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Tag Archives: Budget & Debt

Make Section 2201 of the CARES Act Work in Practice

Section 2201 of the CARES (Coronavirus Aid, Relief, and Economic Security) Act authorizes direct payments, “Recovery Rebates,” to individual households and families.  The Section is called the “2020 Recovery Rebates for Individuals” and is estimated to total $300 billion–the sum of $1,200 to individuals ($2,400 for joint returns) plus $500 for each qualifying child. The amount is reduced for taxpayers earning over $75,000 annually (or $150,000 for joint returns) with no payments for...

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Structural, Not Cyclical, Budget Reform

Today I published a column in Project Syndicate on fiscal policy. I am positive about pro-growth effects of the tax reform in the 2017 tax act and of the greater use of cost-benefit analysis in the recent regulatory reform effort. And the recent trade deals—the USMCA and “phase one” with China—take away some threats of trade wars. But there is still a fiscal policy problem due to the growing federal budget deficit and debt. Fortunately, this problem can be addressed in way that...

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Congressional Testimony on the Costs of Rapidly Growing Government Debt

Yesterday I testified at the Committee on the Budget of the House of Representative.  John Yarmuth chaired, and Steve Womack was the ranking member. The Committee titled the hearing “Reexamining the Economic Costs of Debt,” which was quite different from the title “Why Congress Must Balance the Budget” of a hearing of the same House Committee at which I testified only a few years ago in 2015. At the earlier hearing I showed that basic economic theory grounded in real world data implies...

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A Decade of July 4th Debt Explosions: Are They Getting Less Spectacular?

Starting a decade ago, I’ve charted on Independence Day the most recent long-term projection of the federal debt by the Congressional Budget Office (CBO). Over the years the chart has continued to look much like the Fourth of July fireworks, as you can see here 2010, 2011,  2012, 2013, 2016, 2017, 2018 . The CBO just released its 2019 Long-Term Budget Otutlook  on June 25, and so it’s time for a July 4th update. The chart of the total deficit on the front cover of the report...

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Still Exploding After All These Years

For the past nine years on Independence Day (see here and here for example), I’ve plotted the most recent long-term projection of the federal debt by the Congressional Budget Office as a reminder that it’s as explosive as the Fourth of July fireworks seen all over America. The CBO just released its latest long-term forecast, and while their shortening of the horizon and eliminating the alternative fiscal scenario may blur the underlying problems, the message, like the fireworks...

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What’s Past is Prologue. Study the Past

Each year the Wall Street Journal asks friends for their favorite books of the year. Two years ago I chose Thomas Sowell’s history of income distribution in Wealth, Poverty, and Politics and Brian Kilmeade’s history on Thomas Jefferson and the Tripoli Pirates. Last year I chose The Man Who Knew, Sebastian Mallaby’s biography of Alan Greenspan, and War by Other Means by Bob Blackwill and Jennifer Harris. This year I chose two amazingly relevant  books on U.S. economic history: John...

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Seeing Through the Fog of Federal Budget Forecasting

Every summer since 2010 I’ve charted the latest Congressional Budget Office (CBO) long-term projection of the federal debt, noting the similarity with the Fourth of July fireworks. But during these years, the CBO has changed its procedures several times, fogging up comparisons over time and lessons from experience. Starting with my first post in 2010 on this topic, CBO reported projections of the debt as a percentage of GDP going out 75 years based on their “alternative fiscal...

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CBO’s New Way to Evaluate Fiscal Consolidation Plans

In its recently released budget outlook, the Congressional Budget Office projects that this year’s federal deficit will increase by 35% from last year to $590 billion, and that the debt will rise from $14 trillion to $23 trillion by 2026, or from 77% to 86% of GDP. Clearly it’s time for a fiscal consolidation plan. Yet we’re not hearing about any such a plan on the campaign trail. If anything candidates are proposing more, not less, federal government spending because many people think...

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An Economic and Security Policy Blueprint for America

A timely new policy book, Blueprint for America, edited by George P. Shultz, is being released today online for the first time. The release coincides with the start of platform writing by Republicans this week and Democrats the following week, and then by national political conventions and the general Presidential campaign.  But the book is purposely meant to be non-partisan as ten contributors with experience in economics, national security, finance, health care, energy, and education...

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Debt Explosion Still Looks Like July 4th Fireworks

Six years ago, on July 4, 2010, in a post on this blog, I plotted the CBO’s projection of the ratio of federal debt to GDP because it reminded me so much of the Fourth of July fireworks. What does it look like now? The most recent CBO long term projection was made in June of last year (CBO is later than normal this year).  For some reason, however, the CBO no longer reports debt levels higher than 250% of GDP, as it did in the past, though it does publish estimates of the primary...

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