The Bottom Line

November 29, 2012

Back in the late 1980s and early 1990s, lawmakers faced a serious challenge with large budget deficits.  Throughout the 1980s, many measures were put in place to combat deficits. Chief among them was the Gramm-Rudman-Hollings Balanced Budget Act of 1985 that laid out a path for balancing the budget by 1990. If the enacted criterion was not met, a large spending sequester loomed.

November 29, 2012

With all the attention on the fiscal cliff looming only weeks away, the fact that the federal government will hit the debt ceiling in the next few months appears to be on the back burner. At the same time, it's hovering over current negotiations, which is why some lawmakers, including Senate Majority Leader Harry Reid (D-NV), would like to see the issue resolved at the same time as a cliff deal.

November 28, 2012

Some commentators have advocated for a position of going over the fiscal cliff to leverage a better compromise.

November 28, 2012

Yesterday, we discussed the myth that the poor would be spared by the fiscal cliff, with one of the reasons being the large tax increase at the end of the year. According to the Tax Policy Center, the poorest 20 percent of people would face a tax hike of $412, or a 3.7 percent reduction in their after tax income.

November 28, 2012

Today, the Fix the Debt Campaign is having a major event at the Capitol with its many citizen leaders, urging Congress to replace the fiscal cliff with a smart, comprehensive plan to fix our unsustainable fiscal path.

November 27, 2012
Inside America's Tax Battle

Former Council of Economic Advisers Chair and CRFB Board Member Laura Tyson says that it has become clear that increased revenues are needed along with spending cuts in a comprehensive plan. But there is still some disagreement about how to get that revenue.

November 27, 2012
Weekly Update on Budget and Fiscal Policy Developments and a Look Ahead

Putting the Turkeys Behind Us – We hope everyone had a good holiday weekend! As we all recover from the annual turkey-induced coma, we are especially thankful for our growing network of supporters who are demanding fiscal responsibility of their leaders. That message is especially important as lawmakers return this week to address unfinished business such as the fiscal cliff and possibly an appropriations package for the rest of the fiscal year.

November 26, 2012

In the first of our "Myth Buster" series this week, we take on the myth that those who advocate for deficit reduction should love the fiscal cliff.

November 26, 2012

The Washington Post has joined the many supporters of using a more accurate measure of inflation, the chained CPI. We've written a paper before about the chained CPI as a potential piece of a deficit reduction plan.

November 26, 2012

In an op-ed in the Washington Post, Sen. Bob Corker (R-TN) outlined a plan for replacing parts of the fiscal cliff with what he estimates to be a $4.5 trillion deficit reduction plan. This is one of the first plans to be put out by a member of Congress since Election Day.

November 21, 2012

Over the past few weeks we've heard some misleading things about the fiscal cliff and the possible bipartisan plans that could replace the cliff. CRFB President Maya MacGuineas referenced many of these myths in her recent Washington Post piece, but a few of these, and additional misconceptions, are worth addressing in detail. Next week we will dive more in depth into each of the three misconceptions listed below.

November 21, 2012

In recent weeks, we’ve heard a lot of talk about the fiscal cliff, but little of it has focused on one piece that has caused headaches for lawmakers for almost a decade – the Sustainable Growth Rate (SGR) formula. In January, the SGR formula calls for an unrealistic 27 percent cut to Medicare provider payments if Congress does not act to prevent them from going into effect. We’ve discussed before how the SGR is a flawed formula and that any “doc fix” enacted by Congress should be paid for in full.

November 20, 2012

In an address to the New York Economic Club today, Federal Reserve Chairman Ben Bernanke commented on the state of the economic recovery and the challenges faced by the U.S.--namely, a weak housing market, slow global growth, and of course, the fiscal cliff. But this third headwind to economic growth is entirely within the control of lawmakers, and Bernanke urged Washington to take on the challenge.

November 20, 2012

Sen. Tom Coburn (R-OK) is known for going after government inefficiencies, whether it's lauching the GAO's comprehensive review of federal agencies for duplicative programs or his yearly "Wastebook." Now Coburn has turned to the Department of Defense in his latest report "Department of Everything," an in-depth look which finds $67.9 billion in spending unrelated to DoD's national security goals--spending that is often duplicative or wasteful.

November 20, 2012

In a recent blog post, Jason Delisle and Alex Holt, colleagues at the New America's Foundation Education Budget Project, argue for the elimination of the interest-free benefit on Subsidized Stafford student loans.

November 20, 2012
Weekly Update on Budget and Fiscal Policy Developments and a Look Ahead

Racing to the Cliff – The NASCAR season ended on Sunday with Brad Keselowski claiming his first Sprint Cup championship. But fans of seeing things going around in circles can get their fix by watching the action in Washington. Congress is not in session this week for a Thanksgiving pit stop, but the posturing for position continues regarding the looming fiscal cliff. The thing about this race is that it isn’t clear how many laps it will go.

November 19, 2012

A new report by CRFB and Moment of Truth Project consultant Paul Weinstein provides some guidance on how we could handle both our infrastructure deficit without affecting our federal deficit. How does he propose to do this? Weinstein recommends using a commission to identify wasteful spending to help pay for infrastructure investment along with deficit reduction.

November 19, 2012
Five myths about the 'fiscal cliff'

Not long after her appeal to national leaders to work towards a bipartisan compromise, CRFB president Maya MacGuineas dispels 5 common misconceptions about the looming fiscal cliff in a Washington Post op-ed published last Friday. MacGuineas identifies the myths as follows:

November 19, 2012

President Obama met with Congressional leaders last Friday to begin working toward a deal to avoid the fiscal cliff. Reportedly, the talks had an optimistic tone, and leaders seem to be willing to reconcile their differences in the coming months. However, this was not the only development that took place at the end of last week.

November 19, 2012
Going Off the Fiscal Cliff Is Good Policy­—If You Like Unemployment

Former Congressman and CRFB Board Member Bill Frenzel has some advice for the so-called "fiscal cliff divers": don't even think about it! Going off the fiscal cliff would be terrible policy, with the sudden and blunt spending cuts and tax increases likely sending the U.S. into another recession.

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