Given the nature of debt ceiling politics lately, estimating when the federal government will start defaulting on obligations has become a common, multiple-times-a-year occurrence.
As the conferees met yesterday, any doubt that we can afford to wait on the long-term debt problem should have quickly been erased after CBO Director Doug Elmendorf's testimony to the conference committee. While the budget outlook has improved somewhat in the short term, little progress has been made on the long-term problem. And fixing the long term will likely require greater reforms to entitlement programs and the tax code.
At the second meeting of the budget conference committee earlier today, CBO director Doug Elmendorf was on hand to present the budget and economic outlook and to answer (as it turned out many, many) questions from the conferees.
It's no secret that a significant portion of the federal budget is devoted to our national defense and insurance programs like Social Security, Medicare, and Medicaid. As Ezra Klein wrote almost three years ago, the federal government can be thought of as essentially "an insurance conglomerate protected by a large, standing army." But the army's getting smaller too.
Yesterday, the Congressional Budget Office (CBO) dramatically lowered its estimate of savings if policymakers chose to increase the Medicare eligibility age from 65 today to match Social Security's full retirement age of 67. Last year, CBO estimated that increasing the age would generate $113 billion in savings over 10 years.
Last week, we noted that the furlough of "non-essential" employees at the Congressional Budget Office due to the government shutdown could halt the release of the updated Budget Options report, depriving lawmakers of important information at a time when they would ideally be using it to create a deficit reduction package.
The government is still shut down, the debt ceiling is fast approaching, and the need to put our debt on a sustainble path remains. This environment creates an opportunity for organizations to put forward a variety of budget options for lawmakers to consider. But because of the shutdown, a traditional supplier of those options is hamstrung.