Budget

On Thursday, September 30, 2010, the Committee for a Responsible Federal Budget convened a policy forum, “Getting Specific: How to Fix the Budget.” The event brought together policymakers and a wide array of the nation’s foremost fiscal experts to discuss how we can get specific in fixing the federal budget. Also at the event, CRFB released two policy papers for a new series entitled Let’s Get Specific, offering a plan to reform Social Security and another to help further control rising health care costs.

Former OMB director Peter Orszag is off to a great start in his new career as a columnist. The expiring tax cuts pose a significant economic and policy conundrum (and less importantly, a real political one), given the weak economy and bleak fiscal outlook. Extending the cuts only temporarily and then letting them expire in 2013 — as he suggests — is a clever solution.

President Obama, his economics team, and the Chairman of the Federal Reserve continue to display a curiously detached view of the economy.  Just the other day, the president indicated that “it took nearly a decade to dig the hole that we’re in” as if that provided an excuse for the lassitude he continues to display in regard to the problem of unemployment.

In July 2008, in a memorandum for the Obama campaign team and later published in Challenge,  I wrote as follows:

If the above analysis is correct, the political capital of the new presidency risks being depleted, quite quickly, in a series of short-term stimulus efforts that will do little more than buoy the economy for a few months each. Since they will not lead to a revival of private credit, every one of those efforts will ultimately be seen as “too little, too late” and therefore as ending in failure.

You are absolutely right when you argue that state budget cuts are doing lasting damage to California.

It is plain foolish to cut the school year, lay off thousands of teachers, increase university tuition, undermine the safety net, and close state offices on Fridays. And you're also right to argue that there need to be new revenues on the table to reverse the cuts to these important priorities.

Last week, the Congressional Budget Office (CBO) released its updated Budget and Economic Outlook, which provides their latest baseline projections for the coming decade. Under current law, CBO estimates debt to rise from about 60 percent of GDP currently, to nearly 70 percent by 2020. However, this current law baseline assumes that a number of current policies scheduled to expire under current law will actually do so, a highly unlikely scenario. Absent policy change,  the debt is likely to grow far more quickly  

The Social Security trustees released their updated projections last week detailing the financial health of the nation's retirement system.

Bottom line: The program is running a deficit this year, and is projected to run growing deficits after 2015. But it will have money in the trust funds to pay full benefits until 2037.

Yesterday, the Social Security and Medicare Trustees released their 2010 report on the financial status of both programs. Both programs remain on unsustainable paths.

Is California beyond repair? A sizable number of Golden State citizens have concluded that it is. Incessant budget crises plus a government paralyzed by partisan gridlock have led to demands for reform, even a constitutional convention. But what, exactly, is wrong and how can we fix it?