Understanding the Budget Control Act

Understanding the Budget Control Act

1 August 2011 by Keith Hennessey 1 Comment

hundreds-rows

This is the second of three posts on the bill agreed to by the President and the bipartisan bicameral leaders of Congress (Speaker Boehner and Leaders Reid, McConnell, and Pelosi).

The other two posts are:

  1. Quick summary of the Budget Control Act; and
  2. Strategic analysis of the Budget Control Act.

If you have not read my quick summary post, please do so before reading this one. I cover three topics in this post:  how taxes are treated in the Joint Committee, how the spending cut trigger works, and the intentional imbalance of triggered spending cuts.  All three are critical to the strategic analysis. Continue reading “Understanding the Budget Control Act”

An Update to the Budget and Economic Outlook: Fiscal Years 2012 to 2022

An Update to the Budget and Economic Outlook: Fiscal Years 2012 to 2022

For fiscal year 2012 (which ends on September 30), the federal budget deficit will total $1.1 trillion, CBO estimates, marking the fourth year in a row with a deficit of more than $1 trillion. That projection is down slightly from the $1.2 trillion deficit that CBO projected in March. At 7.3 percent of gross domestic product (GDP), this year’s deficit will be three-quarters as large as the deficit in 2009 when measured relative to the size of the economy. Federal debt held by the public will reach 73 percent of GDP by the end of this fiscal year—the highest level since 1950 and about twice the share that it measured at the end of 2007, before the financial crisis and recent recession. Continue reading “An Update to the Budget and Economic Outlook: Fiscal Years 2012 to 2022”

The “Fiscal Cliff” Deal

The “Fiscal Cliff” Deal

January 4, 2013

We’ve received a number of questions in the past few days about the budgetary and economic impact of the significant budget legislation just enacted by the Congress. Here are some of the most common questions and our answers to them:

Does the Legislation Increase or Decrease Federal Budget Deficits?

That depends on what you compare the legislation with:

Relative to what would have occurred under the laws previously in effect, this legislation will increase budget deficits in coming years. Continue reading “The “Fiscal Cliff” Deal”

The price tag: $4 trillion added to deficit

The price tag: $4 trillion added to deficit

The Capitol and U.S. Currency are pictured in this composite photo.

The compromise could add $4 trillion in debt in the next 10 years.

By DAVID ROGERS | 1/1/13 3:03 PM EST

The White House-Senate Republican tax compromise could add almost $4 trillion in debt over the next 10 years, according to Congressional Budget Office estimates, which attribute most of the cost to lost revenues or payments on refundable tax credits.

The three-page table was released Tuesday even as House Republicans were meeting behind closed doors on the deal. And while the numbers can be understood only with some context, they could also spook deficit-conscious conservatives into demanding more spending cuts.

CBO begins its analysis from its March current law baseline that assumes all of Bush-era tax cuts would expire at New Year’s Day, and therefore gives no deficit-reduction credit for the fact that the deal begins to raise rates for the wealthiest Americans. Continue reading “The price tag: $4 trillion added to deficit”