How could the current budgetary decision-making process be improved? This paper looks at the current process and how the concurrent budget resolution, authorization process, and appropriations process interact to establish a budgetary framework, allocate resources among competing priorities, and generate sufficient revenue. It also examines five reform proposals.
Last week, the Budget Committees in both the House and Senate reported out their respective versions of the Budget Resolution, to be considered on the House and Senate floors. While each resolution would result in smaller deficit than would the President’s Budget, as estimated by the CBO, we worry that both resolutions contain a number of assumptions that may be difficult to achieve.
Last week, the CBO released its Preliminary Analysis of The President’s Budget, projecting a significantly worse fiscal situation than the Administration does. The cumulative deficit numbers from the CBO over the 2010-2019 period are over $2.2 trillion greater than those from OMB.
Although CRFB commends the President for having a specific fiscal goal and for honestly budgeting for expected costs, several items and trends in the budget are troubling. This paper focuses on three main issues: a more aggressive deficit goal would be appropriate; introducing new spending programs and tax cuts before finding ways to close the fiscal gap threatens the principle that Congress set forth to fully offset all new initiatives; and the budget largely fails to address the long-term.
Today, the White House released an outline of the FY2010 Budget. The President’s budget has a specific fiscal goal, accounts for policies omitted by previous budgets, and proposes to fully offset new tax cut and health care plans. This paper analyzes the fiscal goals, baseline figures, health care reform, and the budget process elements of the President’s budget outline.
This paper looks at the 1967 President’s Commission on Budget Concepts and which concepts need to be re-visited by the Peterson-Pew Commission on Budget Reform.
San Antonio Express-News | October 31, 2008
The new president will face many challenges, but the critical budget problems of our country top the list. The economy is likely to still be in recession. The continually increasing national debt will serve as handcuffs to his promised agenda.
Confronting these challenges will not be easy; ignoring them puts the health of the country at grave risk.
The new president will first have to get the economy under control. This may require further fiscal stimulus, but he should ensure that any package is not filled with fiscal pork. All stimulus measures should be temporary to avoid digging ourselves deeper into debt down the road.
Second, the new president will have to deal with the budget deficit. Ongoing deficits hurt all of us. The continued borrowing by our government crowds out private investment, which in turn causes slower economic growth. Deficits also harm future generations by allowing politicians to initiate new spending programs and provide tax cuts for current workers, while sending the bill to our kids. And deficits leave us vulnerable to our foreign lenders, who are gaining an increasing amount of influence over U.S. policy.
The budget plans of both Senators McCain and Obama would increase rather than decrease future deficits. The Committee for a Responsible Federal Budget analyzed the impact these policies would have at the end of the next president's first term in our Voter Guide, “Promises Promises: A Fiscal Voter Guide to the 2008 Election.”
Our analysis shows that both candidates would increase the deficit by more than $200 billion a year. Given the new debt levels in the United States –– the national debt just broke $10 trillion –– this will not fly.
Both Senators McCain and Obama are realistic men who know we cannot keep up this seemingly insatiable appetite for spending and cutting taxes. Campaigns may not always be the best time for delivering bad news, but the honeymoon period afterward will require straight talk with the American people.
The new president will need to submit a budget plan that phases out the deficit over a reasonable amount of time. That might be five years, it might be 10, but what matters most is that the plan is credible. This will require shelving many of his priorities until the budget is in better shape to accommodate new tax cuts and spending.
The new president will have to work with Congress to get his plan passed. This will require the development of a bipartisan plan that reflects the goals of both parties, so that no single party gains or loses from the making of tough choices.
Lastly, taxes also have to be on the table. Both candidates promised over $350 billion in annual tax cuts. The unfortunate truth is that tax increases are in the future, and the smartest approach to dealing with the inevitable is to consider how to simplify and modernize the tax code in a way that could bring in more revenues without harming the economy.
The work does not stop there. The major fiscal threats of Social Security and healthcare costs were not discussed enough during the campaign. Reforms will have to be made, growth in benefits will have to be slowed, and raising the retirement age should probably be considered.
This is not exactly the job the new president signed up for, but this is the card he was dealt. Ignoring our burgeoning budget problems could lead to the next economic crisis. The first test of real leadership will be whether President McCain or President Obama confronts these challenges head on.
The United States faces serious fiscal challenges. Large budget deficits have returned, and shifting demographics along with growing health care costs are putting intense pressure on the long-term federal budget outlook. Over time, sustained deficits will weaken the economy and adversely affect the American standard of living.
The two major political parties' presidential candidates are campaigning on a lengthy list of policy initiatives, most of which would have significant impact on the federal budget. While not all of these proposals will become law, they do reflect the candidates' values and priorities, and the policies each candidate is likely to pursue once in office. In addition to these new initiatives, a number of outstanding tax and budget issues exist that will need to be addressed, such as which of the 2001 and 2003 tax cuts should be made permanent, how to fix the Alternative Minimum Tax, what to do about growing entitlement spending, how to control health care cost growth, and how to pay for the wars in Iraq and Afghanistan. The next president will face difficult fiscal challenges. It is therefore critical that voters understand the potential budgetary impacts of the candidates' plans.
US Budget Watch's report, Promises, Promises: A Fiscal Voter Guide to the 2008 Election--with an updated (10/31) section on the candidateswill help voters find their way through the thicket of policy proposals put forward by the likely Republican candidate for president, Senator John McCain, and the likely Democratic candidate for president, Senator Barack Obama. It presents a capsule summary of the candidates' major policy proposals and includes an estimate of the likely fiscal impact of each proposal. The guide is not intended to express a view for or against either candidate or any specific policy proposal. This report will be followed by other more detailed reports on the candidates' tax and spending proposals.