Budget

Congress May Not Produce a Budget, But You Can

CHAIRMAN
Bill Frenzel
Tim Penny
Charlie Stenholm

 
PRESIDENT
Maya MacGuineas
­­­
 
DIRECTORS
Barry Anderson
Roy Ash
Charles Bowsher
Steve Coll
Dan Crippen
Vic Fazio
Willis Gradison
William Gray, III
William Hoagland
Douglas Holtz-Eakin
Jim Jones
Lou Kerr
Jim Kolbe
James Lynn
James McIntrye, Jr.
David Minge
Jim Nussle
Marne Obernauer, Jr.
June O'Neill
Paul O'Neill
Rudolph Penner
Peter Peterson
Robert Reischauer
Alice Rivlin
Charles Robb
Martin Sabo
Gene Steuerle
David Stockman
Laura Tyson
Paul Volcker
Carol Cox Wait
David M. Walker
Joseph Wright, Jr.
 

SENIOR ADVISORS
Elmer Staats
Robert Strauss


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.

 


Click here for a pdf version of this release.

For press inquiries, please contact Kate Brown at (202) 596-3365 or brown@newamerica.net.

 

 

 

 

 

No Budget, No Plan, No Accountability...No More

CHAIRMAN
Bill Frenzel
Tim Penny
Charlie Stenholm

 
PRESIDENT
Maya MacGuineas
­­­
 
DIRECTORS
Barry Anderson
Roy Ash
Charles Bowsher
Steve Coll
Dan Crippen
Vic Fazio
Willis Gradison
William Gray, III
William Hoagland
Douglas Holtz-Eakin
Jim Jones
Lou Kerr
Jim Kolbe
James Lynn
James McIntrye, Jr.
David Minge
Jim Nussle
Marne Obernauer, Jr.
June O'Neill
Rudolph Penner
Peter Peterson
Robert Reischauer
Alice Rivlin
Martin Sabo
Gene Steuerle
David Stockman
Paul Volcker
Carol Cox Wait
David M. Walker
Joseph Wright, Jr.
 

SENIOR ADVISORS
Elmer Staats
Robert Strauss

 
 
 
 


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.  

 


Click here for a pdf version of this release.

For press inquiries, please contact Kate Brown at (202) 596-3365 or brown@newamerica.net.

 

 

Fiscal Turnarounds: International Success Stories

Download this document

The U.S. is not alone in facing massive budget deficits and an exploding debt, nor is it the first country to face this type of situation. There are important lessons we can learn from other countries' fiscal turnarounds. In this paper CRFB discusses the experiences of Canada, Denmark, Finland, Ireland, and Sweden in successfully bringing their debt under control.

Op-Ed: President's Budget Is a Start, at Least

AOL News | Feb. 1, 2010

 

The president's budget elevates the issue of fiscal responsibility (good), but fails to achieve it (not good).

President Obama proposes spending $3.8 trillion next year and borrowing $1.3 trillion of that. The massive deficits the nation now faces would gradually fall to $706 billion in 2014, before rising back to just over $1 trillion by 2020.

Among the larger deficit-reducing proposals in the budget are a three-year nonsecurity discretionary spending freeze, which would save $250 billion over 10 years; a fee on large financial institutions designed to pay back the TARP money, which would generate $90 billion; a limit on itemized deductions, saving $290 billion; and the elimination of a large number of tax preferences, which would raise about $350 billion.

All good stuff (OK, not good, but necessary). But when you're dealing with cumulative deficits of $8.5 trillion over the next decade, not good enough.

I'm sympathetic to the situation the president is in. He is for the most part cleaning up a fiscal mess not of his own making. The massive fiscal challenges we face are primarily the result of the borrowing of past years, even when the economy was strong; the deterioration in the budget caused by the recession; and the major spending challenges going forward because of aging and growing health care costs.

And if the president were to actually come out with a budget that would put the country on a sustainable path – say, by bringing the debt down to 60 percent of gross domestic product by the end of the decade and keeping it there – the policies he'd have to propose to get us there would leave Congress apoplectic.

They might include new taxes, perhaps an energy or consumption tax; raising the retirement age; dramatically restructuring major entitlement programs such as Social Security and Medicare; and a freeze on discretionary spending more aggressive than the one the president has proposed. Not exactly the agenda any politician wants to run on.

But it's not as though the need to submit a budget came as a surprise to the White House. Administration officials should have been doing much more in the weeks and months building up to the release of this budget to prepare the country for the difficult choices ahead.

The president should have made clear that no area of the budget is off limits, and that major structural reforms, not small spending freezes or cutting earmarks, will do the trick. And instead of bragging about providing tax cuts for 95 percent of the public in his State of the Union speech, the president should have explained that even his promise not to tax families making less than $250,000 a year is probably impossible to keep.

At the very least, he shouldn't be making the situation worse by extending a number of expiring policies – from the Bush tax cuts to the Alternative Minimum Tax patch – all without paying for the costs.

This budget will have to be the start – not the extent of – the president's push to implement a strategy to pull us out of this fiscal hole. Even though it is an election year, we cannot continue to delay.

Copyright 2010, AOL News

 

What CRFB Would Like to See in the FY 2011 Budget

CHAIRMAN
Bill Frenzel
Tim Penny
Charlie Stenholm

 
PRESIDENT
Maya MacGuineas
­­­
 
DIRECTORS
Barry Anderson
Roy Ash
Charles Bowsher
Steve Coll
Dan Crippen
Vic Fazio
Willis Gradison
William Gray, III
William Hoagland
Douglas Holtz-Eakin
Jim Jones
Lou Kerr
Jim Kolbe
James Lynn
James McIntrye, Jr.
David Minge
Jim Nussle
Marne Obernauer, Jr.
June O'Neill
Rudolph Penner
Peter Peterson
Robert Reischauer
Alice Rivlin
Martin Sabo
Gene Steuerle
David Stockman
Paul Volcker
Carol Cox Wait
David M. Walker
Joseph Wright, Jr.
 

SENIOR ADVISORS
Elmer Staats
Robert Strauss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


What CRFB Would Like to See in the FY 2011 Budget
January 28, 2010



On Monday, February 1, President Obama will unveil his FY 2011 budget. Although the President offered a preview of some portions of the budget last night, many questions remain. Given the United States’ mounting debt, the budget must begin the process of closing our fiscal gap. In particular, CRFB hopes that the administration’s FY 2011 budget request:

1) Commits to an ambitious, yet attainable, fiscal goal. Given the nation’s current fiscal picture, U.S. creditors need to be reassured that the country intends to take control of our future debt path; to do this, the country needs an aggressive, yet realistic, fiscal goal. The Peterson-Pew Commission on Budget Reform has recommended stabilizing the debt at 60% of GDP by 2018, but this is by no means the only option. The important thing is that a goal be ambitious enough to avert a fiscal crisis, but realistic enough that it is viewed as credible. It is also important that a fiscal goal capture the need to deal with both the medium- and long-term fiscal imbalances – such as the case with a goal of stabilizing the debt so it does not grow as a share of the economy once the target is hit.

2) Details specific actions for meeting fiscal goals. It isn’t enough to set a fiscal target; the President must also provide specific policy proposals to achieve the goal. The partial discretionary spending freeze President Obama discussed last night is a good start, but stabilizing the debt likely will require changes to Social Security, Medicare, Medicaid, defense, and tax policy as well.

3)Avoids using gimmicks. The President’s budget must be able to meet his fiscal targets without relying on any budget gimmicks. For example, assuming that certain policies will expire when they are unlikely to can make it seem easier to stabilize the debt. Relying on unspecified savings (sometimes called “magic asterisks”), such as those suggested by a fiscal commission, also would be problematic – unless some type of “trigger” were put in place to implement tangible policies if an agreement could not be reached.

4) Enforces fiscal targets through budget rules and process reform. To codify his proposed targets, we encourage the President to insist on fiscal rules – such as an exemption-free PAYGO, statutory budget caps, and a debt trigger – to help maintain the fiscal path Congress chooses. Other reforms designed to bring transparency, order, and a focus on the long-term to the budget process also would be helpful.

“This is a critical year for the budget,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. “As the White House pivots from focusing on economic recovery to reducing the deficit, it needs to start the discussion by presenting an aggressive and credible budget. But the story doesn’t end there. It is an election year and President Obama will have to use a good deal of his political capital to get Congress to work with him on enacting any of the tough measures he is willing to put forth.”

 


Click here for a pdf version of this release.

For press inquiries, please contact Kate Brown at (202) 596-3365 or brown@newamerica.net.

 

CRFB Reacts to the State of the Union Address

CHAIRMAN
Bill Frenzel
Tim Penny
Charlie Stenholm

 
PRESIDENT
Maya MacGuineas
­­­
 
DIRECTORS
Barry Anderson
Roy Ash
Charles Bowsher
Steve Coll
Dan Crippen
Vic Fazio
Willis Gradison
William Gray, III
William Hoagland
Douglas Holtz-Eakin
Jim Jones
Lou Kerr
Jim Kolbe
James Lynn
James McIntrye, Jr.
David Minge
Jim Nussle
Marne Obernauer, Jr.
June O'Neill
Rudolph Penner
Peter Peterson
Robert Reischauer
Alice Rivlin
Martin Sabo
Gene Steuerle
David Stockman
Paul Volcker
Carol Cox Wait
David M. Walker
Joseph Wright, Jr.
 

SENIOR ADVISORS
Elmer Staats
Robert Strauss


CRFB Reacts to the State of the Union Address
January 27, 2010



The Committee for a Responsible Federal Budget commends President Obama for his focus on deficit reduction in his State of the Union address, and hopes that he will follow through by pressing Congress to enact medium- and long-term deficit reduction policies over the next year.

As the President remarked tonight, we find ourselves in a “massive fiscal hole… a challenge that makes all others that much harder to solve.” And he argued, rightly so, that “if we do not take meaningful steps to rein in our debt, it could damage our markets, increase the cost of borrowing, and jeopardize our recovery.”

The President offered three proposals, in particular, which would be promising steps in the right direction:

  • A three-year non-security discretionary spending freeze, beginning in fiscal year 2011, and enforced by a veto, if necessary;
  • A bipartisan fiscal commission – created by executive order and fashioned after the Conrad-Gregg proposal – to provide a specific set of solutions to our fiscal problems;
  • The reinstatement of statutory pay-as-you-go laws (although as we’ve mentioned before, we are concerned about the large number of exemptions).

“We are thrilled that President Obama understands the threat of ever-rising debt, and is making some concrete proposals to begin to address it,” said Maya MacGuineas, President of the Committee for a Responsible Budget. “But actions speak louder than words. In the coming weeks and months, we urge the President to bring together members of both parties and begin taking concrete actions to stabilize the debt once the economy recovers.” 

 


Click here for a pdf version of this release.

For press inquiries, please contact Kate Brown at (202) 596-3365 or brown@newamerica.net.

 

Syndicate content