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History Lessons from Past Deficit-Reduction Packages

November 16, 2011

Compromise didn’t use to be a dirty word. With revenue increases a major sticking point in the congressional “supercommittee’s” effort to cobble together a budget plan, we looked at past deficit-reduction packages and found that revenue increases were part of nearly every major package in the 1980s and 1990s, under Democratic and Republican administrations alike.

Government Revenues in U.S. Are Low by International Standards

November 2, 2011

I have already noted that government spending in the United States (as a percent of gross domestic product, or GDP) is below average for a developed country, using data from the Organisation for Economic Co-operation and Development (OECD). Those data also show that government revenues in the United States are low by international standards.

No Need for Social Security Fright on This Halloween

October 31, 2011

The Washington Post says that because Social Security will pay out more in benefits this year than it collects in payroll taxes, the program has gone “cash negative” and will add $46 billion to the deficit in 2011. This claim, which we’ve dealt with before, ignores a huge source of income to Social Security — interest on its portfolio of Treasury bonds — to make it sound like the program faces imminent crisis.

SSI Benefits Vital to Severely Disabled Children and Their Families

October 26, 2011

A House Ways and Means subcommittee will hold a hearing tomorrow on Supplemental Security Income (SSI) benefits for disabled children to consider the program’s future. SSI provides monthly cash assistance to people who are disabled, blind, or elderly and have little income and few assets; in September 2011, 8 million people collected SSI benefits — including 1.3 million children under 18.

Here are some important things that lawmakers should know about SSI for disabled children:

Social Security COLA Is Back for 2012

October 21, 2011

It’s official: recipients of Social Security (as well as SSI and certain other programs) will get a 3.6 percent cost-of-living adjustment (COLA) in January 2012. For most enrollees, higher Medicare premiums will offset some of that increase, but other enrollees will actually see their premiums decline. COLAs preserve the purchasing power of elderly or disabled beneficiaries and are a crucial part of the safety net — something policymakers should recognize as they debate tying benefit levels to a different measure of inflation.

Is Government Spending Really 41 Percent of GDP?

October 18, 2011

Chris Edwards from the Cato Institute generated some buzz recently by stating at a Joint Economic Committee hearing that government spending in the United States is 41 percent of gross domestic product (GDP). Although that’s right — by one yardstick for one year — it exaggerates the situation. Edwards used data from the Organisation for Economic Co-operation and Development (OECD), which makes several adjustments to the U.S. data that pump up the government’s percentage from levels we’re used to seeing. And Edwards picked a year when that figure is unusually high because of a weak economy.

Here’s what you need to know to put the numbers in context:

Elderly and Disabled Refugees Face SSI Cutoff

September 29, 2011

Up to 4,600 impoverished elderly or disabled refugees will lose their Supplemental Security Income (SSI) benefits on October 1, when a temporary provision of law expires. Several hundred more will lose their benefits each month thereafter. Congress should act quickly to avert the severe hardship that this small but vulnerable group will face.

To Reduce the Debt, Follow the Law

August 25, 2011

As my colleague Jim Horney has explained, the Congressional Budget Office’s new budget estimates show that deficits and debt are on a downward path over the next decade if we simply follow the laws already on the books. That means there’s no need to impose large spending cuts in the near term that go beyond those in the Budget Control Act, which implemented the recent debt-limit deal.

Alarmist Stories Misportray Social Security Disability Insurance

August 23, 2011

Social Security’s disability-insurance program is forecast to run short of money in 2018, more than six years from now, and policymakers can plug the hole for several decades by reallocating some taxes from the related old-age program as they have done in the past. But that’s not the impression you’d get from some alarmist reports. “Social Security disability on verge of insolvency” blares a Fox News story, a theme echoed by other outlets (see here and here).

Debt Limit and Long-Term Deficits Are Separate Issues

July 21, 2011

Policymakers are playing with fire as they risk a default on U.S. federal obligations because of a dispute over how to reduce budget deficits. The nation’s long-term fiscal path is unsustainable, and policymakers should address it in a timely and responsible way. But as we explain in a new report, legislators should not hold the debt limit hostage to approval of deficit reduction measures that satisfy various ideological or political concerns. Policymakers cannot let the government default.

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