Fiscal Policy in the News
Big Day – Today is the big day in budget world. The White House released its fiscal year 2013 budget request. As you can imagine, CRFB has been busy going through the numbers and proposals. CRFB issued a statement earlier today with initial analysis and a paper examining the request is forthcoming. The budget would stabilize the debt at 76% of GDP in 2022.
It's no secret that the conference committee tasked with finding solutions for the expiring 2-month fix for the payroll tax cut, unemployment insurance, and the doc fix is having a difficult time agreeing on how to offset the costs of any extensions. But just because coming to an agreement isn't easy doesn't mean it's time to abandon offsets altogether.
Baseline Instinct – The Congressional Budget Office (CBO) on Tuesday released its much-awaited 2012 Budget and Economic Outlook. According to CBO, if current law is maintained, deficits will decrease significantly in the period from 2013-2022; but that is a big if. Under the current law baseline, a major reason that deficits will shrink is due to major revenue boosts because the 2001/2003 tax cuts will expire and the Alternative Minimum Tax (AMT) will hit more middle-income families.
Super Not So Duper – The word “super” has lost its luster lately. The failure of the Super Committee and the need for a super majority in the Senate to pass virtually anything have contributed to record-low approval ratings for Congress. Meanwhile, Super PACs are pouring unlimited funds into campaigns, resulting in even more negative advertising than usual and rising concerns that the political process is being distorted.
Stating the Obvious – President Obama delivers the State of the Union address Tuesday evening. The SOTU is the annual rite where presidents attempt to hit the “reset” button and lay out their agenda for the coming year.
Playoffs in Full Swing – The Packers packed it in; the Broncos got busted; the Saints went marching out; and Houston had a problem as the NFL Playoffs eliminated more contenders in the annual march towards crowning a champion. Challengers were eliminated in the presidential contest as well as former Utah Governor Jon Huntsman backed out and more may fall away after Saturday’s South Carolina primary.
With the year wrapping up, our friends Ezra Klein over at the Washington Post and Derek Thompson at The Atlantic asked a variety of noted economists and other important individuals ranging from Larry Summers and Jared Bernstein to Rep. Paul Ryan (R-WI) and Sen. Kent Conrad (D-ND) to list their favorite chart of the year.
This Saturday in Des Moines, Iowa, the Republican presidential candidates will debate for one of the last times before the Iowa caucuses on January 3. The Committee for a Responsible Federal Budget has several questions we would like to see the candidates answer.
Europe's worsening debt crisis--notably Italy's--should serve as a warning to the United States of what can happen to an otherwise steady, solvent economy whose debt is too high. In short, when debt gets so precariously high that interest payments become a very large budget line, debt markets can expand a slight decrease of confidence into a significant increase in interest rates. From there, the crisis can quickly descend into a national failure to refinance expiring bonds, and then possibly into national bankruptcy and default.