Other CRFB Papers

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.

 

Op-Ed: Obama's Freeze Is a Good First Step

CNN | Jan. 27, 2010

 

When the president unveils his 2011 budget next week, he will propose capping "non-security" discretionary spending at its current level of about $450 billion for three years, saving roughly $250 billion over ten years.

The freeze does not include defense, veterans' affairs, homeland security and some international programs.

Let's start by putting these numbers in context. The Congressional Budget Office's new baseline numbers show that deficits will be $6 trillion over the next decade -- under highly unlikely assumptions that Congress will stay true to current law, where the tax cuts and other popular policies expire -- or more than $12 trillion under more likely assumptions.

So $250 billion, while obviously a large number, is a very small share of the amount Congress is poised to borrow -- and add to the debt -- in the coming decade.

It would be fair, then, to say that this is a baby step -- OK, it's a teeny-weeny tiptoe of a step -- in the right direction. But there have been so many steps in the wrong direction in recent years, such as extending tax cuts, that anything that it can legitimately be argued would help bring down future deficits should be heralded as an important move.

And frankly, it is a courageous one too for this administration; there are going to be an awful lot of members of the president's own party who are none too happy with the plan.

But remember, the president's budget for the fiscal year that begins in October isn't actually a law. It is more like a polite suggestion to Congress. Given that Democrats run the House and Senate, they won't declare the budget dead on arrival, as so often happens when the budget season begins with a president of one party delivering his budget to a Congress run by the other.

But in this highly charged election year, where legislators will talk about being tough on spending but not necessarily back that claim with real spending cuts, it will be extremely difficult to get them to stick to this freeze.

Therefore, the president is going to have to back up his promise with more than words for it to be seen as credible. What it needs is teeth.

First, he should promise to veto any appropriations bills that exceed the limits he has put forward for spending. Otherwise, there's little question that appropriators will find all sorts of ways to bump up spending beyond what he has proposed -- everything from budget gimmicks to simply ignoring his proposal.

If he chooses to look the other way, the spending freeze will prove to be little more than a cynical political talking point at a time when real action is needed. Shepherding the budget from blueprint to law is part of the heavy lifting the president will have to lead on.

Second, he should support statutory spending caps that enforce his limits. This is an idea that is gaining momentum in the Senate and House, and it is the ideal companion piece to his suggested freeze. From Sen. Jeff Sessions, R-Alabama, to Sen. Evan Bayh, D-Indiana, to Sen. John McCain, R-Arizona, he need not look far to find a host of good ideas.

Finally, there is the issue of the rest of the budget. Non-security is only a small sliver of discretionary spending, and discretionary is only a small sliver of total spending. All told, we are talking about less than one-sixth of the budget. It would be more sensible to cap all discretionary spending and force policymakers to make tradeoffs between defense and other security parts of the budget as well, not just within the relatively small non-security category.

And then there are still the big enchiladas -- Social Security, health spending, and taxes -- to be dealt with. When this fight gets going, remember, it will only be working its way down from the tip of the iceberg. Nonetheless, a discretionary freeze is a sensible first step. Let's hope when the rest of the budget is released on Monday, it will take that first tiny sensible step much further.

Copyright 2009, CNN

CRFB Welcomes New Budget Proposals

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 Welcomes New Budget Proposals
January 27, 2010
 

The Committee for a Responsible Federal Budget is encouraged by recent proposals to address the nation’s large budget imbalances. Constructive plans from the Blue Dog Democrats in the House, Senators John McCain and Evan Bayh, and Congressman Paul Ryan—in addition to President Obama’s expected budget proposals in tonight’s State of the Union address—are all helpful in jumpstarting a much-needed national discussion about our fiscal future.

“It is no longer sufficient for policymakers to acknowledge that we have a problem” said Maya MacGuineas, President of the Committee for a Responsible Federal Budget. “You’d have to be blind not to know that. Now is the time to start proposing real solutions—and it is gratifying to see that a number of policymakers are taking that responsibility seriously.”

The “Blue Dog Blueprint for Fiscal Reform” unveiled yesterday puts forward the goal of stabilizing the debt level at 60 percent of GDP—a key recommendation of the Peterson-Pew Commission on Budget Reform. In order to achieve that goal, the plan lays out 15 steps including: restoring paygo rules, capping discretionary spending, instituting a “budget reconciliation trigger” to enforce budget discipline, and establishing a fiscal commission to recommend to Congress spending and revenue changes to ensure long-term fiscal sustainability.

The Bayh-McCain “Fiscal Freeze Act” would limit non-security discretionary spending growth to inflation, place a moratorium on earmarks, and implement a number of other reforms to stay in place until the federal budget is balanced. It also calls for long-term spending and deficit reduction targets, along with mechanisms to enforce those targets.

Congressman Ryan’s detailed “A Roadmap for America’s Future 2.0” announced today includes a comprehensive set of reforms for healthcare, Medicare, Medicaid, Social Security, the budget process and the tax system. The debt would still reach 100 percent of GDP by mid-century—a level we worry is far too high, but it is nonetheless a significant improvement compared to current policy, and a far more detailed offering than we have seen from any other politician.

President Obama will reportedly announce a three year freeze on “non-security” discretionary spending, as well as a presidential fiscal commission, in his State of the Union address tonight.

CRFB does not support every element of each proposal, but we commend those offering them for exhibiting leadership and political courage in putting forward a plan. We hope others will follow their leads.

 

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 Analysis of CBO’s January 2010 Baseline

Download this document

From CBO's January 2010 Budget and Economic Outlook, baseline estimates now show that public debt will increase from 53 percent of GDP in 2009 to 67 percent in 2020. Yet as troubling as this scenario is, it is almost certainly optimistic. If we assumed current policies were to continue as they have in the past, the debt would reach nearly 100 percent of GDP in 2020.

CRFB Supports Creating a Statutory Commission

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 Supports Creating a Statutory Commission
January 25, 2010
 

The Committee for a Responsible Federal Budget (CRFB) supports creating a statutory commission to help deal with the nation’s budgetary challenges.

As part of the discussion on whether to increase the debt ceiling, the Senate is scheduled to vote this week on an amendment offered by Senator Kent Conrad (DND) and Senator Judd Gregg (R-NH) to create a task force that would make specific recommendations for how to address the nation’s fiscal imbalances. President Obama endorsed the commission this weekend.

It has long been the Committee for a Responsible Federal Budget’s preference that Congress directly addresses these urgent budget challenges, but given the seeming unwillingness to do so under regular order, CRFB thinks a commission would be beneficial.

“A commission is certainly not a cure-all,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. “Our leaders must still make hard tax and spending choices, and sell them to the American people. But a commission can help to jump-start the critical process of crafting a sensible fiscal plan for the country, and make that process just a little bit easier.”

A budget commission offers a number of potential advantages including:

  • Sending a credible signal to creditors and financial markets that the US is serious about tackling its fiscal challenges 
  • Establishing a shared fiscal goal
  • Creating a bipartisan forum in which to discuss budget issues
  • Establishing a process to ensure that the recommendations are considered
  • Lending political cover

“The country now faces both medium- and long-term budget challenges. A commission will probably need to work toward two goals: stabilizing the debt in the medium term, and then bringing it down to manageable levels over the longer term,” MacGuineas said.

“The most important ingredient for success is that there is bipartisan buy-in. Nothing should be taken off the table in establishing a commission, both to help facilitate broad buy-in and because the problem is so large that all policy options will have to be considered” said MacGuineas.

 

Click here for a pdf version of this release.

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

 

Controlling Discretionary Spending

Download this document

Over the past decade, discretionary spending has grown faster than mandatory. Between 1999 and 2008 discretionary spending grew annually, on average, by 7.5 percent – from less than $570 billion to over $1.1 trillion. Although the CBO baseline makes it appear as if discretionary spending will grow only modestly, more realistic assumptions tell a different story. Just holding discretionary spending growth to inflation would be a positive step. In the 1990s, it was these types of caps, along with pay-as-you-go rules, strong economic growth, slower-than-usual health care cost growth, and a commitment to deficit reduction that led to budget surpluses.

Follow the House's Lead: Pay for the Extenders

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
 
 
 


Follow the House's Lead: Pay for the Extenders
December 10, 2009



Yesterday, the House passed a $31 billion “tax extenders” bill to renew a number of tax rates for another year. The last minute passage of this legislation is part of an all too regular end of year crunch, since a number of expiring tax and spending provisions have not yet been renewed.

Often in the past, in the rush to leave town for the holidays, the House and Senate have simply extended the programs for a year without regard for cost. We commend the House for fully offsetting the costs of their tax extenders bill, but worry that other changes may be deficit-financed. This year, given the fiscal crisis facing the nation, we urge Congress to avoid the easy solution and find ways to offset the full cost of their actions.

“Ideally, policymakers would sit down and make rational decisions about what provisions are worth keeping in the first place,” said Maya MacGuineas, President of the Committee for a Responsible Federal Budget. “But if they are going to insist on a band-aid solution, the least they could do is pay for it.”

Among the other major items likely to be extended are:

  • An Alternative Minimum Tax (AMT) Patch. Because the AMT is not indexed to inflation, it threatens to hit an increasing number of middle-income and upper-income earners each year. To avert this scenario, Congress regularly “patches” the AMT. Last year’s patch, enacted as part of the stimulus bill, cost almost $70 billion.
  • A Medicare Physician Payment Update. Under current law, payments to physicians are scheduled to fall by 21 percent next year. In past years though, policy makers have replaced these cuts with a payment freeze or a small increase. A one-year fix would probably cost more than $10 billion.


 

 


  • Unemployment Benefits. The American Recovery and Reinvestment Act (ARRA) both extended and expanded unemployment benefits significantly. This program is set to expire at the end of the year. Unemployment rates remain persistently high and Congressman Jim McDermott has introduced legislation which would extend these benefits through March of 2011. According to press accounts, this would cost about $85 billion.
  • COBRA Subsidies. The ARRA also included a 65 percent subsidy for unemployed workers who held on to their health care benefits through COBRA rules. Since these subsidies could only be taken for nine months, they have recently lapsed for some individuals; and by the end of the year, no new individuals will be eligible for the subsidy. According to press accounts, renewing these subsidies would cost about $15 billion.
  • The Estate Tax. Under current law, the estate tax is expected to disappear at the end of the year, and then come back the next year, with a higher rate and much lower exemption than currently exists. Few policymakers or experts support this disappearing-reappearing act. Keeping it at 2009 levels next year would actually raise money. But if such a freeze were made permanent, as the House has proposed, it would cost almost $235 billion over the next decade.
  • Payments to Seniors. Because prices have fallen, Social Security beneficiaries will receive no cost of living adjustment (COLA) this year. This has led the administration and others to call for a second round of the $250 payments to seniors originally enacted in the ARRA. These payments would likely cost a little less than $15 billion.

Including the tax extenders bill, renewing these measures could cost more than $225 billion, mostly spent over one year. Fortunately, the tax extenders legislation was passed with offsetting revenue raisers.

“Kudos to the House for paying for this policy” said MacGuineas.

But Congress may use gimmicks to pay for some of these other measures (for example, using TARP money), and might not offset other changes at all. Congress should avoid such tactics and simply pay for whatever legislation they pass.

“Two hundred and twenty-five billion dollars? It seems like every year is worse than the last,” MacGuineas said. “When the Bush tax cuts expire next year, we’ll be talking about trillions. We’re in fiscal trouble here, and I don’t see things getting any better without a major change of course. Let’s at least make sure we aren’t making things worse.”


Click here for a pdf version of this release.

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

 

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