The Congressional Budget Office (CBO) released its latest figures on the long-term finances of Social Security.
The CBO began releasing its reports in 2004 and continued this tradition on an almost annual basis through this year. Slightly different than "The Long-Term Budget Outlook" (Long-Term), these long-term projections focus specifically on the revenues and outlays of the Social Security program and occasionally use different assumptions. One of the most significant ways that this Social Security outlook differs from the Long-Term outlook is that the former assumes a lower level of Social Security revenue.
As the reader probably knows, the Social Security program is primarily funded through payroll taxes. There are varying levels of concern about the effects of the retirement of Baby Boomers, and how this might pose a strain on the system. While the system's revenues currently outweigh its spending, the CBO estimates that this trend will begin to reverse, tapping into the Social Security trust fund. By 2043, the CBO estimates that the trust fund will be exhausted.
However, these lower levels of revenue are based on the assumption that non-taxed health care benefits will grow to represent a greater portion of a worker's compensation. As the health debate recently highlighted, health care costs continue to rise and many employers are spending more on health care instead of wages. Since health care benefits are currently not taxed, if health care costs continue their trend, this will result in lower payroll tax revenue for Social Security. When the health care debate resumes this fall, keep an eye on how this may affect Social Security.
The report also notes that the current recession will lower revenues but does not deem it the major challenge to the long-term viability of Social Security.
Image by Flickr user peretzpup, used under a Creative Commons license.
(Jocelyn Yin* 08/10/09; 0 comments)As the Senate finishes up a few important matters before the August recess, including a Cash-for-Clunkers vote, it's time to take a look at what else is going on in regular Senate business. Unfortunately, the Senate is behind schedule, and it remains unlikely that all appropriations bills will be resolved prior to the start of the new fiscal year on Oct 1.

Of the twelve bills, four have been passed by the full Senate, seven more have been marked up by their respective subcommittees and voted on by the Appropriations Committee while the Defense spending bill still needs to be marked up. If Senate is not able to get through the remaining bills in a timely manner, then the Senate will have to employ a continuing resolution and potentially an omnibus spending bill. While congressional leaders tend to try and avoid omnibus spending bills, it's clear that this year's environment and health care-related legislation are tying up a lot of of Congress' attention and resources.
In the meanwhile, the four bills that were already approved (Agriculture, Energy & Water, Homeland Security, Legislative Branch) by the full Senate now move to conference negotiations, where representatives from the House and Senate try to reconcile any differences between House and Senate appropriations bills.
Track appropriations bills here.
CQ($$): Senate to Take Up Appropriations Bills in September
(Jocelyn Yin* 08/06/09; 0 comments)The "Cash-for-Clunkers" (C4C) program will get an addition infusion of money, this time from stimulus funds. Passed in June, the program's purpose was to use rebates to subsidize car purchases and with the launch of the program this month, it seems Congress underestimated demand by just a little bit. Fortunately, this is a good problem for Congress, which has been accused of spending stimulating money too slowly - the House responded by passing HR 3435, which will allocate $2B from PL111-5 to the program.
The program provoked mild controversy earlier this year when Congress was debating the war supplemental bill. There were other aspects of the bill that stirred much greater debate, such as funding for the International Monetary Fund, but some legislators felt that C4C itself did not belong in a bill whose purpose was to fund foreign policy objectives. Aimed at "clunkers", or cars with lower fuel efficiency, the program provided $3500-$4500 in vouchers for purchases of new, more fuel efficient cars. The program officially kicked off on July 27th, although purchases starting from July 1st could qualify for the rebates. The U.S. Department of Transportation, which manages the program, began to raise concerns that cars were being purchased faster than the paperwork could be processed, ultimately leading to the temporary halt of the program.
The original version of the bill that narrowly passed the house (226-202, largely among party lines with 30+ Democrats voting against the bill) contained incentives valued up to $4.5B but this amount was later scaled back to $1B. The newest $2B allocation passed much more easily, 316-109, and calls for reallocating unused Energy Department loan guarantees that were contained in the original stimulus bill. The Senate will likely pick up the legislation next week, where there may be some objection to providing more subsidies to the auto industry. Given the success of the program, legislators are hoping to introduce new requirements, such as greater fuel efficiency or rebates for low-income communities. It remains to be seen whether Congress will be able to replicate this approach with other stimulus dollars.
For more details about the program, go to the site that the government set up.
CQ($):House Adds $2B to 'Cash for Clunkers'
Image by Flickr user youngthousands, used under a Creative Commons license.
(Jocelyn Yin* 07/31/09; 2 comments)
As Congress hits the home stretch before the traditional August recess, it's time to see what Congress has been up to...

As usual, the House is moving along with its bills, leaving the big one (Defense) for last. It should be noted that the House Appropriations Committee recently increased discretionary budget authority by $133 billion, of which $128.2 billion was for defense spending. The bulk of the appropriations work now falls to the Senate, where they will likely continue to tussle over items which could face presidential veto, such as F-22s. Other outstanding, but related items include the healthcare reform and the transportation reauthorization efforts.
As always, you can track the appropriation process here.
(Jocelyn Yin* 07/28/09; 0 comments)This afternoon, OMB Watch submitted a letter to all members of the House of Representatives, encouraging them to support the "Statutory Pay-As-You-Go Act of 2009" ("PAYGO"). Introduced by House Majority Leader, Rep. Steny Hoyer (D-MD), the bill is a crucial first step towards returning to a culture of responsible spending.
In short, the concept of PAYGO typically uses the threat of sequestration (i.e. automatic spending reductions when there are proposed tax cuts or spending increases that are not offset by reductions elsewhere.) The revised version that the House will vote on includes some key changes to the bill that was originally introduced:
The House is expected to vote on PAYGO on Wednesday. For more information on PAYGO from Rep. Hoyer's office, click here.
(Jocelyn Yin* 07/21/09; 0 comments)Today, four House Democrat leaders, including Rep. Barney Frank (D-MA) and Rep. David Obey (D-WI), released a strongly worded letter that expresses their displeasure with President Obama's use of a signing statement to reassert his right to ignore the conditions placed on the IMF funding for purposes of conducting foreign policy.
The funding was included as a part of the recent passage of the War Supplemental bill and was one of the most contentious elements of the bill. Some of the conditions were attached to the funding in order to garner enough votes for the bill's passage. Some of the elements include:
Among other things, the bill required the Treasury Department to oppose loans to nations that have supported terrorism, force the World Bank to pay more attention to workers’ rights, increase oversight of the IMF, and push for greater climate change reduction efforts and more transparency at both organizations.
While it is not unusual for a president to hold this stance, particularly as it relates to foreign policy, past presidents have been charged with using signing statements to alter the intention of legislated mandates. This latest signing statement is another reminder of the Bush administration, which was often accused of abusing the intent of signing statements. As a result, this may affect the President's future ability to garner funding for the IMF, World Bank, or other types of institutions of similar missions, which are typically the center of ideological disagreements regarding foreign policy.
CQ ($$): Obama Following Bush Example, Democrats Complain
(Jocelyn Yin* 07/21/09; 0 comments)PAYGO legislation continues to move through Congress and may come up for a vote as soon as next week.
Added: CBO responds to Rep. Paul Ryan's request for analysis of the proposed policy.
Added 7/17: Access the latest information and version of the bill here.
House Democratic leaders appear to be pushing the legislation partly due to the timing of the health care debate. If passed, the House leaders can point to PAYGO to deflect some of the criticisms regarding the cost of proposed health care reforms. House Republicans are displeased that the legislation may be rushed to a vote without committee debate as well as provisions in the legislation that would provide notable exceptions. As a whole, the Senate seems less likely to push for immediate action on the legislation - it remains to be seen whether any substantive debate will happen before a vote on health care reforms or the August recess.
(Jocelyn Yin* 07/16/09; 0 comments)Last week, the House Appropriations Committee approved the 2010 fiscal year Financial Services spending bill. Along the way, one of the amendments that failed to make the cut was to "enact into law H.R. 1557 (the “Securing America’s Future Economy Commission Act”)". This amendment would've created a 16-member commission charged with creating recommendations to reduce the country's long-term debt. With a maximum of four members of Congress, this commission would have had the power to create legislation that would be considered by the House and Senate.
While a failed amendment embedded in an appropriations bill usually isn't newsworthy, it's possible that rising public concern about the nation's long-term debt
obligation might eventually lead to increased support for such a proposal. Both H.R. 1557 and last week's amendment were introduced by Frank Wolf (R-VA). Debt commission proposals are hardly new and are typically championed by fiscal conservatives and the defeat of last week's amendment is evidence of the partisan nature of the debate. On the campaign trail, Obama indicated that he was against the idea of a commission that could potentially circumvent the power of Congress. With public growing increasingly concerned about the implications of current economic policy on long-term debt, the Administration may need to do something, even if it is symbolic, to show that it is similarly concerned.
As this proposal is written, the commission would consist of the Director of the OMB, the Secretary of Treasury, and 14 other voting members that would be appointed by the majority and minority leadership in Congress. (The Comptroller General of the U.S. and the Director of the CBO would be non-voting members.) The commission would be able to make write legislation that attaches a timer for Congress to act. If Congress does not submit its own legislation within 90 days after receiving the commission's recommendations, then:
a motion to proceed to the consideration of the legislation shall be highly privileged and shall not be debatable, and a motion to reconsider the vote by which the motion is disposed of shall not be in order. (Sec 13.b.1.C)
While nudging (or shoving) Congress to act may not necessarily be bad thing, one has to wonder about giving privileged legislative power to a commission that consists primarily of members who are not elected by voters. Granted, it would seem pointless to create a commission that only had the power to make non-binding recommendations but using the appointment system to create the commission greatly reduces the appointees' accountability to the public.
In addition to the accountability issue, critics of this type of commission say that the primary purpose of this type of legislation is to reduce entitlements. While this remains to be seen, the Chair of the Appropriations Committee, Dave Obey, maintains that this type of legislation does not belong in an Appropriations bill. Supporters claim that the commission would force Congress to deal with potentially politically unpopular problems.
A similar Senate bill, S. 1056 was introduced two months ago by Sens. Voinovich (R-OH), Isakson (R-GA), and Lieberman (I-CT). The Senate version provides similar wording and some minor differences in the composition of the commission. Both bills remain in committee, although there will likely continue to be efforts to insert the language into other legislation.
To track other budget deficit and national debt-related bills, click here.
Image by Flickr user mjpeacecorps, used under a Creative Commons license.
(Jocelyn Yin* 07/15/09; 0 comments)On July 8th, Peter R. Orszag, the Director of the Office of Management and Budget, wrote a letter to Reps. George Miller (D-CA), Charles Rangel (D-NY), and Henry Waxman (D-CA), to express the Administration's support for the policy changes that have been discussed thus far. After commending their efforts thus far to make policies deficit-neutral, Orszag writes that these changes are not enough.
In his opinion (and therefore the Administration's), the proposed deficit-neutral policies are only the beginning:
I commend you for proposing delivery system reforms that will begin the process of transforming our health system so that quality is improved, cost growth is contained, and waste is reduced. Though these reforms may not achieve immediate or scored savings, they do emphasize quality and value...it would be desirable to build upon these measures with additional steps that will help make our health care system sustainable for generations to come.
The letter points to Medicare reform as a specific opportunity for change:
We recommend that you consider additional savings from Medicare and Medicaid disproportionate hospital payments and further delivery system reforms, including changes to the process through which Medicare policies are set.
Orszag remains consistent to his testimony at the PAYGO hearing and continues to emphasize that Medicare policy is one of the biggest obstacles to long-term debt reduction. Perhaps learning from the Clinton years, it's clear that the Administration would love for Congress to take on the heavy-lifting associated with any type of Medicare reform. Given how Medicare "reform" equates "benefit reduction" in the mind of a formidable constituency, it remains to be seen whether Democrats will take on this politically unpopular topic in a meaningful way.
(Jocelyn Yin* 07/13/09; 1 comment)As Congress returns to work this week, it's time to take a look at the status of various appropriations bills.

Not surprisingly, several big-ticket items are still left on the House's to-do list, probably because Congress is trying to figure out how to fit massive health care and transportation spending proposals in with this year's discretionary spending. The House continues to push ahead with its schedule, with the hopes that it will be able to work through most of the remaining issues and avoid an omnibus spending bill this year. Subcommittee and full committee markups continue this week in both the House and Senate.
Up-to-the-date status tracking can be found here.
(Jocelyn Yin* 07/07/09; 0 comments)