The Bottom Line

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.

May 3, 2012

Last week’s report from the Social Security Trustees laid out the challenges facing the vital program. The largest federal program began running annual deficits in 2010 and will continue to do so each year through 2033, when the trust fund is projected to become exhausted. At that point, recipients will see a 25% cut in benefits, absent any action.

May 3, 2012

As the topic of tax reform will be heating up this year, five analysts from the Brookings Institution's Hamilton Project have released a paper called "A Dozen Economic Facts About Tax Reform." It is certainly a useful primer on how the tax system has changed over time and the promise and difficulties involved in changing it.

Those dozen facts are:

May 2, 2012

David Lawder of Reuters has featured our recently updated budget simulator in an excellent piece about the challenges of cutting the debt. The simulator offers a menu of tax and spending options with the ultimate goal of reducing debt below 60 percent of GDP. As many of our users are finding out, debt reduction is possible but not without considering some difficult options.

May 1, 2012
Social Security Disability System Is Broken

CRFB's Senior Policy Director Marc Goldwein has a message to policymakers in an op-ed in The Hill: don't overlook the disability insurance (DI) program. The latest Trustees report projecting the DI trust fund to run out in only four years, but people often overlook that deadline, since they assume money would be transferred from the old age portion of the program. 

May 1, 2012

An article in The Hill today notes that House Republicans do not plan to offer offsets for the extension of the 2001/2003 tax cuts that expire at the end of the year.

April 30, 2012

The news that Britain has entered into a double-dip recession touched off a fierce debate last week over the role of austerity in the country's downturn.

April 30, 2012

The politicians don't seem to want to budge on the budget, but our simulator is allowing the public to nudge them along.

April 30, 2012

Last week, the House Ways and Means Subcommittee on Select Revenue Measures held a review of "tax extenders" -- tax provisions that have been enacted on a temporary basis but are frequently extended. The hearing featured testimony from members of Congress who had sponsored legislation to extend one or more extenders, with each of them having to defend their particular tax breaks.

April 27, 2012

Today, we are launching DebateTheDebt.org, a site where you can sign a petition calling for a real debate devoted to the debt. In that vein, CRFB president Maya MacGuineas reiterated the call to have one of the three presidential debates focus exclusively on the debt in an op-ed at CNN.com.

April 27, 2012

Update: CBO has posted scores for the Energy and Commerce and Oversight bills. They would save $113 billion and $83.3 billion, respectively, over ten years.

April 26, 2012

To hear the news coming out of Washington, finding the route to fiscal stability can be pretty hopeless as our leaders all steer in different directions. If only we had a GPS! Well, maybe we do.

April 26, 2012

Federal Reserve chairman Ben Bernanke held a press conference yesterday following the conclusion of the Federal Open Market Committee meeting. Questions spanned a variety of topics including the Fed's current monetary policy stance, the economic outlook, the possible threat posed by European troubles, and Fed transparency. But one question did come up about the fiscal cliff and how the Fed would react if no action were taken. Here are his remarks:

April 26, 2012
Congress Cannot Afford to Punt on Social Security

Today, two of CRFB's co-chairman, former Representatives Charlie Stenholm (D-TX) and Jim Kolbe (R-AZ), penned an op-ed in The Hill, saying that the new Trustees report should give lawmakers a new sense of urgency over Social Security reform.

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