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



Thursday, June 21, 2007

Post Article Gives Praise Unto Walker

Praise be budget nutcase David Walker. His Word is holy, and those who speak it become holy, i.e. writers for the Washington Post.

Today's epistle expresses almost zero skepticism about any of Walker's claims about the "entitlement" crisis. It is not for the Washington Post to question the Word, though the author gets a little credit for including a paragraph with a quote from a heretic.

In all seriousness, the problem is simple: Walker, et al, lay claim to the Truth about The Budget. They are Sensible and Reasonable people who want the Best for America. It would be absurd- no, defamatory!- to accuse them of exaggeration, or having ideological blinders, or just plain being wrong. They want America to know the Truth.

There's no point in having an inclusive discussion with different perspectives. Everyone on the fiscal wake-up tour agrees with each other- and they are the High Priests of Budget Truth.

Then again, it should be easy for the High Priests to expose the budget heretics and their wicked ways. Why not bring them on the tour- what are the High Priests so afraid of?



Posted by Matt Lewis, 11:40:15 AM



Tuesday, June 19, 2007

What is the President Smoking?

I stumbled across a copy of the president's weekly radio address this morning and, for the life of me, can't figure out what Mr. Bush is smoking. The address summarized Bush's record on fiscal policy, stating outrageous claims like the president's tax cuts were a success, that Bush has enacted fiscal discipline in Washington, and that government spending imperils economic growth. These statements are all pretty much wrong, but the worst part of the speech was this:

Over the past three years, we have met the urgent needs of our Nation while holding the growth of annual domestic spending close to one percent - well below the rate of inflation...By keeping taxes low and restraining Federal spending, we can meet my plan to have a balanced budget by 2012.

Let's take a look at how well the president has met the urgent needs of our nation. Just recently, we've come across the following reports:

  • New Hampshire may have to cut food and other assistance for the elderly;
  • Hunger in America could be significantly curtailed if we'd only invest a little more;
  • Backdoor cuts to Medicaid have drawn the ire of state Medicaid directors. Michigan is one state that has cut its Medicaid program;
  • Delays and insufficient funding in the FY 06 spending bills threatened cuts to veterans health care, the Social Security Administration, the Food Safety and Inspection Service, the Small Business Administration, the FBI and DEA, Amtrak, and low-income housing programs - all of which have been operating on shoestring budgets over the past several years;
  • The Walter Reed scandals appear to be a budget issue at its core with privatization of government services pursued to save money over delivering quality services;
  • A growing number of sinkholes are increasingly becoming a problem around the country - mostly due to underfunded or neglected federal wastewater management programs;
  • The Food and Drug Administration has largely blamed budget cuts and a lack of resources for their poor responses to recent food safety problems;
  • The Center for Disease Control stated last week they lacked funding to put a plan in place to respond to a large tuberculosis outbreak;
  • The president's own Millennium Challenge program, which provides funding to foster the development of poor countries, was running $400 million to $1 billion behind in January, 2007;
  • Even funding for Iraq reconstruction has been insufficient and mismanaged;

Unfortunately, this is just the tip of the iceberg of unmet needs around the country the president doesn't even seem to be aware of. What's more, the president has presided over the largest increase in the national debt in history, as it has increased from $5.95 trillion to close to $9 trillion during his presidency. At this point, it's a little late for him to be shooting for a balanced budget in 2012 - 3 years after he leaves the White House. I'm afraid the damage has already been done.





Posted by Adam Hughes, 02:07:57 PM



Wednesday, June 13, 2007

More Meditations on the Hamilton Project

One last thought on the Hamilton Project- I believe they do not serve the cause of fighting inequality.

Stay with me on this one. Take this statement:

Industrial policies and direct market interventions can try to change the before-tax distribution of income. But ultimately such policies harm the economy—for example, excessively high living-wage laws can result in large job losses for low-skilled workers.

Factually, I believe the statement is wrong. Government intervention in markets can promote the common good. Everything that's known about health care provision is a case in point.

As for its politics, the statement gets to the heart of what's wrong with the Hamiltonian philosophy, which posits that government is wasteful but nice, and the market is cruel but efficient- the "Mommy-State and Daddy-Market" philosophy, one that seems to dominate the economics profession from Brookings all the way to George Mason University.

Hamilton's version of this story is less crazy than others. But it is fundamentally the same- it denigrates government and puts the market on a pedestal. Worse, all varieties of the message are legitimized when one comes from the "non-partisan" Brookings Institute.

Look, this kind of behavior just isn't helpful. It might have been cool in the '80s and the '90s, but it's not cool anymore. Our country now has big problems to face up to- inequality, the health care crisis, global warming, etc.- that can't be solved with tax breaks. It's going to take vigorous collective action, and our best collective institution is and will probably always be the federal government. Belittling it like the Hamiltonians do only serves the interests of people who don't want to do anything about these problems (a point made well in this interesting article on inequality by James Lardner).

That's why it's hard to swallow the Hamiltonian's professed interest in reducing inequality. If they really did, they would scale back their assault on government. But they don't take seriously anyone who believes in governmental efficacy, so why even bother with them?



Posted by Matt Lewis, 05:47:07 PM



Tuesday, June 12, 2007

Blue Dogs Seek to Seize Fiscal Responsibility Mantle

The Washington Post reports today that the Democratis Blue Dog Coalition plans to introduce legislation shortly to

impose caps on some spending, enshrine pay-as-you-go rules in federal law and authorize automatic spending cuts to enforce them ... amend the U.S. Constitution to require a balanced budget and to create an array of budget provisions that would focus more attention on what it sees as pork-barrel spending.

While setting a goal of producing a balanced budget is meritorious, the approach advocated here is problemmatic. It may, for example, gratuitously restrict policy flexibility, particularly where circumstances such as war, natural disaster, etc., arise.

These issues will be discussed at a panel discussion sponsored today by the quarterly journal Democracy, entitled "Balanced Budgets: Holy Grail or Overrated?" featuring former Treasury secretary Lawrence Summers; Clinton economic adviser Gene Sperling; former Virginia governor Mark R. Warner; and Jeff Faux, founder of the Economic Policy Institute, a District think tank.



Posted by Dana Chasin, 12:44:31 PM



Thursday, June 07, 2007

Monthly Budget Review: June, 2007
CBO's Monthly Budget Review has been released:
The federal government incurred a deficit of $152 billion during the first eight months of fiscal year 2007, CBO estimates, $75 billion less than the shortfall recorded through May of last year. In comparison with receipts collected during the same period in 2006, revenues have risen by about 8 percent; outlays have grown by less than 3 percent. CBO expects that the government will end 2007 with a deficit of between $150 billion and $200 billion.


Posted by Craig Jennings, 09:19:41 AM



Monday, June 04, 2007

GAO Still Not Pleased With Long-Term Fiscal Outlook

The Government Accountability Office (GAO) has released the latest version of their "The Nation's Long-Term Fiscal Outlook" report today. As with previous reports, GAO finds little change in the long-term outlook and warns that current fiscal policies are unsustainable (duh!).

Despite re-stating the important fact that current policies are unsustainable, the report also helps to distinguish what is driving long-term imbalances. Instead of lumping Social Security and Medicare together and labeling the problem as an "entitlement" one, the GAO report highlights health care costs generally as the major obstacle. The relevant paragraph from the report states:

Although Social Security is a major part of the fiscal challenge, it is far from our biggest challenge. Spending on the major federal health programs (i.e., Medicare and Medicaid) represents a much larger and faster growing problem. In fact, the federal government's obligations for Medicare Part D alone exceed the unfunded obligations for Social Security. Over the past several decades, health care spending on average has grown much faster than the economy, absorbing increasing shares of the Nation's resources, and this rapid growth is projected to continue. For this reason and others, rising health care costs pose a fiscal challenge not just to the federal budget but to American business and our society as a whole.

Under the leadership of Comptroller General David Walker, the GAO continues to bring an important and under appreciated voice to long-term fiscal policy debates. The short report is worth a read:

GAO: The Nation's Long-Term Fiscal Outlook





Posted by Adam Hughes, 04:54:10 PM




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