CRFB

Background

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

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

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

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

President George W. Bush submitted his eighth and final budget request to the Congress on Monday. Under the proposal, fiscal year 2009 discretionary spending—spending subject to annual appropriations—would be at the same level as in the prior year for domestic programs and agencies not involved in homeland security efforts. The budget request for the Department of Education fits this general theme. Fiscal year 2009 discretionary spending at the Department of Education would total $59.2 billion, the same level of funding… more

While we believe that fiscal stimulus done right would be likely to help the economy, we also believe that a good stimulus package is hard to come by. We have expressed concern that fiscal stimulus might come too late to help the stalling economy and that a package might be loaded up with costly and unrelated items.

Initially, we were gratified as negotiations between the White House and the House of Representatives led to what we found to be a… more

As the Committee noted in an earlier release, the Congressional Budget Office (CBO) currently projects that—after three consecutive years of decline—the deficit will increase to $219 billion in fiscal year 2008. The CBO baseline also shows the budget returning to surplus in 2012.

CBO projections reflect current law, which does not reflect many likely budget scenarios. Accordingly, this budget update calculates an alternate baseline that incorporates alternate budget scenarios. This baseline does not necessarily reflect the policy path… more