Budget Process and Rules
Yesterday in a blog post, IMF's Fiscal Affairs Director Carlo Cottarelli stressed the need for fiscal transparency on the part of governments around the world in attaining a comprehensive debt-deal. By fiscal transparency, Cottarelli means the necessity for governments to make fiscal information accurate and readily available.
With Congress in recess until after the elections, a plan to replace the fiscal cliff with a comprehensive debt deal will have to get done during the lame duck session. With less than five weeks to work with, Congress might look to the Bipartisan Policy Center's new Framework for a Grand Bargain for recommendations on how Congress could avoid the fiscal cliff, while ensuring it is committed to a debt deal in a limited time frame.
The use of dynamic scoring is one of the most contested issues in the budget world. We highlighted the pros and cons of using it and the issues associated with incorporating it into the budget process in a paper earlier this year.
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.
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."
Donald Marron, who recently wrote a blog post on how budget limits are treated in Congressional rules, wrote a piece today detailing how Medicare Part A rules could be altered so that savings in Part A could not be used to both reduce the deficit and extend the life of the Hospital Insurance (HI) trust fund. Here's his take:
Last month, Social Security and Medicare Trustee Chuck Blahous sparked a controversy by saying that the Affordable Care Act would add to the deficit, arguing that the law was double counting savings from Medicare Part A because Part A is already restrained by a trust fund that is scheduled to expire this decade. Thus, the Medicare savings from the law would only be used to extend the life of the trust fund.
Tax Reform Cometh…Eventually – Today is Tax Day, when federal tax returns are due. Procrastinators have DC Emancipation Day, a holiday in the District of Columbia celebrating the day President Lincoln freed the slaves there, to thank for the extra day to file. The law prohibits Tax Day from falling on a weekend or federal or state holiday. Congress returns from a two-week hiatus just in time for lawmakers to take advantage of the tax filing deadline to promote their favorite tax reforms.
Bloom and Gloom – Washington’s famous Cherry Blossoms bloomed just ahead of the festival in their honor, and most promptly disappeared due to stormy weather in DC. Now, we can look forward to five weeks of celebrations with the namesakes mostly absent. A similar situation is playing out with the federal budget. There have been weeks of hearings, which will culminate this week as the House votes on the FY 2013 budget resolution. Yet, it is clear that there will be no budget coming out of Congress, again.