Focus on Budget

Focus on Budget

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On July 27, the Congressional Budget Office released a study on the risk of a financial crisis posed by a sharp rise in the federal debt. The study warns that if action on the debt is not taken until there is a crisis then almost anything done at that time will make economic conditions worse and require greater austerity than if action is taken well in advance.

In a July 26 commentary, economist Martin Sullivan urged the business community to take the lead in finding permanent solutions to the deficit problem.

On July 23, the Office of Management and Budget released its mid-session budget review.

A July 21 study from the Center on Budget and Policy Priorities is critical of the widely cited research on the limits of national debts by economists Carmen Reinhart and Ken Rogoff. The study says that Reinhart and Rogoff confuse different measures of debt and use one for the U.S. that improperly includes debts the government in effect owes to itself.

A July 14 study from the Urban Institute looked at government spending on children. It found that less than 10 percent of total government spending is devoted to children, primarily through education. On a per capita basis, the nation spends almost two and a half times more on the elderly than on children ($10,642 vs. $24,300 in 2007).

On July 8, the Committee for a Responsible Federal Budget announced the results of an online simulator in which average citizens determine how best to reduce the deficit. Among those proposals with the strongest support: eliminate “outdated” programs, cut earmarks, reduce farm subsidies, raise the normal retirement age, and reform the international tax system.

On July 7, the Center on Budget and Policy Priorities published a study of Rep. Paul Ryan’s “Roadmap for America’s Future,” a radical budget plan widely endorsed by conservatives. Despite its proposed sharp cuts in Social Security and Medicare, the CBPP analysis finds that the federal debt as a share of GDP would nevertheless rise sharply due to Ryan’s overestimation of federal revenues under his plan.

On July 2, the Congressional Research Service released an analysis of budget reconciliation procedures and the so-called Byrd Rule, which limits what measures may be included in reconciliation. (Under reconciliation, legislation may not be filibustered in the Senate.)

In a July NBER working paper, CUNY economist Ryan Edwards looks at estimates of the cost of wars in Iraq and Afghanistan. He finds that they have been understated because they didn’t fully account for veterans’ costs after the end of hostilities.

In the July issue of the Armed Forces Journal, Lawrence Korb has a commentary pointing out that rising health costs for military dependents are a key cause of higher defense spending.

On June 30, the Congressional Budget Office released its latest long-term budget forecast. It shows that the nation’s finances are in relatively good shape based on current law, but that current law would require the implementation of large scheduled budget cuts and tax increases that are politically implausible, possibly damaging economically, and perhaps unwise on policy grounds. CBO director Doug Elmendorf summarized the report in a June 30 post.

Bruce Bartlett is an American historian and columnist who focuses on the intersection between politics and economics. He blogs daily and writes a weekly column at The Fiscal Times. Read his most recent column here. Bartlett has written for Forbes Magazine and Creators Syndicate, and his work is informed by many years in government, including as a senior policy analyst in the Reagan White House. He is the author of seven books including the New York Times best-seller, Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy (Doubleday, 2006).

Bruce Bartlett’s columns focus on the intersection of politics and economics. The author of seven books, he worked in government for many years and was senior policy analyst in the Reagan White House.