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Home :  Federal Budget & Tax : 
Federal Budget & Tax:      News     Blog     Background    



Wednesday, May 28, 2008

Hi (Economist) Mom!

I just wanted to alert readers of a new blog we've been reading: EconomistMom - "where analytical rigor meets a mother's intuition."

Authored by economist and mom Diane Lim Rogers of the Concord Coalition, the blog's "particular focus [is] on the economics of fiscal responsibility," but Rogers also writes about broader issues.

She's been on a roll lately, explaining the trap of the "largest tax increase in history" rhetoric, expressing frustration about the 'extenders' tax cuts, and righteously high-fiving Steven Pearlstein for his column that connects the dots of the various economic woes of the day.

Good stuff.



Posted by Craig Jennings, 11:06:43 AM



Thursday, May 22, 2008

Surrealistic Surplus

The unanticipated hiatus between this week's conference approval of the FY09 budget resolution and its formal adoption by Congress next month gives us some time to examine the assumptions underlying the deficit/surplus projections in both the resolution and the budget submitted by the President in February in depth prior to passage.

It is presumably de riguer in modern budgetmaking to show how we can get from here to the promised land of budget surplus, presto. Indeed, both documents project sizable federal government surpluses in 2012 and 2013. The budget resolution projects surpluses for those years in the hundreds of billions of dollars.

But today, the Center on Budget's released an Analysis of the Conference Agreement that revisits the resolution's assumptions and provides a sobering reality check on its projected surpluses/deficits, factoring in more realistic assumptions regarding:

  • the extension of portions of Bush tax cuts of 2001 and 2003
  • maintaining defense expenditures at current levels
  • supplemental appropriations for the wars in Iraq and Afghanistan *
  • increased interest expense

and concludes that both the president's budget and the budget resolution underestimate the cumulative projected 2008-13 surpluses/deficits by close to $800 billion.

We strongly support adoption of the budget resolution for its marked and numerous improvements over the president's provisions for FY09. But without saying so in as many words, the CBPP analysis makes amply clear that the projected 2012 and 2013 surpluses rest on somewhat fanciful assumptions. The analysis makes the implicit point that more credible assumptions in support of out-year deficit/surplus projections would help restore some badly needed integrity to the budget process.

-----------

* The Senate just approved the largest emergency supplemental appropriations bill in U.S. history, adding approximately a quarter of a trillion dollars to this amount. The House is expected to follow suit tomorrow.



Posted by Dana Chasin, 05:57:19 PM



Condition of State Budgets Continue to Decline

The state of state budgets continues to deteriorate around the country. The Center on Budget and Policy Priorities released another update yesterday to their increasingly disturbing analysis, which now shows that 31 states are anticipating budget problems in 2009, with 27 projecting a budget shortfall. We continue to reiterate that this is pretty bad news as state budgets are far less flexible than the federal budget and usually are legally prohibited from running a deficit. From the CBPP update:

31 states anticipate budget problems. Of those:
  • 27 states and the District of Columbia faced or are facing $47 billion in combined '09 budget shortfalls. Arkansas and Michigan join this list.
  • 2 states face '09 deficits, but have released no further information. (Connecticut joins this list. Louisiana and Michigan leave.)
  • 2 other states project budget gaps for 2010 and beyond. (Connecticut leaves this list.)

CBPP: 27 STATES FACE TOTAL BUDGET SHORTFALL OF AT LEAST $47 BILLION IN 2009



Posted by Adam Hughes, 11:27:53 AM



House, Senate Set to Approve Budget Resolution

The House and Senate are set to vote on the FY 2009 Congressional Budget Resolution today. OMB Watch sent letters of support for the resolution to both the House and Senate Budget Committees yesterday (House letter, Senate letter). The letters highlight the positive (and negative) aspects of the resolution, as well as the recent historical difficulty of enacting a budget resolution during an election year (hasn't happened since 2000).

The resolution is good, but not great. Hopefully its enactment will help develop momentum for Congress to continue to draft and pass more fiscally-responsible, responsive fiscal policies in 2008 and beyond.

Related Materials:
Text of Conference Agreement
Statement of Conference Managers
Conrad/Spratt Joint Press Release
SBC: Budget Resolution Conference Agreement Overview
HBC: Highlights of the FY2009 Budget Resolution



Posted by Adam Hughes, 09:02:59 AM



Wednesday, May 21, 2008

GAO: The Nation's Long-Term Fiscal Outlook, April 2008 Update

The Government Accountability Office released an updated report on the nation's long-term fiscal outlook last week.

The outlook is still bleak, but the GAO is getting on the same page as the CBO in pointing toward rapidly rising health care costs as the prime cause of the gargantuan fiscal gap.

Although Social Security is a major part of the fiscal challenge, it is far from the biggest challenge. Spending on the major federal health programs (i.e., Medicare and Medicaid) represents a much larger, faster growing, and more immediate problem. In fact, the federal government's future obligations for Medicare Part D alone exceed the unfunded obligations for Social Security.


(click to enlarge)



Posted by Craig Jennings, 11:39:40 AM



Thursday, May 08, 2008

Monthly Budget Review: April, 2008

Receipts from tax returns filed by the April 15 deadline were about 6 percent higher than such receipts last year, about what CBO anticipated when it prepared its most recent budget projections in March. Nevertheless, the federal government recorded a deficit of $151 billion for the first seven months of fiscal year 2008, CBO estimates—$70 billion more than the shortfall incurred in the same period last year.

...

Because of the large inflow of tax payments due by April 15, the government runs a budget surplus in April. This year, that surplus was $160 billion, CBO estimates, or $17 billion less than the surplus recorded in the same month last year. That reduction was due to the effect of the calendar on the timing of certain outlays.

...

Through April, withholding of income and payroll taxes rose by about $49 billion (or nearly 5 percent), reflecting continued increases in wages and salaries. Those receipts grew at a slower rate than the nearly 7 percent increase recorded in both 2006 and 2007.

CBO: Monthly Budget Review


Posted by Craig Jennings, 03:48:18 PM




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