The Bottom Line

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.

June 5, 2012

CRFB's newest paper dives into the set of projections underlying CBO's Long Term Budget Outlook. The report shows two very divergent paths for the budget over the long-term, both of which would present formidable challenges for the U.S. economy for very different reasons.

June 5, 2012
A Weekly Update on Budget and Fiscal Policy Developments and a Look Ahead

Heat Is On – Summer had its traditional kick-off with Memorial Day weekend and the temperatures in DC rose to the occasion. If only the same could be said of the city's political process. As the November election gets closer, temperatures will continue to rise this summer, along with the debt. But will the best solutions rise to the top? Meanwhile, the fiscal cliff also gets closer and will become hotter to handle.

June 5, 2012

The much-anticipated CBO Long-Term Budget Outlook has been released this morning, projecting what the budget will look like over the next 75 years. CBO's outlook shows a tale of two paths: the relatively optimistic Extended Baseline and the absolutely disastrous Alternative Fiscal Scenario. The Extended Baseline assumes that current law happens and brings debt down to a sustainable level while the AFS assumes--more realistically--that current policies will be extended, resulting in exponentially growing debt.

June 4, 2012

UPDATED: The table now also includes average scheduled benefits in 2050.

June 4, 2012

Already a member of the Basketball Hall of Fame, former Sen. Bill Bradley (D-NJ) joined another exclusive club over the weekend: the Announcement Effect Club. His comments came during an appearance on Meet the Press yesterday (see here for a full transcript).

SEN. BILL BRADLEY:

June 4, 2012
IRS Finds 0.5% of Higher Earners Pay No Taxes

The IRS's Spring 2012 Bulletin has a report, as required by law, by Justin Bryan reporting that 20,752 tax returns for people with adjusted gross incomes of $200,000 or greater, or 0.5 percent of total returns for people making more than $200,000, were able to avoid paying any U.S. taxes in 2009. If you exclude people who paid taxes in foreign countries, that number is about half as much at 10,080 or less than 0.3 percent of total returns.

June 1, 2012

Go long or go prudent? These are the competing views of tax reform, according to Howard Gleckman in a Tax Policy Center blog post. He sums up the views as follows:

May 31, 2012

An article in The Hill warns that war spending may be in jeopardy because of the sequester. Apparently, the Pentagon has reversed its position on the sequester's application to Overseas Contingency Operation (OCO) spending, now saying that it would be affected. Previously, it had said that the sequester would exempt spending for the war in Afghanistan.

May 31, 2012

What is dynamic scoring? How are legislative proposals currently scored? CRFB's latest policy paper details the process and methods that the Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) use to estimate the budget impact of legislation and the pros and cons of supplementing that process with "dynamic scoring."

May 30, 2012

Brian Faler of Bloomberg has an article about the unwillingness of lawmakers to address Social Security's Disability Insurance program. Although the program's trust fund will run out in only four years (resulting in an automatic 20 percent benefit cut at that time), most people assume that money will simply be transferred from the old-age component of Social Security to fund the shortfall in the disability program.

May 30, 2012

Last week, we wrote about American Action Forum president and former CBO director Doug Holtz-Eakin's four steps for tax reform. These involved:

May 29, 2012

A Washington Post article late last week detailed a number of current Republican members of Congress or Congressional candidates who are foregoing the "no new taxes" pledge circulated by Americans for Tax Reform. Signs that the seemingly ubiquitous pledge is fading in popularity are good for the purpose of getting a deal on deficit reduction that tackles all parts of the budget. Here's one example of a House candidate eschewing the pledge:

May 29, 2012

Update: The text has been updated to include spending growth numbers for President Bush excluding financial rescue programs.

May 29, 2012

CRFB has called for this year’s presidential candidates to "Debate the Debt" by dedicating one of the three presidential debates to proposals for putting the federal debt on a sustainable path. More and more Americans, from all walks of life, are joining the call.

May 25, 2012

The Hill has an article today detailing infighting within the Democrats over what to do with the 2001/2003 tax cuts. The position expressed by President Obama and many Democrats for years has been to extend the tax cuts only for people making less than $250,000, but a growing contingent seems to favor upping that threshold to $1 million, including House Minority Leader Nancy Pelosi (D-CA).

May 25, 2012

Each day the Fiscal Cliff gets closer and closer, adding more uncertainty to our economic situation. But, as Deutsche Borse Group reports today, there is some cause for hope.

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