We have said before that the Disability Insurance (DI) portion of Social Security is too often overlooked, even though it has a more immediate funding problem than the Old Age and Survivors Insurance (OASI) portion. The Chief Actuary of the Social Security Administration estimates that the DI trust fund will run out in just four years.
After the report we released in March, the topic of the fiscal cliff has risen in prominence as CBO and others have attempted to estimate the size of the cliff. In addition, uncertainty over how it will be handled has started to make many different sectors of the economy anxious.
In an op-ed in The Hill, former Sen. Judd Gregg (R-NH) argues that whoever is President next year should eschew the standard President's budget--with its detailed line-by-line policies and numbers--and instead issue a budget submission with a few big policies. As he says:
In evaluating the fiscal cliff, it is interesting to see how it compares to past cases where the federal government has rapidly reduced deficits. The OMB has historical data on deficits as a percent of GDP going back to 1930, so we can evaluate based on this time period. For simplicity's sake, we will compare "cliffs" by the change in deficits from the previous year.
The Hillpoints to a press release by Senator (and former OMB director) Rob Portman (R-OH) that claims the upper-income portion of the 2001/2003/2010 tax cuts accounted for only 4 percent of the swing from surpluses to deficits starting in the early 2000s.
The Fiscal Cliff: A Hard Landing Becomes More Likely
Today on the Brookings Institution website, CRFB co-chair and former Congressman Bill Frenzel (R-MN) wrote an op-ed about the looming fiscal cliff. In it, Rep. Frenzel argues that there may not be enough time to avert the fiscal cliff during the "lame-duck" session of Congress. He believes that there is hope for a solution, but both parties will need to compromise.
The defense portion of the sequester that will hit on January 2 of next year has garnered a lot of attention, but it is not the only part of the automatic cuts. The sequester will also make cuts to non-defense discretionary spending and and certain other mandatory programs (many low-income programs are exempted). Recently, other parts of the sequester have started to receive attention.
Today, CBO has released yearly estimates of the long-term budget projections for the Department of Defense. The DoD provides a plan to Congress called the Future Years Defense Program (FYDP), in which DoD lays out its plans and the needed appropriations for the next five years. CBO uses this report to project future defense spending through 2030, using their own assumptions for variables like health care costs and weapons system prices that affect the defense budget.
As Senator Mark Warner pointed out last week in the Christian Science Monitor, the United States is still in a position where long-term debt reduction is much easier than in several European countries now in fiscal crisis.
Much of the focus on budget plans has revolved around the two presidential candidates, but Members of Congress have a tremendous impact on the federal budget. In conjuction with the Boston Globe, CRFB's U.S.
Often when tax reform is discussed these days, policymakers are gleeful to detail the ways in which they will cut tax rates or otherwise lower tax burdens under the current system, but much less forthcoming about how they will otherwise raise taxes to meet a certain revenue target (see here, for example).
In light of President Obama reigniting the tax debate yesterday, Dylan Matthews of Wonkblog has a very informative blog post showing the course of tax policy since President Obama took office three and a half years ago.
In a press release today, CRFB examines President Obama's announcement that he will push Congress for one year extension of the 2001/2003/2010 tax cuts for those making less than $250,000. This comes as Republicans in the House move to extend all of the tax cuts for a year with a vote this month.
The latest edition of CQ Weekly has a piece on the "low-hanging fruit" of the budget debate -- provisions that have been proposed or negotiated by members of both parties. A table from the article is a very welcomed addition to our own overlapping policy grid, which also shows a surprising level of commonality between some budget plans and discussions.
In yesterday's Washington Post, Jonathan Rauch writes that President Obama should propose a bill, that would among other things, tackle long-term debt reduction. That plan, as the title of this post would indicate, is Simpson-Bowles. He explains:
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.
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.