Budget Updates

The new fiscal year began on Oct. 1, without a single appropriations bill completed. Instead, operations are being funded by a continuing resolution (CR) that sets discretionary funding at current levels and is in place through November 16. The measure also temporarily extended some programs that were set to expire at fiscal year-end including the State Children's Health Insurance Program (SCHIP), food stamps, and the Federal Aviation Administration.

Congress also increased the debt limit by $850 billion. The increase should… more

Now that the House and Senate have passed their budget resolutions, they will begin the process of trying to resolve outstanding difference in conference. The two resolutions are quite similar to each other, though they are substantially different from what the President has proposed. It appears likely that the differences will be able to be worked out in conference and the budget passed in a timely manner.

The House and the Senate should be applauded for sticking… more

Our first impressions of the President’s just-submitted FY 2008 budget are:

We are pleased the president is embracing the goal of a balanced budget, but it is important to note the following:

While the budget shows the deficit declining in each year and reaching surplus in 2012, the net effect of the policies in the budget would worsen the fiscal picture by $474 billion over five years.

Important Administration priorities are not accounted for (realistic out-year war costs and fixing the Alternative… more

You have heard us say it before and we will say it again: Budget rules alone cannot do the heavy lifting required to address the nation's fiscal challenges. One could argue that focusing on budget reform is a diversion from the issues that should be getting Members' attention -- the revenue and spending policy changes to bring the short- and long-term budget back into balance. But given the polarized partisan environment and that it is an election year, improvements to… more

The President’s budget projects a decline in the deficit from $423 billion in FY2005 (3.2% of GDP) to $205 billion in FY 2011 (1.2% of GDP). The President hasproposed further savings in mandatory spending this year—a positive step.However, the proposed savings in mandatory spending programs and the cuts innon-defense discretionary spending programs would be more than offset by the taxcuts and other increases in spending. Though the deficit is projected to decreaseunder the proposed… more

Although being a budget watchdog generally requires a healthy dose of skepticism, recent months have provided reasons for cautious optimism. The sticker shock associated with the costs of responding to Hurricane Katrina on top of large structural deficits appears to have made the nation’s fiscal health a higher priority for policymakers and the public.

After four years of tax cuts and spending increases enacted with little concern for their budgetary impact, talk of budget offsets has returned to the legislative process. Congress is on the verge of… more

It will be some time before officials will be able to fully assess the amount of disaster relief funding that will be necessary in the wake of Hurricane Katrina, but it is already becoming clear that the costs of responding to Katrina will vastly exceed any previous natural disaster in the U.S. Though the specifics of any one disaster cannot be anticipated, they are an unfortunate, costly, and regular reality. Budgeting for disasters is part of being prepared for these… more

The Congressional budget resolution increased the deficit relative to the CBO baseline by $200 billion from FY 2005 through FY 2010. Since passing the budget resolution, Congress has approved several bills that would increase spending above the limits in the resolution. Making matters worse, Congress is poised to take actions this fall that would result in further increases to the deficit beyond those already assumed in the budget resolution.

In this update, we examine the impact of Congressional actions on… more

Being a budget watchdog generally involves a healthy degree of pessimism and the last few weeks have provided plenty of reminders why. It was encouraging to see the appropriations process moving forward within the tight spending limits set by the budget resolution. That is, until a political firestorm over veterans benefits erupted, leading to pressure for increased spending. While efforts to achieve the modest savings in mandatory spending programs are moving forward slowly, momentum is growing for further tax cuts… more

At the beginning of this year there were some indications that the era of "deficits don't matter" rhetoric was being replaced by a renewed concern about deficits, at least rhetorically. Unfortunately, the actions since then have shown no indication that policymakers have the stomach to match that rhetoric with actions.

The budget resolution conference agreement leads to higher deficits than current law in each of the next five years, with the costs of additional tax cuts and increased spending for defense and homeland security assumed in the resolution… more

The President’s budget projects a gradually reduced deficit over the next five years, from the $412 billion deficit in fiscal year 2004 (3.6% of GDP) to $207 billion in 2010 (1.3% of GDP). This decline mirrors the decline in the deficit projected under current law as the near-term budget outlook improves modestly. In fact, the President’s policies would actually increase the deficit over the five-year window. Furthermore, the budget relies on unrealistic assumptions and gimmicks to limit the size of… more