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CRFB Reacts to Trustees Reports
August 5, 2010 Today, the Social Security and Medicare Trustees released their annual reports on the financial status of the two programs. The Trustees are projecting that Social Security will face a cash flow deficit of $41 billion (excluding interest) this year, a cash flow deficit of $7 billion next year, will then run small surpluses from 2012 to 2014, and will again return to deficits thereafter. Deficits will reach 0.4 percent of GDP in 2020 and 1.2 percent by 2030. The Medicare deficit in the Hospital Insurance program is projected to reach $33 billion this year, before running small surpluses by mid-decade. But deficits will resume an upward path by 2020. The report states “The projected trust fund shortfalls should be addressed in a timely way so that necessary changes can be phased in gradually and workers can be given time to plan for them. Implementing changes sooner will allow the needed revenue increases or benefit reductions to be spread over more generations.” “When the programs’ own Trustees tell the nation reforms need to be made sooner rather than later, we ought to listen,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. “The clock is ticking; our ongoing delay has already made strengthening the program much more difficult. Do we really want to tell participants down the road – sorry for the abrupt benefit cuts and tax increases—the Trustees warned us year after year, but we chose to delay taking action? It just doesn’t make sense that when it comes to Social Security, one of the nation’s most successful programs, we are unwilling to make the necessary changes to avoid insolvency even in the face of repeated warnings.” For press inquiries, please contact Kate Brown at (202) 596-3365 or brown@newamerica.net.
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CRFB Reacts to CBO's Long Term Outlook
June 30, 2010 Today, the Congressional Budget Office (CBO) released its Long Term Budget Outlook, which paints an alarming and dismal picture of the country’s fiscal future. Under current law, public debt will reach 79 percent of the economy by 2035 and about 107 percent by 2080. Under CBO’s Alternative Fiscal Scenario, which is seen to be a more likely policy path and includes the extension of many expiring policies as well as modifications to certain savings assumptions that may not materialize, debt will reach 87 percent by 2020, 185 percent by 2035, and an astronomical 854 percent by 2080. Talk about unsustainable. CBO also reports that even with health care reform, population aging and excess cost growth remain the largest problem areas in the budget and will push deficits and debt to untenable levels. If current policies are continued, federal spending is projected to increase from 24.3 percent of GDP today to over 35 percent by 2035, whereas revenue levels will be far from sufficient to sustain the projected growth in spending—increasing from 14.9 percent today to 19.3 percent in 2035. “Aging, health care costs, and an outdated, insufficient revenue system are set to bury the country in debt,” said CRFB president Maya MacGuineas. “Are the findings in this report really the messages we want to be sending our creditors?” “Policymakers must begin working on real solutions to our long-term problems now,” said MacGuineas. “With debt levels expected to soar, policymakers must embrace meaningful reforms to help us regain control over future deficits, reduce the risks of a fiscal crisis, and keep the economic recovery on track. If this year’s Long Term report isn’t a call to action, I don’t know what is.” For press inquiries, please contact Kate Brown at (202) 596-3365 or brown@newamerica.net. |
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Congress May Not Produce a Budget, But You Can
May 19, 2010 The Committee for a Responsible Federal Budget today is launching its new “Stabilize the Debt” budget simulator to allow the public to get a better understanding of the steps necessary to close the budget gap and stem the rising federal debt. The simulator allows anyone—from members of Congress to interested citizens — to try their hand at stabilizing the federal debt at a manageable level of 60 percent of GDP. “Congress will not likely adopt a budget resolution this year, but this new budget simulator puts power in the hands of the public to show their preferences for tackling the mounting debt,” said Maya MacGuineas, CRFB president. “Policymakers and voters need to understand the types of policy changes that will be necessary; the simulator both shows them the types of policies that will ultimately have to be part of a plan and gives them the opportunity to make their preferences known.” The online budget simulator (http://crfb.org/stabilizethedebt) presents users with a variety of budget options from all parts of the budget in an accessible format that allows them to track how their choices affect the medium-term debt picture. Social media capabilities will allow users to share their experience virally with friends and discuss their choices online. CRFB will keep track of the results and share them with policymakers and the public. For press inquiries, please contact Kate Brown at (202) 596-3365 or brown@newamerica.net.
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No Budget, No Plan, No Accountability...No More
May 18, 2010 Well past the April 15 deadline, Congress still has yet to adopt a budget resolution for FY2011. Meanwhile, policymakers are looking to add hundreds of billions of dollars to the debt for additional government spending and tax cuts. And the House and the Senate are eyeing ways to weaken their already weak budget process restraints. The result is an already dangerous fiscal situation, growing ever-more dangerous each day. Instead of disregarding fiscal discipline and pushing forward major initiatives that are not paid for, Congress must consider the long-term fiscal and economic impact of the decisions they are making today. Legislators must think beyond the next election and develop a plan now for the longer term. Here is where we stand: Chances for budget resolution fading. Each passing day without a decision on a budget resolution makes it less likely that Congress will adopt a basic budget blueprint. Many politicians would rather not have a budget debate that will highlight mounting deficits and debt in an election year and either the hard choices involved in getting the debt under control, or their failure to make those choices. The very reasonable push to reduce some discretionary spending has left the House unable to agree on a plan. “That so many members of Congress are unwilling to consider even relatively small spending reductions does not bode well for the type of budget discussions we should be having,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. “Large structural changes to the budget will have to be considered—the types of changes currently being suggested are merely the opening act for what is to come.” Lack of a budget is no excuse for adding to the debt and avoiding the fiscal problems. According to its rules, the House may now begin considering appropriations bills without a resolution in place. Spending decisions should not be made without firm limits. There is growing talk that Congress may simply “deem” a discretionary spending figure for appropriators to divide up this year and attach such a deeming resolution to other must-pass legislation. That process would deny members the opportunity to hold a separate debate on this year’s overall spending levels. | |
“Having no budget is no reason to add further to the debt,” added MacGuineas. “If a deeming resolution is used, it must emphasize fiscal restraint. Failing to pass a budget should not be an excuse to open the spending floodgates.” PAYGO must be strengthened, not weakened. There are also reports that such a deeming resolution may be billed by Democrats as a “budget enforcement resolution” and include provisions reaffirming the commitment of congressional leaders to bring the recommendations of the White House deficit commission to a vote and bringing pay-as-you-go rules in line with statutory PAYGO requirements. However, the PAYGO law passed by Congress earlier this year contains several major exemptions totaling upwards of $2 trillion, including for the Medicare “doc fix” and extensions of the 2001/2003 tax cuts for the middle class. “The new statutory version of PAYGO has loopholes so absurdly large, you could drive a tanker through them. The rules in the House and Senate are far more responsible and consistent with previous iterations of pay-as-you-go budgeting. Instead of trying to bypass the basic principle that we need to pay for what we spend and the sensible PAYGO rules, lawmakers should be figuring out how to comply with them,” said MacGuineas. “Extenders” bill should not extend the debt. Congress wants to enact legislation that would extend until the end of the year popular tax breaks such as the research and development tax credit and social programs like expanded unemployment benefits and COBRA subsidies for the jobless. Democrats will likely unveil a bill that contains offsets for the tax cuts, but not the social spending. The proposal may also include a five-year extension of the “doc fix” that isn’t paid for. And Congress may also attempt to enact a permanent extension of the estate tax at levels that would violate even the weak statutory PAYGO currently in place. “Congress cannot continue to act as though there are no consequences to adding to the debt,” said MacGuineas. “What are we doing—looking at Greece and saying ‘oh that looks like fun, let’s give that a try’? As the federal debt continues to soar, investors are watching lawmakers and as problems abroad clearly demonstrate, investor confidence is crucial. We should stop considering every bill as an ‘emergency’ in order to bypass PAYGO and pay for stimulus measures over the longer term so that they do not add to the long-term debt.” Deficit reducing measures should actually reduce the deficit. Finally, the House is said to be looking into ways to ensure that savings from the President’s Fiscal Commission are preserved for deficit reduction. This is an excellent idea. The last thing we need is to see this money used to finance new spending or tax cuts. For that matter, savings from the health reform bill, which are currently on the PAYGO scorecard, should not be used to offset the costs of other borrowing either. For press inquiries, please contact Kate Brown at (202) 596-3365 or brown@newamerica.net.
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