Tag Archives: Congressional Budget Office

Twelve Adults and the CBO: How many adults in the room?

The much ballyhooed Congressional Joint Select Committee on Deficit Reduction–aka the “supercommittee”–was supposed to hear a history of the debt crisis today.

You can imagine how well that was going to go over.  Partisans from both sides were prepared, I’m sure, to lay blame for the federal government’s fiscal problems at their opponents feet.

“It was Bush’s fault!”

“Was not. It’s Obama’s fault!”

“Nuh, uh!”

And so one. Fortunately, there was an adult in the room, and he was, contrary to oft-repeated and oft delusional grandeur of parental responsibility, not President Obama.

In fact, it wasn’t even a politician, per se. As NPR tells it

Doug Elmendorf, the man who runs the nonpartisan Congressional Budget Office (CBO), immediately dispensed with the question of blame and laid out the options for the supercommittee.

“Putting the federal budget on a sustainable path will require significant changes in spending policies, significant changes in tax policies, or both,” Elmendorf said.

That’s a bitter pill, no matter what party you belong to. Elmendorf laid out the work before the committee. You have three issues before it, he said (and I’m quoting NPR, here):

  1. How much money the government is going to save;
  2. How quickly it is going to do it; and
  3. What mix of spending reductions (GOP choice) or tax increases (Democrat choice) it is going to use.

And partisan meat ain’t gonna cut it, alone. When Republican Senator John Kyl of Arizona suggested it could be recouped by stopping Medicare fraud or selling public lands, Elmendorf shut it down.

Neither of those would make up a very large part of the $1.2 trillion that the supercommittee is tasked with saving. (But he’d be glad to discuss those ideas, he said…just not on their own).

His idea, then? Raise spending or cut taxes now, and then later, raise taxes or cut spending. But lock it in now, with legislation in order to prevent future Congresses from waffling when the pressure is off.

Interesting idea, if something of a pipe dream. Check out the story from NPR.


This isn’t the hope you were looking for…

Debt, debt, debt…

It seems debt is all the rage in Washington these days, and with good reason. The federal government only stays open on debt, and unless Congress and the President can agree soon, we’ll hit that limit and…well, who knows what will happen next.

Originally, negotiators were looking at a deal to cut deficits by about $2.5 trillion over 10 years.

But as the deadline approaches, Obama has raised the stakes. The goal he is now pushing for — as much as $4.5 trillion in deficit cuts over the coming decade — would require changes both in taxes and in the government’s basic safety-net programs.

“There’s going to be pain involved politically on all sides,” Obama told reporters after the White House meeting. Continue reading

When is $100 billion not enough?

When it’s non-security discretionary spending cuts from the budget. That’s when.

Then it’s just not solving the problem. It’s pandering for the press and for constituents.

The problem, and all the talk Washington, is the deficit and getting it back to a manageable level.  Republicans in an effort to keep campaign promises and reduce the deficit, are working on cutting $100 billion out of the budget. The problem is, what they are cutting is just non-security discretionary spending. The real cause of deficit growth–and the looming monster on the horizon–is entitlement spending (Social Security, Medicaid, and Medicare) and interest payments on the federal debt. See, those two items will grow, under the Congressional Budget Office‘s projections, dramatically over the next decade. By 2024, tax revenues will not be enough to pay for the costs of entitlements and net interest payments.

Check it:

But isn’t $100 billion in cuts a good start? Yes…but no. It won’t affect the growth of entitlement spending a bit. Nor will it increase tax revenues (except perhaps to depress them) to pay for the growth in spending. Derek Thompson of The Atlantic likens it to a dentist telling you that you need to brush more or your teeth are going to fall out.

So you buy a toothbrush and you brush one tooth really really really hard for six months but leave the others untouched. By the time you return to the dentist, your teeth are all rotting except for one tooth that is so overbrushed, you’ve worn out the enamel.

Instead of helping your whole mouth, you end up hurting it, including the place you were focused so much. I don’t agree that discretionary spending cuts will hurt as much as that (such as, why does the federal government need to fund cowboy poetry?), but I do think they distract from the real problem that needs addressing–the cost our entitlements will levy on our country in the coming decade.

So why not work on entitlements instead of non-security discretionary spending? Why not stop chopping at the leaves and take the ax right to the trunk?

Because it’s hard and politically dangerous. The largest recipients of entitlement spending also tend to be regular and frequent voters. They are those who are in need. While polls tend to show that almost everyone agrees that cuts must be made, they also show that no one really wants to cut what they benefit from nor do they want the alternative of paying higher taxes.  And what rational congressman wants to go back to his district and tell them that he cut benefits to the poor, the elderly, or the sick?

Yeah. That’ll go over like a lead balloon.

Enter the dragon. Or rather, enter Rep. Paul Ryan, a Republican from

Paul Ryan (politician)

Image via Wikipedia

Wisconsin, and his planning to bring the budget back under control. He acknowledges that what he proposes–throttling back entitlement spending– may not necessarily help Republicans in the short-term.

“Is this a political weapon we are handing our adversaries? Of course it is,” Ryan said Thursday. “I think everybody knows that we are walking into I guess what you would call a political trap that arguably we are setting for ourselves … but we can’t wait. This needs leadership.

“If you just follow the polls, you are nothing but a follower,” Ryan said.

His budget is likely to shift the discussion from cutting discretionary spending to entitlement reform, something that President Obama notably left out of his budget when he proposed it to Congress.

While what exactly Ryan will propose is still unclear, and will be until April, it is speculated that the proposal will call for shifting Medicaid to block grants so as to limit how much growth can happen in a single year, as well as potentially a voucher system for Medicare recipients. Social security, the least problematic of the three, will probably remain untouched, for now (though, IMO, it’s still a payment I make every month that I’ll never see).

As long as voters vote for the short-term, we will all pay in the long-term.

Of course, as Keynes put it, rather without vision, “in the long run, we are all dead.”