Showing posts with label deficits. Show all posts
Showing posts with label deficits. Show all posts
Monday, April 8, 2013
From the Washington Post: Why do people hate deficits?
A counter-intuitive read. We don't like deficits, but do we really know enough to say why? And are they really as cataclysmic as we think?
Sunday, April 7, 2013
A handy dandy revenue and outlay chart - only slightly dated
Expect more soon. This was put together prior to the fiscal cliff negotitations.
Wednesday, February 20, 2013
Sequester Week Begins
I've postponed providing links to info on the sequester, but as we wade into the legislative and executive branches and are approaching a look at economic policy and the budgetary process, its time to look at it - plus, the cuts which had been extended a few weeks back are set to start happening very soon.
For definitional purposes - when used as a noun "sequester" means "a general cut in government spending."
Click here and here for general background. The story begins in 2011 when some in Congress began expressing concern over the large deficits that began following the crash in 2008. Conflict emerged between those who wanted to deal with the deficit immediately (and then debated among themselves about whether this is best done by cutting spending or raising taxes) and those who believed that the cuts were premature and should be delayed until after the economy stabilized. Supporters of immediate spending cuts threatened to not raise the debt ceiling - among other demands - unless the cuts were made. This conflict ultimately led to the US's credit rating being downgraded by one of the agencies that does this sort of thing. The debt ceiling was ultimately raised in the Budget Control Act which established a committee that would develop a proposal for dealing with the deficit, and established that in the event that the committee could not do so - or the committee's proposal was not adopted, across the board cuts would be made to the federal budget. This is the sequester. Since the committee's proposals were not adopted - the cuts are now set to be made. That is what is going to occur on March 1st. So this is the culmination (unless an extension is made) of a process going back almost two years.
Hopefully this is an adequate summary. Here are random stories dealing with the economics and politics of the current dispute.
- Here is National Journal's look at the politics of the deficit battle.
- This Washington Post article links to four separate studies that point out where the cuts will fall and how many jobs are likely to be lost due to them. They pick up over time and affect mostly discretionary spending. Texas stands to lose a significant amount if defense spending in the state is cut.
- The two men responsible for creating the original deficit reduction proposal have released a second version.
- Politico reports that members of Congress - of both parties - are working to ensure that whatever cuts happen do not happen in their districts. This points out one of the major problems associated with cutting spending. It is not an abstract exercise. At some point the cuts impact real people and real programs. This provides political support to stop the cuts - which makes deficit reduction just that more difficult.
- The NYT explains how the cuts are likely to happen. They won't all be at once, so they won't all be felt immediately.
- A conservative Republican is concerned that excessive focus on spending cuts right now will hamper economic growth, and that the best way to deal with the deficit is to focus primarily on growing the economy.
- In a twist, here's an argument that the economy is improving - albeit slowly - and the deficit is shrinking. So there is no need to worry excesively about the debt. The primary economic problem is "long-term unemployment, stagnant wages, [and] a slow-to-recover housing sector," not the deficit. Fix those first and the deficit fixes itself.
Expect more as the deadline approaches.
For definitional purposes - when used as a noun "sequester" means "a general cut in government spending."
Click here and here for general background. The story begins in 2011 when some in Congress began expressing concern over the large deficits that began following the crash in 2008. Conflict emerged between those who wanted to deal with the deficit immediately (and then debated among themselves about whether this is best done by cutting spending or raising taxes) and those who believed that the cuts were premature and should be delayed until after the economy stabilized. Supporters of immediate spending cuts threatened to not raise the debt ceiling - among other demands - unless the cuts were made. This conflict ultimately led to the US's credit rating being downgraded by one of the agencies that does this sort of thing. The debt ceiling was ultimately raised in the Budget Control Act which established a committee that would develop a proposal for dealing with the deficit, and established that in the event that the committee could not do so - or the committee's proposal was not adopted, across the board cuts would be made to the federal budget. This is the sequester. Since the committee's proposals were not adopted - the cuts are now set to be made. That is what is going to occur on March 1st. So this is the culmination (unless an extension is made) of a process going back almost two years.
Hopefully this is an adequate summary. Here are random stories dealing with the economics and politics of the current dispute.
- Here is National Journal's look at the politics of the deficit battle.
- This Washington Post article links to four separate studies that point out where the cuts will fall and how many jobs are likely to be lost due to them. They pick up over time and affect mostly discretionary spending. Texas stands to lose a significant amount if defense spending in the state is cut.
- The two men responsible for creating the original deficit reduction proposal have released a second version.
- Politico reports that members of Congress - of both parties - are working to ensure that whatever cuts happen do not happen in their districts. This points out one of the major problems associated with cutting spending. It is not an abstract exercise. At some point the cuts impact real people and real programs. This provides political support to stop the cuts - which makes deficit reduction just that more difficult.
- The NYT explains how the cuts are likely to happen. They won't all be at once, so they won't all be felt immediately.
- A conservative Republican is concerned that excessive focus on spending cuts right now will hamper economic growth, and that the best way to deal with the deficit is to focus primarily on growing the economy.
- In a twist, here's an argument that the economy is improving - albeit slowly - and the deficit is shrinking. So there is no need to worry excesively about the debt. The primary economic problem is "long-term unemployment, stagnant wages, [and] a slow-to-recover housing sector," not the deficit. Fix those first and the deficit fixes itself.
Expect more as the deadline approaches.
Thursday, January 10, 2013
From the Washington Post: Before you talk about the deficit, take a look at these charts
A WP writer looks at what was and was not accomplished in the recent fiscal cliff deal, which is the first of what may turn out to be several separate deals on deficit reduction.
The fiscal cliff deal did much less to reduce the deficit than either political party had promised: It included $750 billion in deficit reduction, a far cry from the $1.8 trillion to $2.5 trillion deficit proposals that the White House and House Speaker John Boehner had put forward earlier in the debate. That’s prompted deficit hawks to insist that much more still needs to be done in the next phase of budget negotiations.
But the Jan. 1 fiscal cliff deal represented just one portion of the deficit reduction that’s been going on since 2011. The Center for American Progress calculates that President Obama and Congress have successfully enacted $2.4 trillion in deficit reduction since the beginning of fiscal year 2011, which began in September 2010.
About one-quarter of that comes from revenues (primarily the fiscal cliff deal) and almost two-thirds from spending cuts: In it’s research, CAP totals up $585 billion in discretionary cuts from the fiscal 2011 budgets passed under a GOP-controlled House and a lame-duck Democratic Congress and a GOP-controlled House. The debt-ceiling debate brought $860 billion in discretionary spending cuts through the Budget Control Act, which CAP calculates is a “10.6 percent reduction from inflation-adjusted 2010 spending levels.” Combined with the fiscal cliff deal and accounting for interest savings, that totals $2.4 trillion in deficit reduction over the past two years, CAP concludes.
The fiscal cliff deal did much less to reduce the deficit than either political party had promised: It included $750 billion in deficit reduction, a far cry from the $1.8 trillion to $2.5 trillion deficit proposals that the White House and House Speaker John Boehner had put forward earlier in the debate. That’s prompted deficit hawks to insist that much more still needs to be done in the next phase of budget negotiations.
But the Jan. 1 fiscal cliff deal represented just one portion of the deficit reduction that’s been going on since 2011. The Center for American Progress calculates that President Obama and Congress have successfully enacted $2.4 trillion in deficit reduction since the beginning of fiscal year 2011, which began in September 2010.
About one-quarter of that comes from revenues (primarily the fiscal cliff deal) and almost two-thirds from spending cuts: In it’s research, CAP totals up $585 billion in discretionary cuts from the fiscal 2011 budgets passed under a GOP-controlled House and a lame-duck Democratic Congress and a GOP-controlled House. The debt-ceiling debate brought $860 billion in discretionary spending cuts through the Budget Control Act, which CAP calculates is a “10.6 percent reduction from inflation-adjusted 2010 spending levels.” Combined with the fiscal cliff deal and accounting for interest savings, that totals $2.4 trillion in deficit reduction over the past two years, CAP concludes.
Wednesday, January 2, 2013
The McConnell-Biden Plan passes the House
Coverage in the NYT.
Andrew Sullivan complies reactions to the deal.
Wonkblog outlines the deal and provides good links to studies about it and its consequences.
Here's another link to a summary of the bill's content. I'll highlight these later.
Spending cuts have been postponed for only two months, so we've only stepped back slightly from the cliff.
And commentators seem to have suddenly discovered that by not going over the cliff, nothing has been done substantively to deal with the deficit, and with it the ever increasing debt. The argument made by some economists is that since the economy is still weak - even if it is recovering - we would be better suited in waiting to tackle the deficit after the economy recovers.
Andrew Sullivan complies reactions to the deal.
Wonkblog outlines the deal and provides good links to studies about it and its consequences.
Here's another link to a summary of the bill's content. I'll highlight these later.
Spending cuts have been postponed for only two months, so we've only stepped back slightly from the cliff.
And commentators seem to have suddenly discovered that by not going over the cliff, nothing has been done substantively to deal with the deficit, and with it the ever increasing debt. The argument made by some economists is that since the economy is still weak - even if it is recovering - we would be better suited in waiting to tackle the deficit after the economy recovers.
Tuesday, August 30, 2011
From Wonkbook: Doing nothing is still an option
Interesting post: if Congress does nothing to change existing laws, the deficit improves. This includes not extending the Bush tax cuts.
Monday, July 25, 2011
Behind Battle Over Debt, a War Over Government
From the NYT, the battle over the debt ceiling is simply the latest battle over the larger question of the size scope and purpose of government - especially the national government.
Republicans have shown that their higher priority is not lower deficits, as it was for the party through most of the last century, but a smaller government. House Republicans in the spring passed a plan that would not balance the budget for three decades despite deep cuts in Medicare and Medicaid — largely because it also deeply cut taxes, adding debt.
For Republicans, “reducing the deficit implies tax increases, or the possibility of tax increases, and that’s not something they want to do under any circumstances because it doesn’t suit their political needs,” said Stan Collender, a longtime federal budget analyst and a partner at Qorvis Communications.
The party’s dynamic in the debt talks reflects the culmination of a 30-year evolution in Republican thinking, dating to the start of President Ronald Reagan’s administration. The change is from emphasizing balanced budgets — or at least lower deficits — to what tax-cutting conservatives have called “starve the beast,” that is, cut taxes and force government to shrink.
Republicans have shown that their higher priority is not lower deficits, as it was for the party through most of the last century, but a smaller government. House Republicans in the spring passed a plan that would not balance the budget for three decades despite deep cuts in Medicare and Medicaid — largely because it also deeply cut taxes, adding debt.
For Republicans, “reducing the deficit implies tax increases, or the possibility of tax increases, and that’s not something they want to do under any circumstances because it doesn’t suit their political needs,” said Stan Collender, a longtime federal budget analyst and a partner at Qorvis Communications.
The party’s dynamic in the debt talks reflects the culmination of a 30-year evolution in Republican thinking, dating to the start of President Ronald Reagan’s administration. The change is from emphasizing balanced budgets — or at least lower deficits — to what tax-cutting conservatives have called “starve the beast,” that is, cut taxes and force government to shrink.
Monday, July 11, 2011
Sunday, April 10, 2011
A Few Random Posts on Friday's Agreement on Appropriations
- Before Deal, Angst Over Effects of Shutdown.
- Budget Deal to Cut $38 Billion Averts Shutdown.
- Republicans and Democrats Alike Claim Successes in Averting a Federal Shutdown.
- President Adopts a Measured Course to Recapture the Middle.
- Next on the Agenda for Washington: Fight Over Debt.
- Obama to Offer Details of Plan to Reduce U.S. Budget Deficit.
- Budget Deal to Cut $38 Billion Averts Shutdown.
- Republicans and Democrats Alike Claim Successes in Averting a Federal Shutdown.
- President Adopts a Measured Course to Recapture the Middle.
- Next on the Agenda for Washington: Fight Over Debt.
- Obama to Offer Details of Plan to Reduce U.S. Budget Deficit.
Tuesday, March 8, 2011
Pimco and Primary Dealers
This post is meant to add to my collection about the bond market and their role in the budgeting process
- Wikipedia: Pimco.
- Wikipedia: Primary Dealers.
- Wikipedia: Pimco.
- Wikipedia: Primary Dealers.
Friday, February 25, 2011
Paul Burka on Texas' Structural Deficit
From Burka Blog, a neat summary of how Texas got into the current deficit mess. It's more complicated than you think.
Wednesday, February 23, 2011
How to Read a Budget
Bruce Bartlett walks through the budget. He makes the following observation about tax revenues:
According to the historical tables, federal revenues will only consume 14.4 percent of GDP this year – the lowest percentage since 1950. The postwar average is about 18.5 percent and there were many very prosperous years when revenues were considerably higher. In the late 1990s, they averaged more than 20 percent of GDP, which was a key reason why we ran budget surpluses.
The budget somewhat implausibly assumes that the ineffective Bush tax cuts will finally be allowed to expire at the end of 2012, as they are scheduled to do under current law. This causes revenues to raise to 17.9 percent of GDP in 2013, 18.7 percent in 2014, 19.1 percent in 2016, and 19.3 percent in 2016. In the long run, the budget assumes that revenues will remain at about 20 percent of GDP, even though total government spending will continue to rise to more than a third of GDP by 2080.
According to the historical tables, federal revenues will only consume 14.4 percent of GDP this year – the lowest percentage since 1950. The postwar average is about 18.5 percent and there were many very prosperous years when revenues were considerably higher. In the late 1990s, they averaged more than 20 percent of GDP, which was a key reason why we ran budget surpluses.
The budget somewhat implausibly assumes that the ineffective Bush tax cuts will finally be allowed to expire at the end of 2012, as they are scheduled to do under current law. This causes revenues to raise to 17.9 percent of GDP in 2013, 18.7 percent in 2014, 19.1 percent in 2016, and 19.3 percent in 2016. In the long run, the budget assumes that revenues will remain at about 20 percent of GDP, even though total government spending will continue to rise to more than a third of GDP by 2080.
Tuesday, February 15, 2011
Some Random Posts Commenting on Obama's Proposed Budget
A few comments seem universal. 1 - The cuts aren't deep enough to impact the deficit meaningfully. 2 - The cuts are drawn mostly from the small percentage of the budget that is non-defense discretionary spending. 3 - This is the first step of a political process that will involve a great deal of bargaining and posturing. No one wants to stake a position now that will prove politically problematic next November.
- Stress Testing the Budget.
- Andrew Sullivan is unimpressed here, and here. But he isn't sure Republicans will take advantage of an opportunity.
- David Brooks.
They'll be much more to come.
- Stress Testing the Budget.
- Andrew Sullivan is unimpressed here, and here. But he isn't sure Republicans will take advantage of an opportunity.
- David Brooks.
They'll be much more to come.
Tuesday, February 8, 2011
The Latest From Bipartisan Talks on Reducing the Budget Deficit
From Politico:
As key senators met Monday evening on a bipartisan deficit reduction plan, President Barack Obama faced increased pressure to articulate a strategy for himself and his party, already so edgy about spending cuts that many Democrats seem prepared to ignore the consequences for policy.
Indeed, Obama and House Republican leaders share this much in the coming budget wars: Both are racing to catch up with the train. And just as the president must contend with panicky Democrats, Speaker John Boehner (R-Ohio) faces tea party freshmen wanting to more than double the $32 billion in reductions now proposed by the GOP for the last seven months of this fiscal year.
As key senators met Monday evening on a bipartisan deficit reduction plan, President Barack Obama faced increased pressure to articulate a strategy for himself and his party, already so edgy about spending cuts that many Democrats seem prepared to ignore the consequences for policy.
Indeed, Obama and House Republican leaders share this much in the coming budget wars: Both are racing to catch up with the train. And just as the president must contend with panicky Democrats, Speaker John Boehner (R-Ohio) faces tea party freshmen wanting to more than double the $32 billion in reductions now proposed by the GOP for the last seven months of this fiscal year.
Thursday, February 3, 2011
The Economist is Confused by Conflicting Stances Taken Towards the Deficit
Story here:
I'M HAVING trouble writing about the GOP effort to reach a compromise over whether to cut $100 billion out of the 2011 budget, or just $50-60 billion. My problem is that I can't really write about the advantages or disadvantages of one or another version of the cuts when the entire enterprise appears completely senseless to me. The notion, apparently, is that continuing unemployment and slow growth in America are caused by the federal budget deficit. So shrinking the deficit by $50-60 billion will presumably lead to faster economic growth and renewed hiring. Yet exactly one month ago, these same Republican leaders eagerly agreed to a tax-cut package that raised the federal deficit for 2011 by over $400 billion. Even if there were a plausible argument that unemployment and lethargic growth today stem from the current budget deficit, any impact congressional leaders hope to see from their spending cuts will add up to no more than noise around the edges of their tax cuts.
I'M HAVING trouble writing about the GOP effort to reach a compromise over whether to cut $100 billion out of the 2011 budget, or just $50-60 billion. My problem is that I can't really write about the advantages or disadvantages of one or another version of the cuts when the entire enterprise appears completely senseless to me. The notion, apparently, is that continuing unemployment and slow growth in America are caused by the federal budget deficit. So shrinking the deficit by $50-60 billion will presumably lead to faster economic growth and renewed hiring. Yet exactly one month ago, these same Republican leaders eagerly agreed to a tax-cut package that raised the federal deficit for 2011 by over $400 billion. Even if there were a plausible argument that unemployment and lethargic growth today stem from the current budget deficit, any impact congressional leaders hope to see from their spending cuts will add up to no more than noise around the edges of their tax cuts.
Wednesday, January 26, 2011
Friday, January 7, 2011
Health Care Repeal and the CBO
The House moved towards a mostly symbolic vote in favor of repealing health care. The real dispute seems to be about the costs of repeal and whether House Republicans want to accept -- which they don't -- the Congressional Budget Offices' analysis that repeal will increase the deficit.
Bruce Bartlett warns against undermining the CBO.
Bruce Bartlett warns against undermining the CBO.
Monday, November 15, 2010
Jobs? Yes / Health Care? Yes / The Deficit? No
Only 4% of respondents to a CBS Poll want Congress to focus first on the deficit.
Friday, November 12, 2010
The Report From The National Commission on Fiscal Responsibility and Reform
This week, the National Commission on Fiscal Responsibility and Reform unveiled a preliminary version of their proposal to reduce the deficit over the next few years. It has yet to be approved by the entire commission, and once approved (if it is approved) it has no effect unless approved by Congress. The commission was created by an executive order by Obama.
- Ezra Klein's analysis.
- Proposed spending cuts can be found here.
- NYT Story.
- Times Topics: National Commission on Fiscal Responsibility and Reform.
- Ezra Klein's analysis.
- Proposed spending cuts can be found here.
- NYT Story.
- Times Topics: National Commission on Fiscal Responsibility and Reform.
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