New Fed Data: Economy Drowning in Federal Debt
Each quarter, the Federal Reserve publishes the “Flow of Funds” accounts, which provide a summary of the conditions of the consolidated balance sheet of the United States and its constituent parts: households, nonfinancial businesses, financial intermediaries, and government. The U.S. national balance sheet continues to deteriorate, with a record $56.3 trillion in gross debt outstanding relative to $15.8 trillion in national income (GDP). Read more...
What Obama’s Sequester Claims Says About the State of Public Administration
The sequester that began this month is likely to prove far more damaging to the credibility of the Obama Administration than the economy. The focus of Administration rhetoric has been maximizing public impressions of the pain inflicted by the sequester and then blaming Congressional leaders for allowing the catastrophe to happen. Read more...
iStockphotoExpanding Medicaid: The Conflicting Incentives Facing States
Recent decisions by individual states concerning the Affordable Care Act (ACA)’s now-optional Medicaid expansion have been much in the news of late. Today the Mercatus Center is publishing my comprehensive study of the conflicting incentives facing states as they make their choices about expansion.
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iStockphotoAlan Krueger and the White House Government Spending Charade
In an interview with the Wall Street Journal, Council of Economic Advisers Chairman Alan Krueger suggested that the coming “sequester” would deal a harmful blow to the economy. This claim is at best misleading on two counts: First, we’re actually quite “late” in the recovery in terms of time elapsed since the end of the recession. Second, the international evidence strongly cautions against the Obama Administration’s economic policies, as deficit reduction based on tax increases tends to be much more debilitating than spending cuts. Spending cuts tend to boost private investment, which partially or wholly offsets the direct effect of the cuts. Read more...
Ingram PublishingThe Incredible Lowering of the Medicare Drug Benefit Baseline
This week, President Obama took credit for the slowdown in health care cost inflation, proclaiming in his State of the Union address that “[a]lready, the Affordable Care Act is helping to slow the growth of health care costs.”
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iStockphotoAre We Underestimating the Social Security Shortfall?
Last month the New York Times printed an op-ed piece (“Social Security: It’s Worse than You Think”) by professors Gary King of Harvard and Samir Soneji of Dartmouth. Their piece asserted that the Social Security actuaries’ methods for projecting mortality are “antiquated,” prone to “interference from political appointees,” and result in projections that underestimate the Social Security financing shortfall. Read more...
A Misleading Financial Outlook
In Saturday’s weekly radio address, President Obama repeated the assertion that the federal government is “more than halfway” to the required cumulative deficit reduction to stabilize debt ratios. Read more...
iStockphotoTen Things the Latest CBO Report Tells Us about Federal Finances
Earlier this week the Congressional Budget Office (CBO) released its updated outlook for the federal budget. Here are ten lessons it teaches us about the troubled state of federal finances.
iStockphotoUpping the Dosage Would Kill the Patient
As former Council of Economics Advisers (CEA) Chair Greg Mankiw has analogized, the Obama Administration’s policy response to the Great Recession is like medicine offered to a sick patient. The ineffectiveness of the treatment is obvious given the economy’s continued illness, as most recently evidenced by the fourth quarter GDP report. The question is whether the ineffectiveness of the treatment is the result of an insufficient dose of the right medicine, or whether the problem is the wrong treatment altogether.
iStockphotoUnderstanding Social Security Benefit Adequacy: Why Benefit Growth Should Be Slowed
Many federal policy makers are aware that the Social Security program faces a substantial financing shortfall requiring correction. This would involve either increasing program taxes or slowing the growth of benefits – most likely both, given the size to which the shortfall has already grown in addition to the fact that neither party enjoys sufficient political power to impose its preferred solution on the other.
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