Updated November 12, 2008
The weak economy is generating great fiscal distress among states. This Policy Points provides a snapshot of the budget shortfalls, weak revenues and other indicators of this distress.
Controversial Provision of Doctor Fix Bill Would Improve Medicare and Help Keep Bill Deficit-Neutral
July 7, 2008
When the Senate returns from its July 4th recess, it is expected to reconsider H.R. 6331, the Medicare doctor fix bill that failed to advance by one vote last month. Despite overwhelming bipartisan support in the House (which passed it by a 355-59 vote), the bill stalled in the Senate, largely due to objections from the Administration and many Senate Republicans to a provision concerning Medicare Advantage.
"Tax Extenders" Bill the Latest Test of Congress's Commitment to Fiscal Discipline
June 10, 2008
"Tax extenders" legislation now before the Senate has become the latest battleground in the intensifying debate over whether Congress should abide by its "pay-as-you-go" rules and pay for new tax and budget measures so they don't expand the deficit.
Experts Agree That Capital Gains Tax Cuts Lose Revenue
April 18, 2008
Contrary to misleading claims from Wednesday nights presidential debate, capital gains tax cuts lose revenue over the long run.
Four Helpful Hints for States Dealing With Deficits
March 12, 2008
States, facing their worst fiscal problems in five years, should consider the following four policy options when dealing with deficits: (1) protect their revenues from the effects of federal tax changes, (2) tap their "rainy day funds," (3) don't rule out revenue increases, and (4) avoid "stimulus" tax cuts.
Despite Some Problems, Senate Finance Committee Measure More Effective as Stimulus Than House Bill
February 1, 2008
Some have charged that the Senate, by failing to simply rubber-stamp the House-approved stimulus package, is delaying the injection of stimulus into the economy. This charge is incorrect. Some also have criticized the specific stimulus measures approved by the Senate Finance Committee. In fact, in two major areas extending unemployment insurance and the design of the tax rebate the Finance Committee package is a clear improvement over the House bill in terms of providing swift and effective stimulus for the economy.
Many Missed Opportunities for Congress and the President in 2007
December 20, 2007
Over recent months, federal policymakers considered measures to expand childrens health coverage, strengthen Medicare, make new investments in areas like education and medical research, and extend tax relief while maintaining fiscal discipline. Congress and the President ultimately failed to agree on the first three of these items, however, and the fourth (Alternative Minimum Tax relief) was enacted only after Congress bowed to the Presidents demand that it not be paid for.
Whats Behind the Budget Battles Between the President and Congress?
December 7, 2007
In his conflicts with Congress over issues from taxes to childrens health insurance to appropriations bills, the President is casting himself as the defender of fiscal responsibility. His actions, however, tell a different story.
Bipartisan Legislation to Strengthen Childrens Health Care Focuses On Low-Income Children
October 5, 2007
The childrens health care bill President Bush recently vetoed would provide coverage by 2012 to 3.8 million children who would otherwise be uninsured. The vast majority of these children have low incomes, as the Congressional Budget Office (CBO) has shown.
The Week's Top Five Myths Regarding Congressional Efforts to Strengthen Children's Health Coverage
July 27, 2007
Myth #1: The bills before Congress to renew the State Childrens Health Insurance Program (SCHIP) would vastly expand program eligibility.
Myth #2: The House bill would expand childrens health coverage by cutting health coverage for seniors.
Myth #3: Strengthening public health programs is an inefficient way to reduce the ranks of the uninsured much less efficient than the Administrations proposed tax break for the purchase of private insurance because most of the people who would gain public coverage already have insurance.
Myth #4: Allowing states to use SCHIP funds to cover low-income parents violates the programs goal of expanding coverage among children.
Myth #5: Strengthening SCHIP would advance a Washington-run, government-owned health system.
Now Comes The Hard Part: Can Congress Live Up To Its New Commitment To Fiscal Responsibility?
March 23, 2007
In a fundamental change from recent congressional budget practices, the House Budget Committee and the full Senate have approved budget plans that restore pay-as-you-go discipline and require that the costs of tax cuts or entitlement expansions be fully offset. In addition, contrary to some misleading claims, the House and Senate plans neither require large tax increases nor call for dramatic increases in spending.
Addressing Some Misconceptions about the New Senate Budget Plan
March 16, 2007
The new Senate budget resolution is a bigger break with recent congressional budget practices and a larger step in the direction of fiscal responsibility than some initial media reports suggest.
Examining the President's Recent Claim About Tax Cuts, Revenues, and the Economy
January 23, 2007
In a January 3 Wall Street Journal opinion piece, President Bush made the following assertion: It is also a fact that our tax cuts have fueled robust economic growth and record revenues. He argued that the budget should be balanced by 2012 but that his tax cuts should be fully exempt from actions to achieve that goal and should be made permanent for the sake of both the economy and the budget. This Policy Points examines his claim.
The Phantom Federal Revenue "Explosion"
Updated October 27, 2006
The mid-year budget estimates released this week by the Office of Management and Budget (OMB) forecast higher revenues and a lower deficit for fiscal year 2006 than OMB had projected earlier this year. The Administration has greeted the projections as evidence that its tax cuts are working, by generating strong economic and revenue growth. The President even suggested that the tax cuts are paying for themselves i.e., that they have not reduced revenues at all. The reality, however, is quite different.
The 109th Congress' Track Record on the Budget: Making Deficits Worse
Revised October 10, 2006The 109th Congress took our already large projected budget deficits and passed legislation that will make them larger. The legislation increased projected deficits from 2005 (the year the Congress convened) through 2011 (when the current five-year budget window ends) by a total of $452 billion. Moreover, the budget deterioration over the past six fiscal years 2000 to 2006 is the largest deterioration for any six-year period in the past half century.September 1, 2006Government data issued this week from the Census Bureau on poverty, incomes, and health coverage and from the Commerce Department on the shares of national income going to workers and corporations provide fresh evidence that many middle- and lower-income Americans are not sharing in the gains of the economic recovery.August 1, 2006The new House proposal does not represent a legitimate compromise on the estate tax. Instead, House leaders have sought to win Senate support for gutting the tax by attaching an increase in the minimum wage, extension of popular expiring tax provisions and new special-interest tax breaks for the timber and mining industries.The Coming Estate-Tax Showdown: Repeal, So-Called Compromise, Or Real Reform?
Revised June 5, 2006
The estate tax has received increasing public attention in recent weeks, but two critical facts remain poorly understood: the tax has shrunk considerably in recent years, and several so-called compromise proposals being pushed in the Senate would cause nearly as much budgetary damage as full repeal.
New Tax-Cut Legislation Means Windfall Benefits for the Few, Larger Deficits for the Nation
May 12, 2006
The tax-cut reconciliation agreement approved this week by Congress will provide windfall benefits to those at the top of the income scale but little for most other Americans. Although the agreements supporters claim that the 2003 cuts in capital gains and dividend taxes helped spark strong economic growth, the data show that this economic recovery has been weaker than the typical post-World War II recovery.
Administrations Budget Fails Tests of Fiscal Responsibility, Fairness, and Openness
February 17, 2006
The budget would increase the deficit over both the short run and the long run. It proposes $191 billion in reductions in a broad array of domestic discretionary and entitlement programs, but those reductions would not be used to reduce the deficit. Instead, they would be used to offset part of the $285 billion in tax cuts the President proposes.
Some Key Facts Concerning The Presidents Budget Priorities For 2007
February 3, 2006
In this weeks State of the Union, President Bush outlined the priorities of the Administrations forthcoming budget. Several key facts necessary to understanding the impact of the Presidents proposals, however, were not mentioned in the speech.
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Do the Facts Support the President's Claims about the Economy?
January 6, 2006
In his speech in Chicago on Friday, January 6, President Bush praised the economy's recent performance and gave his policies a large amount of the credit. The fact that the economy is growing is not itself remarkable, since the American economy has always resumed growing after downturns. The critical point is that neither the economy nor the President's policies are performing as well as the President claims.
As Congress Finishes Work on the Budget, Tax Cuts and Budget Cuts Are Growing
December 9, 2005
In the name of reducing the deficit, last month the House passed roughly $50 billion in cuts over five years in entitlement programs such as Medicaid, child support enforcement, student loans, and food stamps. Some House Members are calling for an across-the-board cut in discretionary (i.e., non-entitlement) programs as well. This cut, which would affect everything from Head Start to environmental protection to education to housing assistance for the poor, would come on top of cuts in discretionary programs already approved during the normal appropriations process.
House Budget Bill, With Almost All Of Its Low-Income Cuts Intact, Moves On To Conference With Very Different Senate Bill
November 18, 2005
On November 17, House leaders made several changes to the House budget reconciliation bill, some of them designed to garner the support of Members who were concerned that low-income families would bear a large share of the bills cuts. CBO analyses show, however, that these changes reduce the total level of cuts that most directly affect low-income Americans by only about two percent. The other 98 percent of the low-income cuts remain.
Shared Sacrifice, Stronger Leadership Needed in Aftermath of Katrina
September 16, 2005
The President's speech from New Orleans on September 15 contained inspiring language and some promising proposals. Missing, however, was a statement of the need for shared sacrifice to cope with the fiscal implications of Hurricane Katrina, which could add as much as $200 billion in costs (plus billions more in added interest payments on the debt), even as the nation faces severe long-term budget problems.
This Year's Deficit Picture Looks Better, But the Long-Term Deficit Picture Doesn't
July 15, 2005
In its Mid-Session Review released this week, the Office of Management and Budget (OMB) projected that the 2005 deficit will be $94 billion lower than the level it projected when it released the President's budget in February $333 billion rather than $427 billion primarily because of higher-than-expected revenues. This is welcome news, but the reduction in this year's deficit from a very large one to a large one has little bearing on the nation's shaky long-term fiscal foundation.
Why The President's Social Security Plan Closes Just 30 Percent Of The Long-Term Shortfall
May 13, 2005
The Presidents Social Security Plan would close just 30 percent of the total Social Security shortfall over the next 75 years, much less than is commonly thought.
What You Might Not Have Learned about the President's Social Security Plan
April 29, 2005
Because Social Security reform is a complex issue, and because some of the President's remarks in his April 28 press conference left room for misinterpretation, viewers of the press conference may have been left with an inaccurate impression of the President's Social Security proposals.
Trustees' Report Shows Little Overall Change In Social Security's Finances
April 1, 2005
The latest report by the Social Security trustees is slightly more pessimistic than last year's report about the program's finances over the next two decades, and slightly more optimistic about the program's longer-term outlook. On balance, the report shows little overall change from last year.
What Is and Isn't in the President's Budget
February 11, 2005
The 2006 budget the White House released this week is a statement of the Administration's priorities. The Administration is responding to continuing high deficits not by reassessing any of the tax cuts that have contributed substantially to the deficits, but solely through reductions in a wide array of domestic programs. Indeed, the budget proposes new tax cuts, as well as making existing tax cuts permanent.
Social Security Debate Off to a Misleading Start
Updated January 14, 2005
In its campaign to build public support for private accounts in Social Security, the White House has said repeatedly in recent weeks that the program is in financial crisis. Meanwhile, the Administration is defending the so-called "price indexing" proposal to close Social Security's long-term funding shortfall a proposal that may well be part of the Administration's Social Security plan against charges that it would leave retirees worse off. On both of these issues, Administration claims have been incomplete or misleading.
Emerging Issues in the Social Security Debate
December 17, 2004
At this week's "economic summit," President Bush repeated his call to create a system of private accounts in Social Security. While the President still has not endorsed a specific plan, it apparently will include large-scale borrowing. It also may include substantial cuts over time in the percentage of a worker's pre-retirement earnings that Social Security benefits replace.