Focus on Budget and Debt

Focus on Budget and Debt

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In a November 18 USC/Los Angeles Times poll, Californians were asked about options for reducing the state’s $25 billion budget deficit. An overwhelming 70 percent of voters said they thought the state’s budget problems could be solved by only cutting waste and inefficiency and oppose cutting health or education programs.

Also on November 18, Princeton economist Uwe Reinhardt explained why higher taxes will be necessary to fix the budget.

On November 18, the International Monetary Fund published a working paperwhich suggested that private consumption might rise as a result of fiscal tightening by government, thus mitigating the impact on economic growth.

On November 17, John Maggs of the Politico reported that House Republicans are blocking the reappointment of Doug Elmendorf as director of the Congressional Budget Office in order to get someone in that position who will rubber stamp their proposals.

Also on November 17, the Bipartisan Policy Center issued a deficit reduction plan developed by Pete Domenici, a Republican who previously served as chairman of the Senate Budget Committee, and Alice Rivlin, a Democrat who was director of the Office of Management and Budget under Bill Clinton.

And on November 17, the Congressional Budget Office published a study of public spending on transportation and water infrastructure. It finds that spending at all levels of government was $356 billion in 2007 or 2.4 percent of GDP. This was a decline of 6 percent in inflation-adjusted terms over 2003.

A November 17 NBC News/Wall Street Journal poll had several questions on budget issues. Question 16 found that two-thirds of voters in the recent congressional elections supported candidates favoring cuts in federal spending. However, in question 32a, 70 percent of people said they were uncomfortable with the idea with actually cutting spending.

In a November 16 statement, Sen. Richard Lugar (R-Indiana) criticized the idea that banning congressional earmarks will reduce spending. It will not, he says, because earmarks don’t increase spending, they only change its allocation.

On November 16, the MacArthur Foundation released a poll showing that 60 percent of voters believe that the national debt should be reduced only through spending cuts, with 35 percent favoring a combination of spending cuts and tax increases. Just 5 percent said the debt should be reduced only through tax increases.

Also on November 16, the International Monetary Fund published a working paper that examined the problem of corporate debt. It warned that in major economic downturns the government is often forced to rescue heavily indebted corporations, and suggested that their debts may need to be considered contingent government liabilities in calculating the magnitude of government debt.

And on November 16, the Center on Budget and Policy Priorities released a study that is highly critical of the Simpson-Bowles budget plan.

I last posted items on this topic on November 16.

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.