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Friday, April 25, 2008
Fiscal Policy Final Exam
OK, folks, it's finals time. Two-part question. The following statement was propounded by former CBO Director Douglas Holtz-Eakin on a recent conference call in his capacity as economic adviser to one of the three presidential candidates.
In the federal budget if you provide an earmark, that money gets spent. In the way the baseline is constructed it stays in there forever. It goes up at the rate of inflation. So you could as of 2006 find in the baseline $60 billion in spending that got introduced as earmarks and exists because of that. In the years since there have been an additional $35 billion in earmarks. So we are now at the point if you stare at a federal discretionary spending budget you find a $100 billion that wouldn't be there is it wasn't for earmarks.
1. True or false?
The candidate in question has said that $60 billion dollars a year can be saved from the federal budget by reducing earmarks. According to the Wall Street Journal on March 14 in Home Alone on Earmarks, "[i]n fiscal 2008, there were 11,747 appropriation earmarks totaling $16.8. That is down from a peak in 2005, when there were nearly 13,500 earmarks totaling almost $19 billion."
2. Who is that presidential candidate?
Posted by Dana Chasin
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