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.
Today, the President signed the stimulus bill into law. The fiscal stimulus includes $501 billion in increased spending and $286 billion in tax cuts at a total estimated cost of $787 billion. The paper discusses the elements and likely impacts of the stimulus.
The House stimulus bill costs roughly $820 billion over ten years, while the Senate bill costs $838 billion. Most notably, the Senate version includes more tax cuts and fewer spending provisions and would distribute the funds more quickly than the House bill. This paper discusses these and additional differences between the stimulus bills.
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.
One of the most pressing issues facing policymakers in the United State is rising health care costs. Cost growth is putting ongoing stress on the budgets of families, employers, and governments. The U.S. already spends $2.2 trillion a year - 16 percent of GDP - for health care. Nearly a third of this comes from the federal government.
As health care costs grow, there will be considerable pressure on the federal government's budget. Together, Medicare and Medicaid are expected to rise from 4.2 percent of GDP today to 8.1 percent in 2030 and 18.5 percent in 2082. Yet despite the amount the federal government spends on health care, there are nearly 46 million Americans without insurance and rising costs threaten to grow the rolls of the uninsured. Furthermore, there are many areas of our health care system where the quality lags behind other nations even as we pay a higher price.
Senators McCain and Obama have each proposed a set of reforms to the current health care system. But even accounting for the savings that could be achieved in Medicare, Medicaid, SCHIP, and the employer exclusion, both plans would come at a considerable cost to the U.S. Treasury.
Guide to Health Care: The 2008 Presidential Election hopes to give voters a better understanding of the fiscal implications of the candidates' health care reform proposals. It offers a background of the U.S. health care system, and gives a breakdown of the potential costs and savings for each item in the candidates' health care agendas. The guide is not intended to express a view for or against either candidate or any specific policy proposal.
The next president have to address fiscal imbalances within the government and a dramatically rising federal debt. National debt has been on a more or less steady rise since 1974 when, after a steady decline from the massive debt accumulated during WWII, it hit a low of 33.6 percent of GDP. Total national debt was more than $10 trillion at the start of fiscal year 2009.
This rising debt is driven by entitlement growth, resulting from demographic changes and rapidly rising healthcare costs. An aging population, especially in light of the retirement of the Boomers, is projected to increase Social Security payments from 4.3 percent of GDP today to 6 percent in 2030. More significantly, Medicare and Medicaid are expected to grow from just over 4 percent today, to 18.5 percent of GDP by 2082. This level will exceed the average level of federal revenues over the past 50 years. Even under the most optimistic economic growth assumptions, revenues will not come close to keeping up with this spending growth.
Guide to Tax Policy: The 2008 Presidential Election aims to make voters aware of how the candidates' tax proposals will affect the country's fiscal standing. The report gives a current overview of federal taxes and spending, reviews the challenges posed by future revenue imbalances, and details how McCain's and Obama's proposals might alter tax revenues. The guide is not intended to express a view for or against either candidate or any specific policy proposal.
Social Security is the single largest government program. In 2007, the program cost $585 billion and provided benefits for roughly 50 million retirees, dependents, survivors, and disabled workers. Yet the Social Security Trustees have repeatedly warned that the program is on an unsustainable path and that the system will begin running cash deficits in 2017, and no longer be able to pay full benefits by 2041. Although neither candidate has offered a comprehensive fix for Social Security, both John McCain and Barack Obama recognize the need to address its unfunded obligations.
US Budget Watch
The United States is in the midst of an economic crisis. Financial institutions are failing, the credit markets are frozen, and global stock markets have experienced large-scale losses. This crisis has also had significant effects on the "real" economy. Home values have tumbled, consumption has dropped, and jobs are disappearing.
Both Senator McCain and Senator Obama have put forth proposals to strengthen the short-term economy, which they argue would complement their long-term economic policies. US Budget Watch's report divides their proposals into one of several categories: fiscal stimulus, targeted stabilization, and economic relief. Many have direct budgetary implications, although some are regulatory. Some of these proposals are meant to be enacted before the next president takes office, while others are meant to be sustained over a longer time period.
US Budget Watch's report, Guide to Stimulus Proposals: The 2008 Presidential Election, will help voters better understand the details and costs of the candidates' plans to mitigate and reverse the current economic slowdown. It is not intended to express a view for or against either candidate or any specific policy proposal.