Tag: Congressional Budget Office

Instead Of The Nonsense Congress Is Proposing, Here’s What I Suggest To Actually Fix The Budget Debate

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Photo by Rick Bloom.

After my multiple posts ripping (here and here) the Joint Select Committee on Budget and Appropriations Process Reform for proposing totally worthless, utterly nonsensical and transparently self-serving changes in the way Congress considers the budget, a number of people have told me to put up or shut up.

If I’m so adamant that what the committee came up with is such budget tripe, they want to know the changes I would recommend instead.

That’s a totally fair question that, as a budget wonk, I’m ecstatic about being asked, especially because it gives me the opportunity to include my picture above this post with my answers.

The main issue is simple: Despite their continued public protestations to the contrary, members of Congress don’t want to do any of the politically very painful things that responsible budgeting — like tax increases and spending reductions — sometimes require. The current budget process enables this behavior because it doesn’t force the House and Senate either to make those decisions or to take responsibility for not making them.

The only way to correct this is to create several hard-to-waive nudges/penalties. That’s what’s behind my big four proposed fixes.

1. No Budget Resolution, No Other Legislation.

Annual congressional budget resolutions were intended to force Congress to be held accountable on the deficit. Until they were created by the Congressional Budget and Impoundment Control Act of 1974, Congress voted for individual spending and revenue bills but never had to vote on a full budget that compared each year’s total spending with total revenues and, therefore, showed the deficit or surplus.

That worked until the House and Senate realized that the skies didn’t darken, lightning and thunder didn’t come down from the heavens and evil demons didn’t rise from below if they didn’t adopt a budget. There are, in fact, no political or other penalties for Congress failing or refusing to agree on a budget resolution.

My recommendation to deal with this is to change House and Senate procedures so that neither house is allowed to consider any other legislation — certainly not appropriations or tax bills but also no authorizations or even the naming of post offices — until the budget resolution conference report for the coming year is adopted. This requirement could not be waived under any circumstances and the only exceptions would be for bills that could pass with an extra-super majority of, say, 75 percent.

This will create a constituency for passing a budget resolution: every interest group, the White House and every House and Senate committee that wants Congress to do something on any other issue. The pressure on Congress both to do a budget and to do it early in the year would be intense.

I’m not naive. The way around “No Budget, No Other Legislation” will be for Congress to adopt a totally meaningless, pro forma budget that, for example, ridiculously projects a balanced budget with spending cuts and/or tax increases that are never going to be approved and with a wildly optimistic “rosy scenario” economic forecast that’s never going to happen.

If that’s what Congress does, there’s no procedural change that will make any difference whatsoever.

2. An Automatic Continuing Resolution At Half The Rate Of Inflation.

To stop government shutdowns, I suggest a variation on a proposal that has been constantly mentioned whenever the budget process is said to be broken: An automatic continuing resolution that keeps all agencies and departments operating whenever Congress and the president can’t agree on their regular appropriation by the start of the fiscal year.

My variation is the fiscal version of a Solomon-like decision. My automatic CR would fund all departments and agencies at the current level plus half the rate of inflation projected by the Congressional Budget Office. That would increase spending compared to what’s currently expected but reduce it compared to the baseline. That would be a lose-lose for everyone and an incentive to agree on the regular appropriation.

3. Eliminate Having A Separate Vote On The Debt Ceiling.

The federal government’s borrowing limit should be raised automatically to the level projected in the budget resolution. Congress having to vote on a budget that assumes a deficit and, therefore, higher borrowing and to then have to vote again on raising the debt ceiling to allow the government to borrow to that level makes no sense whatsoever. Having periodic threatened defaults over the debt ceiling is even more nonsensical.

4. Fully Fund The Congressional Budget Office.

CBO, the only truly successful part of the congressional budget process, includes the best collection of nonpartisan analysts in Washington. But CBO is understaffed and overworked. Give it the resources it needs to provide Congress with all the information good budget decisions require.

Follow Stan Collender on Twitter by clicking here at @thebudgetguy.

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New CBO Report Shows GOP Tax Bill Is The Only Reason The Deficit Is Increasing

No…The federal budget deficit definitely is not a spending problem.

In its just-released monthly budget review, the Congressional Budget Office estimated that the federal deficit for fiscal 2018, which ended a week ago on September 30, was $782 billion, a $116 billion increase over the $666 billion deficit recorded in 2017. CBO said that revenues grew by just $13 billion and so were essentially flat compared to what the government collected in 2017. Spending grew by $129 billion, a 3.2 percent increase over 2017.

It would be easy — but very very wrong — to conclude that the increased spending was the reason the budget deficit rose from 2017 to 2018. After all, revenues were about the same both years while spending was higher.

But this overly simple explanation only works if you compare revenues and outlays to what was actually collected and spent the previous year. The explanation is the exact opposite when the substantively correct comparison — to what was expected in 2018 if all tax and spending laws had remained the same — is used.

In June 2017, CBO issued its updated “Budget and Economic Outlook: 2017-2027″ report that showed federal revenues rising in 2018 under current law to $3.5 trillion (Take a look at Table 13). That means the tax bill reduced revenues this past year by about $200 billion compared to what they would have been had it not been enacted.

In that same report, outlays in 2018 were projected to be $16 billion less under current law than the amount CBO now says was actually spent last year.

In other words, the real reason the budget deficit grew from 2017 to 2018 was because revenues were substantially less than what they would have been without the tax bill. Had it not been enacted, the deficit would have dropped below $600 billion instead of rising to close to $800 billion

This is not the spin anti-federal spending activists will use. Indeed, as I’ve posted about previously, even before the tax bill and its projected $1.5 trillion revenue loss was adopted, so-called conservative interest groups such as the Heritage Foundation were pushing the narrative that higher spending was the only reason for the deficit and revenues had nothing to do with it.

The two CBO reports cited above decisively show that’s just not true.

 

Trump’s Deficit Chickens Now Coming Home To Roost

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The first of two official government reports that will be released this month showing that the federal budget deficit is soaring was issued on Monday when the Congressional Budget Office published it’s Monthly Budget Review for August.

According to CBO, the deficit through the first 11 months of fiscal 2018 was $895 billion, a $222 billion (32.8 percent) increase over the same period in 2017.

Some of the increase was the result of timing shifts, that is, spending that was made at the end of August because the first two days of September were on weekend. The deficit for the 11-month period would have been only $154 billion larger than 2017 had it not been for that.

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 The federal government typically runs a budget surplus in September so the final deficit for 2018 may be somewhat lower than the results through August. CBO said that the total deficit for the year will be close to the $793 billion estimate it made in its analysis of the Trump 2019 budget that it updated last month. That would make the year-over-year increase only 19.3 percent.

But put the number crunching wonkery aside and look at the big picture. Donald Trump, who as a candidate virtually guaranteed he would eliminate not just the budget deficit but the national debt, is doing neither.

It’s anything but fake news to say that just the opposite is true. Trump’s own Office of Management and Budget, whose primary responsibility is to protect the president’s behind on budget issues, agrees with CBO that the deficit will come close to or exceed $1 trillion a year through at least 2022.

Keep in mind that this doesn’t include spending for a space force, an infrastructure plan or a wall between the United States and Mexico. It also doesn’t include the projected $200 billion a year revenue loss from the new GOP tax bill the House will debate before the election or the additional spending that will be needed because of Hurricane Florence. And it certainly doesn’t include the lower revenues and higher spending that will happen if the economy slows below current expectations.

A combination of these things could easily cause the U.S. deficit to approach $2 trillion annually.

The next Trump deficit shoe to drop will occur next week when Trump’s own Treasury issues its own monthly report that is expected to agree with and confirm what CBO said this week.

Follow Stan Collender on Twitter @thebudgetguy

 

 

 

 

 

Bend The Knee To The Congressional Budget Office

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If you watch Game of Thrones on HBO, you know that one of the most memorable and often repeated phrases is a request that someone “bend the knee.”

(If you’re not a GOT watcher or just want a few grins, check out the video below to get the full bend the knee picture.)

What does this have to do with federal spending and revenues?

On Monday, the Congressional Budget Office will quietly issue its version of the mid-session review of the federal budget at 2 pm EDT. Keith Hall, CBO’s director, won’t stand at a podium pounding his chest about the quality of the analysis. CBO will simply let the numbers speak for themselves.

In other words, on Monday…yet again…the Congressional Budget Office will be the epitome of what a federal department or agency should be: solidly substantive, apolitical and uninterested in fame for itself.

The Congressional Budget Office is the only part of the budget process that has been a success.

CBO will issue this report after more than a year of vicious attacks from the Trump administration and its allies. Everyone from Office of Management and Budget Director Mick Mulvaney to Trump hanger-on Newt Gingrich has brutally rebuked and ridiculed CBO because its analyses did not help the White House do what it wanted to do.

Several members of the House Freedom Caucus even tried (but failed miserably) to eliminate CBO’s highly regarded budget analysis division because it didn’t produce numbers that furthered the HFC’s agenda.

Given these scurrilous attacks, CBO almost has the right to defend and promote itself, its staff and its numbers. Instead, it is stoically continuing to do its work.

That makes the Congressional Budget Office the only part of the congressional budget process that has been a success. Every other component of the budget act — especially the budget committees, reconciliation, the timetable and the commitment to getting appropriations enacted by the start of the year — has utterly failed.

For all these reasons, when it comes to the Congressional Budget Office, we should all bend the knee.

Follow Stan Collender on Twitter @thebudgetguy

Don’t Leave Just Yet…There’s so much more here:

GOP Won’t Be Able To Hide From It’s Big Deficits Before The Election After All
Trump’s Deficits Will Cause Very Serious Challenges For Multiple Generations Of Americans
Here’s What I Told NPR This Morning About The Deficit (Spoiler Alert: It’s Not Pretty)
Trump’s Economic Lies, Damn Lies And Statistics Revealed For All To See
Ryan And McConnell: Lock’em Up 
This Is Why Trump Will Shut Down The Government
Raising The Chances Of A Government Shutdown This Fall To 60%
OMB Director Mick Mulvaney Says CBO Was Right After All
You’ve Been Warned: Trump’s Trillion Dollar Budget Deficits Are Here To Stay

GOP Won’t Be Able To Hide From It’s Big Deficits Before The Election After All

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House and Senate Republicans who so far have successfully avoided talking about how their tax and spending policies are spiking the budget deficit won’t be able to pretend for much longer that the United States isn’t staring directly into a GOP-created fiscal policy abyss.

The U.S. Treasury and the Congressional Budget Office will issue separate reports just weeks before Election Day that show the actual 2018 deficit between $800 and $900 billion and the estimated 2019 deficit exceeding $1 trillion. The fiscal 2017 deficit was $665 billion.

The deficit numbers the GOP had hoped to bury at least until after the election will soon be available for all to see.

House and Senate Republicans so far have been able to avoid talking about the deficit by making a complete mockery of the Congressional Budget Act. Even though Congress is required by federal law to adopt an annual budget resolution (the only legislation all year that compares total revenues with total spending and forces representatives and senators to vote on the deficit), the GOP leadership decided early in 2018 to prevent that from happening.

No budget resolution meant no budget debate. No debate meant no media coverage. No coverage meant Republicans wouldn’t be asked to explain their votes in favor of trillion-dollar deficits when they had previously and emphatically demanded that the federal budget be balanced.

This cleverness will end when Treasury and CBO issue their reports this October in the final days of a fierce election. That will put the GOP’s breach of faith with its fiscal past on full display for all to see, report on, criticize and make snarky 280 character comments about.

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Given the Trump administration’s efforts to control the narrative on all issues and run roughshod over established rules and procedures, and given the president’s more-than-obvious belief that federal departments exist solely to do his bidding, delaying Treasury’s report until after the election would seem like something it would consider.

But while it’s possible that the White House could concoct a reason to order the report be held until after the election, Treasury’s Monthly Treasury Statement is expected, used and relied on by Wall Street. Delaying it for obvious political reasons may be a theoretical option but just isn’t likely.

In addition, the Congressional Budget Office has shown no willingness whatsoever to knuckle under to political pressure and so will almost certainly release its own Monthly Budget Review this October no matter what the Republican leadership demands it to do.

That means that the deficit numbers the GOP had hoped to bury at least until after the election will soon be publicly available.

This timing could not be worse for Republicans. Congress plans to be out of session by the time these two reports are issued so there will be no chance for the GOP incumbents running for reelection even to do something — like voting for a balanced budget amendment to the U.S. Constitution — before the election.

In addition, on top of all the recent multiple swamp-like events involving Trump former and former allies, this soon-to-be-confirmed break with long-time GOP deficit orthodoxy is almost certain to push a number of more traditional Republicans to reconsider if or how they will vote this November.

Don’t Forget To Follow Stan Collender on Twitter @thebudgetguy

Wait…Don’t Leave Just Yet…There’s So Much More:

Trump’s Deficits Will Cause Very Serious Challenges For Multiple Generations Of Americans
Here’s What I Told NPR This Morning About The Deficit (Spoiler Alert: It’s Not Pretty)
Trump’s Economic Lies, Damn Lies And Statistics Revealed For All To See
Ryan And McConnell: Lock’em Up 
This Is Why Trump Will Shut Down The Government
Raising The Chances Of A Government Shutdown This Fall To 60%
OMB Director Mick Mulvaney Says CBO Was Right After All
Yes…Trump Will Shut Down The Government This Fall
You’ve Been Warned: Trump’s Trillion Dollar Budget Deficits Are Here To Stay

 

OMB Director Mick Mulvaney Says CBO Was Right After All

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This is definitely a man-bites-dog federal budget story.

Since becoming Donald Trump’s Office of Management and Budget director, Mick Mulvaney has viciously attacked the Congressional Budget Office as a highly partisan and substantively inept organization. He has repeatedly questioned its economic assumptions, its budget analysis and the politics of its analysts.

And that makes it more than a little newsworthy that OMB, the federal agency Mulvaney himself directs and in his mind is a paragon of bipartisanship and objectivity, released a report last Friday that not only shows that CBO’s numbers were substantively good, it also shows that the organization Mulvaney had attacked for being too partisan was more optimistic about where the federal deficit is headed the next few years than Donald Trump’s own budget director.

OMB Director Mick Mulvaney owes the Congressional Budget Office a huge apology.

CBO said in its Long-Term Budget Outlook report released last month that the 2018 deficit will be $793 billion; OMB said in its just-released Mid-Session Review of the president’s budget that it will be $890 billion. For 2019, CBO said the deficit will be $973 billion while OMB said it will be $1.085 trillion. For 2020, CBO said $1.003 trillion compared to OMB’s $1.076 trillion.

It’s important to note that OMB’s numbers are based on what we already know is a complete myth: that the spending cuts included in the Trump fiscal 2019 budget sent to Congress earlier this year will be enacted. For the second year in a row, the GOP Congress has shown no interest whatsoever in adopting the spending cuts the president proposed.

As a result, the disparity between CBO’s relatively optimistic deficit estimates and OMB’s comparatively pessimistic projections is most likely to get larger.

To be fair, CBO and OMB diverge in the opposite direction from 2022 through 2028. But, also to be fair, everyone’s budget forecast beyond three years is far more guesswork than substantive analysis given that its multiple congressional and presidential elections and countless natural and man-made disasters will occur, and long-term forecasts of how fast the economy will grow (or not) are often just wishful thinking or straight-line extrapolations.

In the meantime, however, OMB Director Mick Mulvaney owes the Congressional Budget Office a huge apology.

There’s much more here:

House, Senate GOP Should Use This Year’s Appropriations To Stop Trump On Russia
Yes…Trump Will Shut Down The Government This Fall
Pruitt And Kennedy Leaving Increases The Chances Of Government Shutdown To Over 50%
The House and Senate Appropriations Committee Are A Total Disgrace
The Definitive Larry Kudlow Take Down
You’ve Been Warned: Trump’s Trillion Dollar Budget Deficits Are Here To Stay