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It's been an exceptional year. 2008 saw not only economic indicators that evoked memories of the Great Depression, but also a record-breaking federal budget deficit. The federal government, through several agencies, activated trillions of dollars in loans and asset guarantees. Congress approved the largest supplemental spending bill in its history and gave the Treasury Department the authority to expend the equivalent of three-fourths of the federal discretionary budget on one sector of the economy. But in many other ways, Congress proved to be unremarkable by staying true to its recent history of underachievement.
Democrats, Obama Prepare Economic Stimulus Package for January (12/02/2008)
The passage of an unemployment insurance extension, which occurred at the end of November, is likely the last effort by the 110th Congress to enact legislation to stimulate the economy. With Republicans continuing to block immediate passage of a large economic stimulus package, Democrats are preparing to move legislation as soon as President-elect Barack Obama takes office in January 2009.
TARP Oversight Helped, Hindered by Senate (12/02/2008)
A pair of bills designed to improve oversight of the Troubled Asset Relief Program (TARP) has been introduced in the Senate. The first would place restrictions on the use of federal funds and provide greater transparency, and the second would strengthen the role of the Special Inspector General for TARP (SIGTARP). TARP was created by the $700 billion financial bailout bill that Congress passed before the election.
TARP Purchases Increasing as Oversight Languishes (11/18/2008)
As Treasury Secretary Henry Paulson continues to purchase hundreds of billions of dollars in bank equities under the Troubled Asset Relief Program (TARP), oversight of the program remains meager. TARP, as created through the Emergency Economic Stabilization Act (EESA), gives Paulson wide latitude in selecting firms and individuals to implement the program and equally wide latitude in disbursing the $700 billion in authorized funds. However, with $290 billion already committed, two of three oversight institutions created by EESA have yet to be implemented, signaling that oversight and transparency in TARP are second-tier objectives for Congress and the Treasury Department.
Unemployment Insurance in Need of Overhaul (11/18/2008)
As the anticipated severity of the recession increases and unemployment estimates for 2009 reach as high as eight percent, Congress is under increased pressure to enact an extension of unemployment insurance (UI) benefits, perhaps as early as the current lame-duck session. Yet a broader overhaul of the UI program is needed to improve this important safety-net program for American workers.
Joint Economic Committee Holds Hearing on the Need for Economic Stimulus (11/04/2008)
On Oct. 30, a group of economic experts testified before the Joint Economic Committee (JEC) on the necessity and scope of a second economic stimulus package. While committee members and witnesses agreed on the severity of the ongoing economic situation, there was a clear ideological divide on which course of action Congress should pursue. At the center of the divide were the competing concerns for families facing certain hardships inflicted by a contracting economy and for the consequences of an increase in the federal budget deficit, which would be required to aid those families and help reverse the current economic trend.
Commentary: Despite Record Deficits, Stimulus Package Warranted (10/21/2008)
Although enactment of an economic stimulus package could push the federal budget deficit above $1 trillion, political consensus on its necessity is emerging. Political factions are split on the issues of how large and what form a stimulus package should take. Economists, however, indicate that targeted spending can be a powerful weapon to address recession and the effects of economic hardship on American families, even if it increases the deficit. Now is exactly the time to be enacting such fiscal policy.
Commentary: Bailout Package Signed into Law; Economic Stimulus Still Needed (10/07/2008)
With the enactment of a $700 billion Wall Street bailout, or "financial rescue" package, prospects for success in stabilizing the nation's financial markets remain uncertain. Certain, however, is that deteriorating economic conditions that continue to put Americans on the unemployment rolls will remain unaffected by the implementation of the Troubled Asset Relief Program (TARP). And despite over $100 billion in tax cuts included in the package, Congress failed to leverage even modest economic stimulus from the resulting jump in the federal budget deficit. If and when Congress returns to work for a lame-duck session after the elections, it should consider what steps to take next to improve the economy and aid those who have fallen victim to it.
Congress Enacts Flurry of Legislation at Year's End (10/07/2008)
Congress tentatively adjourned for the year on Oct. 3 after passing a flurry of legislation to address the financial meltdown, extend expiring tax cuts, provide disaster relief funding, and fund the federal government through March 6, 2009.
Free Market Ends as Washington and Wall Street Merge (09/23/2008)
Following a string of guarantees, buy-outs, and bailouts for various financial firms, Congress is now rushing to authorize the Treasury Secretary to spend $700 billion to bail out the rest of Wall Street. Since its role in the sale of investment bank Bear Stearns to rival J.P. Morgan in March, the federal government has intervened three times in the nation's financial markets by using taxpayer dollars to prop up the value of various private banking and mortgage entities. While taxpayers ought to be concerned about the sums of money involved in these transactions, a more fundamental problem exists: the bottom-line cost is anybody's guess.
Commentary: On Bailouts, Congress Should Move with Great Care (09/23/2008)
The pace at which Congress is considering the largest intervention into financial markets in the history of the United States, if not the world, is shocking. Over the weekend, the Bush administration proposed legislation that would grant it the authority to buy up toxic financial assets in an amount equal to five percent of gross domestic product (GDP). The magnitude of the funds requisitioned is matched only by the administration's requested level of unchecked power and opacity in how it would execute this historic market intervention. Congress has responded with uncharacteristic haste, setting the stage for passage of monumentally flawed legislation that purports to fix a yet-undiagnosed problem in roughly one week.
Senate Clears Contracting Reforms after Resolving Earmark Dispute (09/23/2008)
The Senate passed important contracting reforms Sept. 17 when it approved the FY 2009 Defense Authorization Act (S. 3001) by an 88-8 vote. Among other measures, the legislation included a provision to create a national contractor misconduct database.
Key Tax Policy Items Remain Unresolved (09/23/2008)
Congress is scheduled to adjourn for the election season on Sept. 26, but a set of what many consider must-pass tax cut bills have yet to be sent to the president's desk. As differences between the House and Senate remain over offsets, and as a massive Wall Street bailout bill has grabbed the spotlight, final congressional approval of these measures before adjournment remains less than certain.
Congress Returns with Little Time, Huge Workload (09/09/2008)
Congress returned to Washington the week of Sept. 8 to a jam-packed schedule and just three weeks left to complete work for the year before the target adjournment date of Sept. 26. Below is a brief summary of some of the major pieces of legislation covering fiscal policy issues that will likely be addressed:
Rising Unemployment Adds to Struggling Economy (09/09/2008)
When the Labor Department released its monthly unemployment and jobs data on Sept. 5, it reported that the unemployment rate for the month of August was 6.1 percent. The 0.4 percentage point increase over the prior month has pushed the unemployment rate to a five-year high and is the latest indication that the economy continues to deteriorate.
Defense Contract Oversight Faces Multiple Challenges (08/19/2008)
Over the last seven years, the Defense Department has doubled the amount of money spent on private contractors, yet it has remained disturbingly lax on contractor oversight. Recent evidence has emerged showing that the Pentagon spends too little on contract oversight and interferes with current auditors to restrict the length and scope of investigations.
Contracting Reform Agenda Makes Gains (08/05/2008)
When President Bush signed the FY 2008-2009 war supplemental bill into law on June 30, he approved a pair of contracting reforms that had long been stalled in Congress. The enactment of these provisions has validated the legislative strategy of reform-minded legislators to pass federal contracting measures.
Congress Fails to Act on Tax Legislation as Clock Winds Down (08/05/2008)
Congress left town for the month-long August recess having failed four times to act on a popular package of tax cuts that are set to expire at the end of 2008. With only three weeks in session left in September before the door is expected to close on the 110th Congress, and with remaining differences between opposing sides, there is still significant work to be done before $123 billion in tax cuts can become law.
Appropriations Breakdown Threatens Federal Investments (07/22/2008)
As the FY 2009 appropriations process grinds to a halt, a new OMB Watch analysis of the past nine fiscal years reveals that the nation's priorities are better served when Congress and the president work together to complete the annual appropriations process. Congress's abandonment of the FY 2009 appropriations process increases the risk that the resources critical to vital government supports will be further constrained as both sides of the aisle simply refuse to work toward agreement on FY 2009 appropriations legislation.
Bush Signs War Supplemental, Cements Fiscal Legacy (07/08/2008)
Contrary to his assertion that he would "not accept a supplemental over $108 billion," President Bush signed a $257 billion war supplemental spending package on June 30. The bill will fund the wars in Iraq and Afghanistan for the remainder of the fiscal year (ending Sept. 30) and through the first several months of the next president's term.
Fiscal Responsibility, War Critics Take a Back Seat in House War Supplemental (06/24/2008)
When the House Democratic leadership introduced a supplemental appropriations bill the week of June 16, chock-full of popular spending measures, it ensured easy passage of the $257 billion package. The Democrats and President Bush can each claim they won items in the negotiation over the bill: the Democrats won increased spending on domestic programs; Bush was able to kill any requirements for withdrawal of soldiers from Iraq. Yet the bill remained controversial because the Democrats refused to include fiscally responsible measures or accede to the opinion of 63 percent of Americans that soldiers should return home within two years.
Congress Struggles with Tax Bills ahead of July 4 Recess (06/24/2008)
In the dwindling days before the July 4 congressional recess, the House and Senate will try to break the longstanding logjams on three critical pieces of tax legislation: a proposal to approve a "patch" to hold constant the number of taxpayers liable to the Alternative Minimum Tax (AMT), a bill to renew dozens of tax provisions collectively referred to as the "extenders," and the tax title of Rep. Barney Frank's (D-MA) Federal Housing Administration (FHA) foreclosure guarantee bill.
Congress Adopts Mixed-Bag Budget Resolution (06/10/2008)
A rare event occurred in Washington on Thursday, June 5: Congress approved a budget resolution during an election year, a feat not seen since 2000. This fact and a human needs-oriented approach to spending signal that Congress is addressing national priorities while attempting to more responsibly manage the country's finances. However, Congress's eliding of pay-as-you-go rules and unrealistic assumptions about war spending and Alternative Minimum Tax (AMT) relief have marred an otherwise responsible budget resolution.
Spike in Jobless Rate Restarts Focus on Unemployment Insurance (06/10/2008)
On June 6, the Bureau of Labor Statistics (BLS) reported a jump in the national unemployment rate from 5.0 percent in April to 5.5 percent in May, the single biggest month-to-month increase in 22 years. Another 49,000 Americans joined the ranks of the unemployed in May, bringing the yearly total thus far to 324,000. The news took analysts by surprise, and along with rising oil prices, helped push stocks down by three percent on all three major American exchanges and re-ignited talk of a possible recession.
President Bush: Veto Rhetoric vs. Fiscal Reality (05/28/2008)
Although Congress has not yet begun to consider any of the appropriations bills that will finance the federal government in FY 2009, the White House threatened to veto Democratic spending bills — even before any details were unveiled. With the flurry of veto threats late in his presidency, President Bush appears to be attempting to erase seven-plus years of reckless fiscal management of the federal government with token gestures that feign fiscal responsibility. Despite these recent actions, budget watchdogs say the Bush legacy on fiscal policy will be one of irresponsibility, inattention to detail, and futility.
War Supplemental Bill Awaits Final House Approval (05/28/2008)
When Congress returns from its Memorial Day recess, the House will take up the Senate's $250 billion supplemental war spending proposal. After the Senate added on $165 billion for war funding to the House's bill (which contained no money for the wars), it also tacked on some $10 billion in additional non-defense discretionary spending above the House's level of $21.1 billion. Although similar to the House version, the Senate's bill differs in a few key aspects, and the House will have to approve the Senate version or continue negotiating by amending it and passing it back to the upper chamber.
House Relentless in Pursuing Contracting Reforms (05/28/2008)
In the last several weeks, the House has continued its efforts to address federal contracting reform. With bills stalling in the Senate, the House has begun to attach various reform provisions to legislative vehicles that are more likely to be enacted into law this year. Marrying these proposals to the war supplemental bill and the Defense Authorization bill, for example, greatly increases the chances these important reforms will be implemented in 2008.
Gas Tax Holiday Would Yield Little for Consumers (05/13/2008)
Increasing gasoline prices have spurred federal lawmakers to propose policies designed to help consumers at the pump. One such proposal that has garnered considerable attention is a "gas tax holiday." Unfortunately, this proposal would do little for consumers because it would be unlikely to lower the price of gas.
House Foreclosure Legislation Meets GOP Ambiguity (05/13/2008)
Despite a worsening housing crisis across the country, Congress continues to move slowly to enact legislation intended to ease the burden for homeowners. On May 8, the House adopted comprehensive legislation (H.R. 3221) that would seek to reduce foreclosures in the face of an administration veto threat issued just days before. But Senate negotiations between the chair and ranking member of the Banking, Housing, and Urban Affairs Committee have gone on for weeks, with no deal in sight. Most members' eagerness to pass a bill to address the crisis before Memorial Day has thus far been thwarted by key GOP leaders in Congress and some in the Bush administration.
Congressional Hearings Explore Contracting Waste, Fraud, and Abuse (05/13/2008)
The Senate Democratic Policy Committee (DPC), the political arm of the Democrats in the Senate, has been holding a series of investigatory hearings concerning contracting problems during the Iraq war. The series of hearings has been aimed at increasing accountability and oversight of the federal contracting process, particularly related to the reconstruction of Iraq and the increased outsourcing of key military functions during the war.
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