Budget and Tax Policy ISSUE SUMMARIES
Issue summaries provide a quick reference to Centrists.Org general principles and most important links, within each topic area.
Budget and Tax (Basics)
Near-Term Budget Outlook
Tax Reform
Centrists.Org No-BS Long-Term Baseline
Budget Process
Joint Statement On The Need For Pay-As-You-Go Discipline
6.23.2005 || The five organizations joining in this statement have warned that large, chronic budget deficits pose a threat to the economic health of our nation. For that reason, we are increasingly alarmed at the apparent willingness of lawmakers to propose new initiatives, without offsets, that would increase deficits in both the short and long term. At a time when fiscal policies should be focused on reducing deficits in recognition of the enormous strains that the retirement of the baby-boom generation will soon place on federal resources, failure to offset new initiatives on a pay-as-you-go basis would send a dangerous signal that fiscal discipline in Washington has all but disappeared. At the very least, lawmakers need to stop digging the hole deeper.
Does the Increase In Revenues Mean the Budget Outlook Has Turned Around?
5.10.05 || On May 5, the Congressional Budget Office (CBO) released new monthly budget figures, which indicates that if revenues and outlays maintain their current trend, the deficit will be better than forecast, possibly in the range of $350 billion. This improvement is due almost entirely to higher than anticipated revenues.
Rhetoric Versus Reality in the President's Budget: A Package Touting Fiscal Discipline Laden with Hidden Costs and Unbalanced Sacrifice
02.08.2005 || The administration is portraying the President’s budget that was released yesterday as an austere budget that makes tough choices in order to reign in the deficit. Unfortunately, the administration’s newfound deficit hawk vigor appears to apply only to the priorities of others, but not to any of the President’s priorities.
The Spending Nobody's Talking About: Interest and Non-War Related Discretionary Outlays
10.18.2004 || The fastest growing major categories of federal spending in 2005 are projected to be defense and war-related outlays (12.2 percent), interest on the public debt (11.9 percent), non-war related discretionary outlays (4.6 percent), and entitlements (4.2 percent).
The Administration's Bogus War Budget
08.05.2004 || In its new mid-session budget, the Bush Administration understates the likely cost of military deployments in Iraq and Afghanistan by as much as $200 billion over the next 5 years.
Transcripts: Concord Coalition (June 24, 2004)
Outlook for the Federal Budget with Doug Holtz-Eakin, Bill Hoagland, Tom Kahn, Bob Bixby
Wall Street and Deficits with Robert Rubin, Pete Peterson, Peter Fisher
Deficits for Stimulus Were OK. But Now? (CentristPolicyNetwork.Org)
07.14.2004 || President Bush and Senator Kerry should mimic Presidents Reagan and Clinton by advocating tax reforms and the reduction of long-term deficits.
Testimony: The Rebate of Value Added Taxes at the Border and the Competitive Disadvantage for U.S. Small Business
07.07.2004 || Comprehensive tax reform would be a far better way to address the problems created by repealing trade subsidies than targeted tax breaks.
Book Summary: Pete Peterson's Running on Empty
07.06.2004 || A short, chapter-by-chapter summary of the important new book, which explains how Democrats' fealty to entitlements and Republicans' devotion to tax cuts threaten to bankrupt the nation.
The FSC-ETI Bills Highlight the Need for Tax and Budget Reform
revised 07.06.2004 || The Senate-passed FSC-ETI bill includes a tax reform commission to begin the process of simplifying and rationalizing the tax code, especially for corporate and international taxation.
Ducking a Debate on the Debt Limit (CentristPolicyNetwork.Org)
06.22.2004 || The House leadership is using an appropriations bill designed to support our troops in Iraq and Afghanistan as a way to slip in a higher debt limit without public discussion.
Two Important Takes on President Reagan's Economic Legacy
06.09.2004 || Robert Samuelson's column Unsung Triumph says Reagan's biggest success was helping the Fed fight inflation. A recent column by Brian Nottage of The Dismal Scientist applauds Reagan, but also argues that he fostered a "caricature of market economics."
Where Will the Deficit Go From Here? New Long-Term Budget Projections
06.03. 2004 || Under realistic assumptions, the annual federal deficit is poised to hover around $400 billion through 2007, between 3 and 4 percent of GDP. After that, the deficits will grow as the first waves of baby boomers leave the workforce and join the entitlement rolls.
Sen. Lieberman's "Present Value" Budgeting Proposal (CentristPolicyNetwork.Org)
05.25.2004 || Sen. Lieberman's proposal would require "present value" budget estimates of proposals that would expand unfunded entitlements or tax cuts, even those with "sunset provisions" designed to hide their long-term cost.
Time for Bolder Thinking on Tax Policy
05.24.2004 || An op-ed in today's Washington Post by Ted Halstead and Maya MacGuineas suggests replacing the payroll tax with a progressive consumption tax.
Book: Contemporary U.S. Tax Policy
05.12.2004 || A new book by economist Gene Steuerle of the Urban Institute highlights the difficulty of keeping taxes simple and fair in a democracy.
More Good News on Jobs -- More Bad News on the Deficit
05.10.2004 || The number of payroll jobs jumped in April, following a big gain in March. These were the first bursts of job creation since the recession began in 2001. The bad news is, the budget deficit keeps getting worse.
Mortgaging the Future in Blueprint, the magazine of the Democratic Leadership Council
05.07.2004 || Large budget deficits and ultra-low interest rates provided an enormous economic stimulus over the last three years. We will eventually have to pay for that stimulus, either with higher taxes, lower government spending, or higher interest rates.
It's The Sunsets, Stupid! CBO and JCT Should Show the Extended Cost of Expiring Provisions
05.03.2004 || The use of sunset provisions has distorted the budget process and can make a mockery of budget rules. The Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) should show the full, 10-year cost of expiring tax cuts or spending bills in the footnotes to their official estimates.
Budget Outlook Looking a Little Better in 2004?
04.08.2004 || New monthly budget figures imply that the deficit will be worse than last year, but a little better than forecast, possibly in the range of $425 to $450 billion.
Rep. Houghton's Tax Simplification Proposals (CentristPolicyNetwork.Org)
04.06.2004 || Last Friday, Rep. Houghton rolled out a series of proposals to help simplify the tax system.
For Kerry, A Positive Move on Corporate Taxes (CentristPolicyNetwork.Org)
03.26.2004 || During the early primaries, Senator Kerry's campaign spewed up some strong anti-corporate rhetoric. The international and corporate tax proposal announced today is a step in a more business-friendly direction.
A Better Budget -- The House "Blue Dog" Alternative (CentristPolicyNetwork.Org)
03.24.2004 || The Blue Dog budget does the best job of "paying for" its initiatives and laying the budgetary groundwork for a "pay-as-you-go" ethic in Congress.
A "Duck-The-Issues" Budget -- Interpreting the Congressional Budget for 2005
revised 03.19.2004 || Will the Congressional budget really reduce the deficit? The answer is "probably not." This year's budget is a stop-gap measure that does not attempt to grapple with the larger fiscal problems facing the nation.
CBO: Budget Outlook Worsens Slightly, Medicare and Medicaid Spending Up
02.28.2004 || On Friday, the Congressional Budget Office (CBO) released a slightly more pessimistic "baseline" budget projection. Higher Medicare and Medicaid outlays were the main culprit.
Realistic Budget Targets and Some Initial Deficit Reduction Options
02.21.2004 || Congress should reduce spending to 19 percent of GDP and raise revenues to 18 percent of GDP by 2007. It will require letting some tax cuts expire and "unaccelerating" others, reducing appropriations throughout the budget, and re-visiting the recently passed agriculture and prescription drug laws.
CBO: Revenues Up Only 1 Percent So Far in FY 2004, Outlays Up 6 Percent
02.15.2004 || The Congressional Budget Office (CBO) released its Monthly Budget Review on February 6, which shows the budget deficit continuing to worsen.
"Stop Us Before We Spend Again?" (CentristPolicyNetwork.Org)
02.12.2004 || The Republican Study Committee (a very conservative group) and the Tuesday Group of moderate House Republicans have issued a 12 point proposal to change the budget process, so spending would be easier to control in the future (if Congress musters the will).
Medicare, Tax Cuts, and the Era of BS Budgeting (CentristPolicyNetwork.Org)
02.08.2004) || We're running deficits. We have significant on-going military requirements overseas. The baby boom generation expects entitlement benefits in 6 short years. Isn't it time we ended the era of BS budgeting?
Heritage vs. the Center on Budget -- Is Spending Too High, Or Are Revenues Too Low?
02.08.2004 || The conservative Heritage Foundation says spending is growing too rapidly and the liberal Center on Budget and Policy Priorities says revenues have fallen too low. Both think tanks are right.
The Budget Squeeze Might Be Closer Than People Think
02.07.2004 || Urban Institute economist Eugene Steuerle calculates that a continuation of current tax and spending promises could squeeze the non-security "discretionary" budget down to nothing as early as 2012.
Deep Cuts in Non-Security Spending and Rapid Economic Growth Won't Balance the Budget
preliminary 02.02.2004 || Wishing for deep cuts in non-defense, non-homeland security outlays will not re-balance the budget. Neither will sustained super-fast economic growth.
New Issue Summary: Budget and Tax (Basics)
updated 02.02.2004 || We need a new short-term budget plan: raise revenues to 18 percent of GDP and reduce spending to 19 percent by 2007.
New Detailed Issue Summary: Budget Process
updated 02.02.2004 || How to reduce the gimmicks distorting the federal budget process.
CBO: Faster Real GDP Growth, Lower Revenues, Higher Deficits and Interest Costs Ahead
01.26.2004 || The Congressional Budget Office (CBO) revised its economic projections higher for 2004 and 2005, but lowered its projections of federal revenues throughout the 10-year budgeting period.
No-BS Long-Term Budget Baseline (Jan. 2004)
01.26.2004 || Based on updated projections from the Congressional Budget Office (CBO), which were released earlier today, Centrists.Org's new budget baseline shows persistent deficits, in spite of rapid economic growth.
When Treasury Secretaries Attack! (CentristPolicyNetwork.Org)
01.11.2004 || Former Treasury Secretaries Robert Rubin and Paul O'Neill would teach us two vital lessons: (1) confidence is an increasingly important driver of real economic behavior, and (2) hyper-politization of public policy can hurt confidence and growth prospects.
A Closer Look at the Latest Jobs Figures -- Plenty of Stimulus, a Scarcity of Confidence
01.11.2004 || Given the huge economic stimulus in place (large budget deficits and ultra-low interest rates), why is the jobs market so weak? The dreadful budget outlook might be dimming the long-term economic outlook.
Preparing for CBO's Updated Baseline Projections and the President's New Budget
01.10.2004 || Next on the budget agenda: deciphering the upcoming projections from the Congressional Budget Office (CBO), which will be released on January 27, and the new President's Budget, which is due on February 2.
Secretary Rubin's Theory of Budget Deficits, Economic Confidence, and Financial Crises
01.10.2004 || Former Treasury Secretary Robert Rubin and economists Peter Orszag and Allen Sinai have written a new paper arguing that sustained budget deficits could spark a sudden economic and financial crisis.
Budgetary Effects of the Diamond-Orszag Social Security Proposal
12.27.2003 || This proposal would resolve Social Security's funding shortfall directly, mostly by raising taxes. The plan is fully "paid-for," without gimmicks or wishful assumptions. The downside is that the tax increases would be permanent, not temporary.
Commentary: CBO's New Long-Term Budget Projections
12.22.2003 || CBO's new budget projections should help move lawmakers past the denial phase on the federal deficit.
The Fourth Entitlement: Interest
12.01.2003 || The discussion of entitlement reform is often limited to Social Security, Medicare and Medicaid. However, interest on the public debt is poised to become the largest and fastest growing entitlement over the next 30 years.
Raising the Cap on Payroll Taxes Doesn't Solve the Social Security Problem
11.17.2003 || Raising the cap on annual earnings subject to the payroll tax ($87,000 in 2003) would simply defer Social Security's cash-flow problem by a few years -- it isn't a permanent solution.
Put Social Security Reform in the President's Budget (CentristPolicyNetwork.Org)
11.17.2003 || Until the President and Congress allocate funds for the transition costs of reform in their budgets, the Social Security debate won't be taken seriously.
Projected Structural Budget Deficit for 2004: $391 Billion
revised 11.18.2003 || Because the structural deficit is now so large, the argument that a return to robust economic growth will "solve" the deficit problem seems a stretch.
Is The Recovery Finally For Real?
11.03.2003 || On balance, the good economic news makes it likely that the Congressional Budget Office (CBO) will revise its economic projections and its forecast of federal revenues slightly higher in fiscal year 2004.
Suggestions for Income Testing in Social Insurance Programs
10.27.2003 || On reflection, the debate over income testing in Medicare is larger than the prescription drug bill in Congress -- it raises fundamental questions about how Americans want social insurance programs to work.
Preliminary 2003 Budget Deficit: $374 Billion
10.10.2003 || The deficit will be lower than CBO's earlier forecast of $401 billion. However, the new figures do not imply that the deficit forecast for 2004 -- almost $500 billion -- should be changed.
Economic Perspective: When Are Health Costs Excessive if $15,000 is Average?
10.01.2003 || In a Sept. 29 commentary in Tax Notes, economist Gene Steuerle fantasizes about a rational Medicare reform and prescription drug debate.
"War Tax" Options (CentristPolicyNetwork.Org)
revised 09.30.2003 || With the budget deficit approaching 5 percent of GDP, and few signs of spending restraint in Congress, a temporary "war tax" is justified.
A Challenge To Both Left and Right on Social Security Reform (CentristPolicyNetwork.Org)
09.16.2003 || The left shouldn't automatically scorn Social Security reform, but the right must figure out how to pay for its large transition costs.
Faster GDP Growth Won't Solve the Budget Problem
09.06.2003 || Congress has not yet accepted the fact that taxes will have to be raised and spending cut to re-balance the federal budget. But there is little chance the budget can be balanced without those actions.
It's the Confidence, Stupid. (CentristPolicyNetwork.Org)
09.05.2003 || How can the economy grow rapidly while the employment market remains so grim? The immediate explanation is high productivity growth. But the real reason may be a lack of confidence in future economic growth.
A Preliminary Assessment of CBO's New Budget Projections
revised 08.29.2003 || Under realistic assumptions, the deficit will be $500 billion in 2004 and will total $6.1 trillion between 2004 and 2013. The public debt will rise from $4 trillion this year to $10 trillion a decade from now. (And after that, things really get bad.)
Budget Update: New CBO Estimates Likely To Show $400 Billion Deficit in 2003; $500 Billion in 2004
08.18.2003 || The Congressional Budget Office (CBO) will release new 10-year projections on August 26, and Centrists.Org's long-term projections will be updated shortly thereafter.
Centrists.Org Chairman Maya MacGuineas to Lead Committee for a Responsible Federal Budget
08.07.2003 || The budget is likely to be the paramount issue in 2005 and for several years thereafter. This move links the Committee, the New America Foundation, and Centrists.Org in search of budgetary solutions.
Economy Note: GDP Growth 2.4% in 2nd Quarter; Jobs Report Tomorrow
07.31.2003 || Second quarter GDP growth came in at 2.4%, after a growth rate of 1.4% in the first quarter of 2003 and 1.4% in the last quarter of 2002.
Professor Boskin's Boo Boo
07.30.2003 || Prof. Michael Boskin's preliminary work on tax-deferred savings implied that predictions of massive budget problems when the baby boomers retired were exaggerated. Now, however, Prof. Boskin has found an error in his calculations.
Centrists.Org No-BS Budget Baseline
updated 07.20.2003 || Centrists.Org's budget baseline shows a deficit of $4.9 trillion over 10 years. This update includes the latest short-term trends for 2003 and 2004 based on the Administration's Mid-Session Budget. Long-term projections are mostly unchanged from June 22.
An Analysis of the Administration's Mid-Session Budget
07.15.2003 || The Administration estimates the federal deficit will be $455 billion in 2003 and $475 billion in 2004, about 4 percent of GDP.
Measuring the Cost of Unfunded Federal Spending Promises
07.14.2003 || By any measure, the future cost of federal spending needs and promises -- especially for entitlement programs like Social Security and Medicare -- will be huge.
Medicare's Fee-For-Service "Savings" Are Really Costs
revised 07.28.2003 || The House and Senate Medicare drug bills contain illusory, distant-year cuts in payments to health providers that are never intended to materialize.
2003 Medicare and Drug Resource Page
CentristPolicyNetwork.Org)
07.13.2003 || Extensive links to think tank research and commentary on the current Medicare debate.
First 3 Quarters of FY 2003: Revenues Down 4%, Spending Up 8%
07.11.2003 || Latest figures from CBO's Monthly Budget Review verify Centrists.Org baseline prediction of $400+ billion deficits.
Time for a Tax and Budget Reform Commission
(CentristPolicyNetwork.Org)
07.09.2003 || Creating this Commission would show balanced leadership, deep concern for the future, and a desire for sound, long-term policymaking.
From Roll Call, July 7, 2003 (www.rollcall.com)
On Medicare and Budget Numbers, CBO is Failing
"Congress is poised to enact a Medicare drug benefit based on bad information. The Congressional Budget Office has failed its duty to provide lawmakers with a thorough and balanced analysis..."
What if Prof. Boskin is Right?
06.30.2003 || Stanford economist Michael Boskin projects that current-law tax collections will increase as a share of GDP when the baby boomers retire and cash in their 401k and IRA savings (and pay income tax). Practical politics implies that won't happen -- Congress would cut tax rates. But if the "Boskin Effect" did occur, would it be enough to avoid a budget crunch? Not even close.
Drug Benefit Costs 1 Percent of GDP in 2030 (If CBO's Right)
06.25.2003 || Centrists.Org projects that the drug benefit being considered by Congress will raise Medicare spending 5.6 percent of GDP to 6.6 percent in 2030, based on an extension of CBO's estimate of S.1 .
Centrists.Org No-BS Budget Baseline
updated 06.22.2003 || Centrists.Org's politically realistic budget baseline now shows a 10-year budget deficit of almost $5 trillion. This update includes the latest trends for 2003, and assumes enactment of a 10-year $400 billion Medicare drug benefit, which now seems probable.
Centrists.Org No-BS Budget Baseline
updated 05.24.2003 || Several times a year, Centrists.Org computes a gimmick-free budget that includes realistic assumptions about baseline spending and revenues. This update includes enactment of the "Jobs and Growth" tax cut package.
JCT, CBO, Fed Agree: Tax Cuts Don't "Pay For" Themselves, Could Hurt Economy.
revised 07.01.2003 originally published 05.14.2003 || The Joint Committee on Taxation, Congressional Budget Office, and Federal Reserve have all produced recent studies debunking some of the claims of the most zealous tax cut proponents.
April Revenues Weak: FY 2003 Deficit Likely to Top $350 Billion
05.10.2003 || CBO reports smallest April surplus since 1995.
Centrists.Org No-BS Budget Baseline
05.10.2003 || Several times a year, Centrists.Org computes a gimmick-free budget that includes realistic assumptions about baseline spending and revenues. This update reflects probable enactment of the Senate's $350 billion tax cut package.
