The Bottom Line

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.

May 24, 2012

The USA Today has an interesting article on the "real federal deficit" for 2011. They say that the $1.3 trillion is dwarfed by a more comprehensive tally that includes changes in unfunded liabilities:

May 23, 2012

In a blog post cross-posted at Tax Policy Center and Forbes, Howard Gleckman summarizes a talk that American Action Forum president and former CBO di

May 22, 2012

Estimates of the fiscal cliff that is set to occur at the end of the year have been popping up in recent weeks. Now CBO has lended its voice to the discussion in a brief, making a number of interesting observations and quantifications with regards to the cliff.

May 22, 2012
A Weekly Update on Budget and Fiscal Policy Developments and a Look Ahead

Much Not to ‘Like’ – Facebook had its initial public offering (IPO) on Friday. The hype surrounding the offering illustrated the prominence of social networking in our economy and society. Yet, for all the lofty numbers involved, they pale in comparison to the federal budget.

May 22, 2012

Yesterday, Medicare trustee Charles Blahous and former chief economist for Vice President Biden Jared Bernstein had a debate about the fiscal consequences of the Affordable Care Act (ACA). The event, hosted by e21 at the National Press Club, discussed Blahous's recent paper on the ACA that claimed the law would increase the deficit, contrary to CBO projections.

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