We commend for your consideration the testimony presented at today's Senate Budget Committee hearing on S. 2063, the Bipartisan Task Force for Responsible Fiscal Action Act of 2007, by William Novelli, CEO of AARP.

Here's a teaser:

The federal revenue base has eroded over the past seven years. Federal revenues dropped by nearly 5 percent of GDP in only four years (between 2000 and 2004) and spending increased by 1.5 percent of GDP 4 sending the budget from a surplus of 2.4 percent of GDP in 2000 to a deficit of 3.6 percent of GDP in 2004. Although revenues recovered somewhat in 2005 and in 2006, they are still well below their peak of 2000, and below levels needed to finance our increasing domestic and global commitments. The tax code contains a multitude of tax provisions that automatically convey benefits, similar to spending entitlements, but they have very different distributional effects...

The Senate is debating the Labor-HHS-Education appropriations bill today (and probably tomorrow), and Sen. Wayne Allard has introduced a disturbing amendment that would automatically cut the budget of any program that was given an "ineffective" PART rating by the Office of Management and Budget. Under Allard's amendment, any program that is listed as "ineffective" under the PART would be automatically cut by 10 percent, with the amount cut used to pay down the national debt. To see which programs would be cut, see this list of "ineffective" programs on the ExpectMore.gov website: programs rated ineffective. The list includes Even Start, the Perkins loan program, vocational education grants, Upward Bound, the Workforce Investment Act programs for Migrant and Seasonal Farmworkers and Youth, the Substance Abuse Prevention and Treatment Block Grant, and the Healthy Community Access program, among others.

But there is a larger issue at play here than where you come down on these programs or the PART itself (and you should come down against it). Congress is granted the authority to appropriate public funds under the Constitution, not the executive branch. Enacting this amendment would transfer that authority to the executive branch, and more specifically to a number of unelected public employees whose sole job is to carry out the policy preferences of the president. Why would any Senator want to vote to give him or herself less power?

What's more, imagine the degree or manipulation of future PART scores for programs covered under this bill if this administration (or any future one) knew a rating of "ineffective" would bring an automatic 10 percent cut. Something tells me we would start to see a whole lot more "ineffective" ratings for programs in the Departments of Education, Labor, and Health and Human Services.

A vote on the amendment is likely later today or tomorrow morning. Please take 5 minutes to call your Senators offices to tell them to vote no on the Allard amendment to the Labor-HHS-Education bill.

From the good folks over at Angry Bear and Econospeak, a little common sense about the deficit: it's not really going down.

The general fund deficit, that is. You see, Social Security revenues are in surplus, and a whole lot of money is being taken out of the flush Social Security trust fund to pay for current government services. This surplus has tremendously contributed to the declining unified deficit, the figure that gets most media attention. See this graph for a good representation.

But Social Security revenues are for, well, Social Security, and under current law they must be paid back to beneficiaries when Social Security is no longer in surplus. So in a way, the government has been borrowing all these new revenues from future Social Security beneficiaries- hence adding to the general fund deficit.

Another way to think about it is that we're adding to future responsibilities to pay for expenditures now. When the bill comes due, the government will probably have to borrow money, raise taxes, or squeeze money out of programs (including perhaps Social Security).

So what are we now buying with the Social Security trust fund? Well, about $200 billion for tax cuts for the rich, and about $170 billion for the wars in Iraq and Afghanistan. Without these expenses, the unified deficit would be in surplus, and the general fund deficit would be near 2001 levels.

Under the Bush fiscal policy, the rich have unquestionably gotten richer, and that has had opportunity costs for everyone else. But now we're seeing the first step towards a massive redistribution of wealth the old fashioned way- taking from the workers subject to the payroll tax and giving to rich people and the beneficiaries of the wars.

It is done: the deficit for FY2007 was $161 billion. Strangely, the President has yet to proclaim "mission accomplished" for "reducing" it from the inflated estimate he gave in his budget- $244 billion. Perhaps he isn't bragging because he didn't reduce it (or perhaps not).

If it wasn't for his many fiscally irresponsible policies, there'd be no deficit at all. Take for example, oh i don't know, the wars in Iraq and Afghanistan. $170 billion was appropriated for them last year. If it had been offset, there would be no deficit. And that's just one of the many fiscally reckless decisions made over the last 6 years.

Imagine a world where there is no deficit. Picture the budget balance, the debt reduction, the low low interest rates...well, having any trouble picturing it? That's because a great deal of that money wouldn't have been put towards deficit reduction. It likely would have been spent on social and economic programs. There's no guarantee, of course, but there's a pretty good chance, Congress being in different hands and all.

Folks, this war isn't just going to paid "by our children" and all that racket: we're paying for it now, in all the spending that just isn't happening. Money that could have been spent on opportunities, security and living standards for lower and middle income folks is being sunk on our foreign adventures and all its beneficiaries. War has opportunity costs.

One wonders if the Bush administration's fiscal incompetence wasn't so incompetent after all. After all, competence is only a measure of achieving goals, whatever they may be. If we assume its goal was to redistribute government finances, it performed rather competently.

CBO Director Peter Orszag spoke at a conference on evidence-based medical reform and the long term fiscal challenge yesterday. The entire conference had interesting speakers, particularly Prof. Elliott Fisher. Very interesting stuff.

NEWS ITEM: 8. Which political party, the (Democrats) or the (Republicans), do you trust to do a better job handling The federal budget deficit? Democrats: 52; Republicans: 29. [This Washington Post-ABC News poll was conducted by telephone September 27-30, 2007, among a random national sample of 1,114 adults.]

The world is topsy-turvy. The party of tax-and-spend now polls better among Americans than the party of the budget barber (cut-cut-cut!) on the issue of fiscal responsibility. House Budget Committee ranking member Rep. Paul Ryan (R-WI) [inadvertedly] sheds light on why Americans have diminishing trust in his party's ability to control deficits:

Technically speaking, [Democrats] may be coming to the floor with pay-go compliant bills, but under any reasonable read of these bills they are eviscerating the spirit of their pay-go rules and they are putting us on much more dangerous fiscal course... It's dangerous to this country and it's dangerous to our fiscal security to lull people into thinking they're actually being fiscally prudent and conservative when they're doing the opposite. [Citing sunsets and SCHIP as an examples,] Congress is going to be facing a situation in 2012, where in June five million children will lose all their health insurance. Congress will extend that. That's $41 billion out the door right there.

So in 2001 and 2003, Mr. Ryan, you voted to send $2 trillion right out the door, not stopping for a minute to think about how you'd pay for it? Whose world is topsy-turvy?

Not much to disagree with in E.J. Dionne's column on the war tax today. I wanted to highlight this passage, though:

Would conservatives and Republicans support the war in Iraq if they had to pay for it?

That is the immensely useful question that Rep. David Obey (D-Wis.), chairman of the House Appropriations Committee, put on the table this week by calling for a temporary war tax to cover President Bush's request for $145 billion in supplemental spending for Iraq.

The proposal is a magnificent way to test the seriousness of those who claim that the Iraq war is an essential part of the "global war on terror." If the war's backers believe in it so much, it should be easy for them to ask taxpayers to put up the money for such an important endeavor.

This is fiscal responsibility at a pretty basic level. If we want something, we ought to pay for it.

Now, things get much more complicated when you turn that principle into policy. For instance I think PAYGO is useful but in practice it sometimes doesn't make any sense. I mean, when the Bush tax cuts lapse, should we seriously not consider it a tax increase? PAYGO says we shouldn't.

But acting according to this basic principle shows that we have the courage of our fiscal convictions. If we really believe in increasing government's role in the economy, we shouldn't be afraid to pay for it. Sure, conservatives have made the political environment inhospitable to tax increases. We can recognize that, but we shouldn't whine about it. They need to be challenged, debated and faced down. Otherwise, we'll always be afraid, and I find it hard to imagine any major changes ever happening.