CRFB Releases and Events
CBO's Long-Term Budget Outlook, released yesterday, is a detailed 130-page document, filled with budget projections for the next 25 years, along with a supplemental spreadsheet with projections for the next 75 years. We've boiled down the document into a concise 6-page analysis with key facts and findings. CBO's debt projections have changed only slightly since last year – slightly higher debt in the next few years and a very modest decline in the still unsustainable upward track thereafter.
As we explain in our paper, CBO projects deficit and debt levels to remain fairly stable over the next few years, but then rise dramatically. Under CBO's "Extended Baseline Scenario," which generally reflects current law, deficits will rise from 2.7 percent of GDP over the next several years, to 3.8 percent by 2025, 5.9 percent by 2040, and 9.5 percent by 2090. As we explain, this will have major implications for debt:
The combination of deficit reduction legislation earlier this decade, low interest rates, and a slowdown in health care cost growth have certainly improved the long-term fiscal outlook, yet debt remains at record-high levels and is set to continue growing unsustainably with no end in sight. If policymakers continue to act irresponsibly – as they did with the “doc fix” legislation earlier this year – the situation will be far worse."
Over the past few years, we have seen many attempts by lawmakers to wriggle out of budgetary discipline by resorting to budget gimmicks. A new CRFB chartbook and one-pager highlight many of these gimmicks, including when they have been used and just how they work.
The one-pager, in particular, focuses on four of the most-frequently used gimmicks in recent years.
With the deadline for extending the surface transportation authorization just a few weeks away and Highway Trust Fund (HTF) bankruptcy approaching this summer, CRFB has released the The Road to Sustainable Highway Spending, a detailed plan to fix the HTF's finances and bring greater rationality to the process of determining highway spending and revenue. The plan would fully close the $175 billion trust fund shortfall through 2025 and set up processes to make future general revenue transfers to the fund much less likely.
Click here to read the full plan.
The plan first articulates three principles that any responsible highway solution should abide by:
- Act quickly to ensure adequate funding. Congress must extend the highway bill this month and provide sufficient funding to avoid disruptions this summer.
- Offset any general revenue transfers with real savings. While at least a short-term general revenue transfer is likely needed, it would be irresponsible to enact a transfer without equal-sized spending cuts or revenue increases to offset the cost. Resorting to gimmicks such as pension smoothing undermines the trust fund’s credibility.
- Close the structural imbalance. Lawmakers cannot rely on general revenue transfers in perpetuity and must ultimately bring highway spending and dedicated revenue in line. Plans should close this gap, and any that fail to do so should acknowledge that further action will need to be taken in the future.
CRFB has released a new compendium of over 150 options to reduce mandatory spending and raise revenue. Despite declining in deficits in recent years, the debt is still projected to rise substantially over the long term. In addition, a series of upcoming Fiscal Speed Bumps will force lawmakers to make decisions about spending and revenue that could require large amounts of offsets, or potentially add almost $2 trillion to the debt.
Click here to see the full list of options.
Our list of options is meant to assist in finding fiscally responsible Speed Bump solutions, achieve some of the unspecified savings in the budget resolution, and help make the country's fiscal situation sustainable.
This paper updates and expands a health care and revenue options report released during the fiscal cliff discussions in late 2012. The new list also focuses on revenue and health care but also includes options for other mandatory (non-health, non-Social Security) spending that may be useful in the months ahead.
Congress sped through this year's second and third "Fiscal Speed Bumps" in March, ignoring the return of the statutory debt limit (though the hard deadline for the debt limit is not until this fall, due to the Treasury Department's "extraordinary measures") and hurrying through a fiscally irresponsible, though permanent, solution to the expiration of the Medicare "doc fix." We've updated our Speed Bumps graphic, below, showing lawmakers barreling full speed to the end of May when the Highway Trust Fund will run out of money.
This week, the House and Senate will announce their conferenced budget resolution, which outlines their blueprint for Fiscal Year 2016. The passage of the concurrent budget resolution signals the start of the appropriations process, which must be completed before an October 1 deadline. That deadline also coincides with the expiration of the Ryan-Murray budget deal and the return of sequestration discretionary spending levels. As we wrote last week, the House jumped the gun and has already started work on several appropriations bills in advance of the final resolution.
The Committee for a Responsible Federal Budget is pleased to announce three new job openings. Those who are interested can visit our jobs page for a detailed description of each position's responsibilities and qualifications.
The positions are:
- Legislative Director: The Legislative Director will contribute to the organization’s ongoing legislative efforts in the areas of federal tax, health, disability, budget, and economic policy. The Director will be a member of the senior team. We are looking for a team player who has previous Hill experience as well as a strong commitment to advocating for responsible fiscal policies.
- Policy Analyst: The Policy Analyst will contribute to the organization’s analysis of federal tax, health, disability, budget, and economic policy issues. We are looking for a team player interested in writing, researching, and publishing new content, analyzing new legislation and approaches to federal budget policy, and becoming part of a growing team of fiscal policy thought leaders.
- Policy Writer: The Policy Writer will assist the policy team in drafting and editing content on a variety of fiscal topics including federal tax, health, disability, budget, and economic policy. We are looking for a team player who is able to distill complex policy material into accessible and compelling content.
Applicants should send a resume, cover letter, and contact information for three references to email@example.com. Those applying for the Policy Analyst and Policy Writer positions should also send a writing sample of six pages or less.
We published a paper with our partners at Fix the Debt last week to help answer questions about the budget conference committee that met for the first time yesterday. The paper answers many common questions about a budget conference – from its goals and its timeline to the differences that the conferees need to settle –and tells us what we can expect when they agree to a concurrent resolution. Below are some of the highlights.
Click here to read the full paper.
What is a budget conference?
A budget conference is a process by which the House and Senate iron out the differences in the budget resolutions they each passed separately to arrive at a unified “concurrent budget resolution” that each chamber will then vote on whether to adopt. The leaders of each party and budget committee in both the Senate and House chose members to participate in the conference committee.
What is a concurrent budget resolution?
After both chambers agreed to their own budget resolutions that set spending and revenue levels over the coming years, they must pass a single agreed-upon concurrent resolution. Although the House and Senate both vote on a concurrent budget resolution, it is not signed by the President and thus does not carry the force of law; however, it can establish rules for Congress that make future laws easier or harder to enact. For more on the rules aspects in these budgets, see our paper Budget Process in the FY 2016 Budget Resolutions.
With the House and Senate preparing to go to conference to work out the differences between their budget resolutions, we published a paper Tuesday outlining the various budget process measures contained in the respective resolutions as well as our recommendations about which should be kept. Both budget resolutions contain several items that could help or hurt the process, and we suggest that the conference committee hammer out these differences in line with the recommendations we've made in the Better Budget Process Initiative. We also published a blog and press release containing some recommendations not related to budget process.
Both budgets tackle process reform by enacting provisions to address the lack of accountability, transparency, and long-term focus in current budgeting.
The federal government will reach its second Fiscal Speed Bump today, as the debt ceiling will be reinstated after having been suspended since last February. The Treasury Department will be able to push back the actual day of reckoning until the fall with "extraordinary measures," but lawmakers will have to lift it later this year to avoid a default on the debt. At times, raising the debt ceiling has involved unnecessary brinkmanship, but it has often been used as a catalyst to make important fiscal reforms. To further the latter and minimize the former, the Better Budget Process Initiative has proposed ten options to change the debt ceiling to make it a more effective tool for fiscal responsibility while improving financial stability in a new paper entitled "Improving the Debt Limit".
The paper divides the changes into four broad categories: linking debt limit changes to achieving fiscal targets, incorporating the debt limit into Congress's decision making, applying the debt limit to more meaningful measures, and replacing the debt limit with a limit on future obligations. The ten options are below:
Link changes in the debt limit to achieving responsible fiscal targets
1) Presidential authority to increase the debt limit if fiscal targets are met
2) Presidential authority to increase the debt limit if accompanied by a plan to put debt on a declining path as a share of GDP
3) Suspend the debt limit automatically if fiscal targets are met
We've released our analysis of CBO's estimate of the President's budget, breaking down the report and its supplementary data in less than six pages. Our paper explains that CBO finds that many policies would save less than the President's budget claims shows debt on an upward, rather than a downward path.
Although CBO shows lower debt as a percent of GDP than OMB does, it also shows debt on a slight upward path after 2020, meaning the budget is less likely to stabilize debt over the long term using CBO's numbers (OMB's numbers showed stable debt through 2040). Debt would fall from 74 percent of GDP in 2014 to 72 percent by 2020 before rising gradually to 73 percent by 2025. Thus, the budget would likely have to do more to truly put debt on a sustainable path.
Debt as a Percent of GDP in the President's Budget
Debt would rise after 2020 because deficits would increase throughout much of the ten-year window. Although they would fall from $486 billion (2.7 percent of GDP) in 2015 to $380 billion (2 percent) in 2016, they would rise continuously after that to $801 billion (2.9 percent) by 2025. The 2025 deficit is lower than CBO's baseline deficit of 3.8 percent but higher than OMB estimated deficit of 2.5 percent.