The Bottom Line

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.

June 28, 2012

According to CNN, the White House has floated a plan to deal with the fiscal cliff, one which would turn off a few provisions temporarily. Their plan? Turn off the sequester for six months in exchange for letting the upper-income tax cuts expire for a year. Thought of another way, it would repeal the spending cuts set to go into effect by extending the 2001/2003/2010 tax cuts for most people.

June 28, 2012

Today, the Supreme Court announced its ruling on the constitutionality of the 2010 healthcare law, the Patient Protection and Affordable Care Act (PPACA). In a 5-4 decision, the Court upheld the individual mandate in the law as within Congress’s power of taxation.

June 28, 2012

It's no secret that Congress hasn't been making the IRS's life very easy. In a time of discretionary spending caps, they are looking to reduce the agency's budget all while they add further to the complexity of the tax code.

June 27, 2012

UPDATE: Congress has reached a deal on a two-year highway bill.

June 27, 2012

Today, CRFB released its newest paper outlining options for controlling federal health care costs. Federal health spending is projected to grow at a high rate and threaten the fiscal health of our economy. According to CBO, net federal health care spending will rise from $750 billion in 2012 to $1.6 trillion in 2022, about 4.9 percent and 6.7 percent of GDP respectively. Over the longer term, it will rise even further--possibly to 9 percent of GDP by 2035 and 11 percent by 2050.

June 27, 2012

Today in The Hill, they have put together a six article package on the looming automatic cuts to the defense budget found in the sequester. These cuts, about $500 billion in total, represent half of the sequester, with the other half coming mainly from domestic discretionary cuts, but also certain mandatory cuts (most entitlements are partially or fully example).

 

The six articles include pieces from:

June 26, 2012
A Weekly Update on Budget and Fiscal Policy Developments and a Look Ahead

Decisions, Decisions – Washington waits with bated breath for the Supreme Court to rule Thursday on the constitutionality of the Affordable Care Act, the 2010 health care reform law. Not only will the decision have repercussions for politics and health care, it will also impact the federal budget significantly. In a blog last week, we laid out how the federal budget will be affected in different scenarios.

June 26, 2012

A new story is suggesting that members of Congress from both parties are trying to delay the sequester until March. This is not the first time we have heard rumors about Congress trying to move the fiscal cliff, but it still is disappointing. According to Bloomberg:

June 25, 2012

Politicos, policy wonks, and citizens will all be eagerly waiting Monday for a possible Supreme Court’s ruling on the ACA. Speculation in particular is focus on whether the individual mandate provision will survive, and what that would require from lawmakers as a response. But lost in all of the coverage is the unsustainable growth in our nation’s health care costs.

June 25, 2012

An article today in POLITICO games out four possible scenarios for how the fiscal cliff could be resolved (or not). They discuss the benefits and drawbacks of each scenario for the budget and the economy. These scenarios are:

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