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Budget | Debt

Populist Rhetoric Does Not a Plan Make
James C. Capretta | 2012-01-25

There wasn’t much suspense in the run-up to last night’s state of the union address because President Barack Obama long ago signaled the kind of populist and heavily political speech he was going to deliver.

Washington is Spending Too Much
e21 Team | 2012-01-17

In the Wall Street Journal, former Chairman of the Council of Economic Advisers, argues that the real budgetary problems are (much further) down the road:

The deficit shot up in basically equal measure from taxes falling and spending rising. Spending rose to 25% of GDP from 20.5% in the recession and soon it will fall back down. Taxes fell to 14.5% of GDP from 18.5% and will also return to more normal levels.

A Look Back at 2011: Congress and White House Edition
James C. Capretta | 2011-12-21

Just over a year ago, Republicans won the midterm election in a landslide. They picked up a historic number of seats in the House of Representatives, substantially narrowed the Democratic majority in the Senate, and took control of scores of state legislatures and governors’ mansions. The message from voters was clear: they wanted to put an end to the hyper-activist agenda coming from the Obama administration, and to renew policymakers’ focus on promoting private sector economic growth, not more government jobs.

Why There Is No Bipartisan Budget Deal
Charles Blahous | 2011-12-19

The failure this year of Congress’s joint deficit-reduction committee produced a spate of post-mortems. Some of these analyses focused on problems seen with the committee process itself – its structure, its mission, the weak deterrents to its failure, and others. There was also the predictable mutual blame-laying, with members on each side pointing to the other’s intransigence.

Balanced Budget Amendment Would Address Fiscal, Credibility Deficits
e21 Staff Editorial | 2011-11-14

A constitutional requirement to submit a balanced budget is essential to improving the economic governance of the nation and establishing trust with the electorate. The Balanced Budget Amendment that the House of Representatives passed in July as part of the Cut, Cap, and Balance Act is a far more sensible approach to fiscal policy than many commentators assume. The problem is not simply the size of current and projected fiscal deficits; the U.S. federal government faces a serious credibility deficit that is tied directly to dishonest and hyper-politicized budgeting. In its current form, the amendment is far from perfect, but its problems can be addressed in a way that promotes fiscal stability and probity in public finance. This issue is about to heat up again as the already enacted Budget Control Act requires a vote by each chamber this winter (before December 31st) on a balance budget amendment.

For the Super Committee, Failure Might Be the Best Option
James C. Capretta | 2011-11-02

The Joint Select Committee on Deficit Reduction — sometimes called the “super committee” because of the unusual power it was granted in the legislative process — now has just three weeks left before it is to report out a plan to cut at least $1.2 trillion from projected federal budget deficits over the coming decade. If the committee fails to produce such a plan, then nine annual automatic “sequesters” will be triggered, starting in January 2013, to achieve the same targeted level of deficit reduction — $1.2 trillion. The “sequesters” will impose spending cuts in defense and certain non-exempt domestic accounts to hit the deficit reduction target.

Fannie and Freddie Updated Cost Estimates
e21 Team | 2011-10-28

On Thursday, the Federal Housing Finance Administration (FHFA) announced that the total net cost of the Fannie and Freddie bailout could be as low as $121 billion, or about 0.8% of GDP.  Some misinterpreted the new estimates as a substantial reduction in the cost of the bailout and contrasted the new figure with the $389 billion estimate from the Congressional Budget Office (CBO) from January 2010.

How the CLASS Act’s Demise Ends the Fiscal Argument for the 2010 Health Care Law
Charles Blahous | 2011-10-24

On Friday, October 14, HHS Secretary Kathleen Sebelius announced that she was pulling the plug on the “CLASS Act”, a long-term care insurance program contained in the health care law pushed through Congress in 2010. The program had to be killed because there was no way to operate it in an actuarially sound manner as required under a provision inserted by then-Senator Judd Gregg. Secretary Sebelius stated flatly that “we have not identified a way to make CLASS work,” and so HHS would “suspend work” on implementing it.

Clean Energy's Accounting Gimmick: "Free" Taxpayer Subsidies
Jason Delisle | 2011-10-07

Last month, the solar energy company Solyndra went bankrupt and defaulted on a $534 million federally-backed loan. Many were quick to label it a lesson in the inherent failings of government directed investment. The Obama Administration guaranteed Solyndra’s loan under an American Recovery and Reinvestment Act program that expanded a prior initiative to subsidize clean energy. But critics of the Department of Energy program that backed the loan haven’t realized that the program is set to quietly impose billions of dollars of losses on taxpayers, all of which will be hidden from the federal budget thanks to a massive accounting gimmick.

The President’s Latest Health Care Proposals Don’t Constitute Entitlement Reform
James C. Capretta | 2011-09-26

Last week, the president unveiled yet another budgetary proposal (his third of the year!). Officially at least, this latest offering is supposed to be aimed at influencing the Joint Select Committee on Deficit Reduction. The twelve-member Joint Committee was created in the August legislation lifting the debt ceiling and is charged with drawing up a plan to cut at least $1.2 trillion from the expected ten-year budget deficit.


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