkblog, Suzy Khimm points to a study done by the Stimson Center that polled Americans about how large the defense budget should be.

May 10, 2012

Over at Wonkblog, Sarah Kliff points out that the Affordable Care Act (ACA) may contain a new "doc fix" -- only this time in Medicaid. The current "doc fix" in Medicare cancels out huge scheduled physician payment cuts as required under law by the Sustainable Growth Rate (SGR) formula. Since it is very expensive to override the SGR permanently (about $300 billion over ten years), Congress usually just enacts temporary extensions.

May 10, 2012

Update: The House has passed the reconciliation and replacement bills by a 218-199 vote.

May 9, 2012

Last month, Social Security and Medicare Trustee Chuck Blahous sparked a controversy by saying that the Affordable Care Act would add to the deficit, arguing that the law was double counting savings from Medicare Part A because Part A is already restrained by a trust fund that is scheduled to expire this decade. Thus, the Medicare savings from the law would only be used to extend the life of the trust fund.

May 8, 2012

Impasses and showdowns have become the norm over the past few years, and it is turning out to be no different with student loans. For background, in 2007, Congress passed a law that gradually reduced subsidized Stafford student loan rates to their current 3.4 percent interest rate. Since the provision was only temporary, that rate will rise to 6.8 percent on July 1. Both chambers have been working on bills to extend the 3.4 percent rate, and the difference--of course--is one of offsets.

May 8, 2012

We all know about the fiscal cliff coming at year's end, and we all know policy makers will have to find a way out. Neither allowing the country to fall off the fiscal cliff nor dooming it to continued accruing debt is a reasonable option. Fortunately, there is a path forward -- a path which gradually and intelligently reduces our debt over the medium and long-term.

May 8, 2012
A Weekly Update on Budget and Fiscal Policy Developments and a Look Ahead

A Galaxy Far, Far Away – Friday was Stars Wars Day, the annual observance of the popular movie series that plays on the date, as in May the Fourth (be with you). The franchise seems as strong as ever, having survived Jar Jar Binks and returning to the big screen again; this time in 3-D glory. The classic battle between good and evil portrayed in the films is timeless and offers many lessons for us today.

May 7, 2012

This week’s The Economist offers another analysis of the end-of-year fiscal cliff of tax increases and spending cuts that the United States faces under current law. The article also explores how "the election will determine whether a nasty dose of austerity can be avoided."

May 7, 2012

The non-partisan Congressional Budget Office (CBO) doesn't make recommendations for, or against, any fiscal plan, but that doesn't mean they can't help others do so. To that end, CBO director Doug Elmendorf recently suggested six criteria with which to evaluate the many plans out there. Of course, these criteria are not necessarily co-equal, but each are important. They are:

May 7, 2012
Vote in French Presidential Election Should Be a Warning for America

Today in The Hill, former Senator Judd Gregg (R-NH) penned an Op-Ed analyzing the French elections (where France yesterday elected Mr. Hollande of the French Socialist Party) and notes what America can learn from France and their current employment situation. Gregg says that the United States should not model itself after France's labor laws or retirement system. Sen. Gregg writes:

May 4, 2012

At an event at the University of Rochester's Simon School yesterday, JPMorgan Chase CEO Jamie Dimon made a direct call for the Simpson-Bowles recommendations. Dimon stated that the debt challenges facing the United States are "the opposite of Europe" because we see the crisis coming and know how to solve it. He pointed to Simpson-Bowles is the answer, but that right now our elected official don't have the political courage to make it happen.

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