In our
previous release (President
Obama's FY2010 Budget), we discussed the broad fiscal impact of the
FY2010 Budget Blueprint. We commended the President for having a specific
fiscal goal, honestly budgeting for expected costs, and for providing offsets
for many of the new policies he supports. However, we expressed strong concern
that the budget included items in the baseline (such as AMT patches, Medicare patches,
and the renewal of the 2001 and 2003 tax cuts), as a way to avoid paying for
Today, President Obama signed into law the American
Recovery and Reinvestment Act of 2009. The "stimulus bill" represents the latest
and largest effort by the federal government to boost the deteriorating
economy. (For details of all efforts to date, see www.usbudgetwatch.org/stimulus).
Yesterday, the Senate passed its version of the American Recovery and Reinvestment Act of 2009 by a vote of 61 to 37. Differences between the House and Senate are being worked out in a conference committee.
In total, the House bill costs roughly $820 billion over ten and a half years, while the Senate bill costs $838 billion. Although similar in size, the two stimulus bills contain
a number of important differences. The Senate version relies more on tax cuts and… more
WASHINGTON, D.C. - Today, the Committee for a Responsible Federal Budget (CRFB) warned against slipping policies intended to be permanent, into the stimulus bill under the guise of temporary stimulus measures.
The Congressional Budget Office's January estimates of baseline federal budget deficits have grabbed the attention of members of Congress and the public. The
cumulative effects of persistently large deficits show up in the stock of debt held by the public and the net interest costs of servicing that debt. This brief will
provide historical data on those items and CBO's current projections. It also will discuss some of the risks to CBO's estimates.
From: Robert Bixby, William Galston, Ron Haskins, Julia Isaacs, Maya MacGuineas, Will Marshall, Pietro Nivola, Rudolph Penner, Robert Reischauer, Alice Rivlin, Isabel Sawhill, Eugene Steuerle
The Fiscal Roadmap Project was created to help
policymakers navigate the serious economic and fiscal challenges facing the
country.
Currently, fiscal policy is being shaped in a haphazard
way: bailing out a firm here, letting another firm go bankrupt there; attaching
conditions to a company bailout, writing a check to another company without
strings attached. These are not ordinary times.
The fiscal year 2009 deficit could reach over one trillion dollars, according to an analysis by the Committee for a
Responsible Federal Budget (CRFB). This deficit would be more than twice as
large as the 2008 deficit of $455 billion and would represent a post-war record
both in nominal terms and as a share of GDP.
"These numbers are simply astonishing," said Maya
MacGuineas, president of CRFB. "Of course we can't try to balance the budget
right now when the economy is in such turmoil, but… more
In light of the
current state of the economy, it appears likely that Congress will pass another
stimulus package...
The Committee for a Responsible
Federal Budget recognizes that there is a strong enough risk of a prolonged
recession that a fiscal stimulus package may well make sense. Given the many
risks associated with a significant downturn, it makes sense to err on the side
of caution in determining whether more stimulus is appropriate. Assuming
Congress proceeds with plans to offer some type of stimulus package, CRFB
offers three… more
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.
Health
expenditures are projected to nearly double to $4.3 trillion in a decade, at
which point they will represent nearly one-fifth of the economy. According to the… more
The next president will 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… more
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. It is financed primarily through the payroll tax -- a 12.4 percent tax on wages up to $102,000. The tax is split equally between employees and employers. The remaining revenues come mainly from the taxation of Social Security benefits for wealthier recipients.
Next year, the program’s surpluses will begin to decline precipitously. The… more
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.
During economic downturns, the government regularly takes actions to
try to combat the effects of the decline. Most of its actions fall into
one of four categories: monetary stimulus, fiscal stimulus, targeted… more
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 United States faces a number of serious fiscal challenges. Budget deficits are back, the economy has weakened, Social Security is unsound, growing health care spending is putting immense pressure on the budget, tax policy is at a major crossroads, and borrowing is projected to reach unsustainable levels. Politicians will have to take concrete steps to confront these challenges, and some level of sacrifice will be required. The sooner decisions are made, the better-both because it will give the public… more
This Budget Update looks at the budget resolutions passed by both the House (H. Con. Res. 312) and Senate (S. Con. Res. 70), compared to each other as well as to the CBO March baseline and the President’s budget as reestimated by CBO.
Major Points
The House-passed budget should be commended for complying with pay-as-you-go (PAYGO) rules without exception. The budget plan assumes that all changes to revenues and mandatory spending would be offset so that deficits would not be increased over… more
The authors of this paper are longtime federal budget and policy experts who have been drawn together by a deep concern about the nation’s long-term fiscal outlook. Our group covers the ideological spectrum. We are affiliated with a diverse set of organizations. We have been meeting informally for over a year, under the auspices of The Brookings Institution and The Heritage Foundation, to define the dimensions and consequences of the looming federal budget problem, examine alternative solutions, and reach… more
Thank you for your inquiry concerning whether the budget plan reported by the House Budget Committee increases taxes. The budget resolution does not raise taxes. Both tax rates and tax revenues as a share of GDP will increase under the budget resolution because tax increases are part of current law, not because of policies introduced as part of the budget resolutions currently under consideration.
Barring changes, taxes will increase beginning in 2011 due to the way in which the original 2001… more
As the Committee pointed out in its earlier release (FY 2009 Budget), the President’s Budget reaches balance in 2012 only through a number of questionable assumptions regarding future fiscal policy. This update will extend that analysis by looking in more detail at the policy and baseline assumptions that underlie the Administration’s budget request.
This paper has pointed out places where the policy assumptions made by the Administration have made the 2012 deficit seem smaller than it likely will be.… more
Last week, the Bush administration released a proposal to
raise the Medicare premiums for wealthy Americans enrolled in the prescription drug program;
reform medical liability laws; and
introduce "value-based health care" measures to improve Medicare efficiency.
The proposal was issued in compliance with the "trigger" provision of the Medicare Modernization Act of 2003. This provision states that the President must present a plan when, for two consecutive years, the Medicare program's trustees estimate that funds taken from general revenues will exceed… more
