The economic stimulus package enacted in 2009 is now four years behind us. According to recovery.gov, $796 billion has been disbursed as of the end of April, with $505 billion in the form of spending and $290 billion in tax cuts. CBO's latest estimate of the cost of the stimulus through 2019 is $830 billion. While some pieces are still going on, in particular food stamp spending and infrastructure spending, most provisions have run their course or were set to expire a few years ago.
On Friday, the Office of Management and Budget (OMB) released its latest detailed report of how the cuts in sequestration will be allocated. The sequester was reduced by $24 billion under the fiscal cliff deal, so the cuts are slightly smaller as a percentage of full fiscal year spending than under OMB's previous report (with the exception of the Medicare cuts).
Along with a two month delay until March 1, the fiscal cliff deal reduced the across-the-board cuts under sequestration for 2013 by $24 billion. Reducing the cuts from $109.3 billion to $85.3 billion was paid for with a reduction in discretionary caps in 2013 and 2014 and a tax gimmick to allow for more conversions to Roth IRAs. As a result, the remaining cuts under sequestration are now slightly smaller.
Although labeled as the "fiscal cliff deal," the American Taxpayer Relief Act (ATRA) enacted into law left many budget issues unresolved or only temporarily resolved. While the deal permanently addressed the expiring tax cuts and AMT patches, many other provisions were only extended temporarily. The sequester, one of the largest components of the cliff, was delayed for only two months.
Over the past week, CRFB has examined the composition, budgetary effects, and economic effects of the American Taxpayer Relief Act (ATRA), which replaced most of the fiscal cliff.
While the American Taxpayer Relief Act has put off worries about the fiscal cliff for a month, it is clear that we missed a clear opportunity to do something about our unsustainable fiscal path. Fiscal Commission co-chairs and Fix the Debt co-founders Al Simpson and Erskine Bowles made it clear that more will need to be done on the debt after missing a "magic moment" in these fiscal cliff negotiations.
The American Taxpayer Relief Act has been discussed at length in the news and on this blog, but much of the discussion has been focused on the big provisions in the law like the extension of most of the 2001/2003/2010 tax cuts on income below $400,000/$450,000, the extension of unemployment benefits, or the delay of the sequester.
Update: CBO confirmed our numbers today, finding a remaining fiscal contraction of about 1 1/4 percent.