United States federal budget

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Fiscal Year 2013 U.S. Federal Spending – Cash or Budget Basis.
Fiscal Year 2013 U.S. Federal Receipts.

The Budget of the United States Government often begins as the President's proposal to the U.S. Congress which recommends funding levels for the next fiscal year, beginning October 1. However, Congress is the body required by law to pass a budget annually and to submit the budget passed by both houses to the President for signature. Congressional decisions are governed by rules and legislation regarding the federal budget process. Budget committees set spending limits for the House and Senate committees and for Appropriations subcommittees, which then approve individual appropriations bills to allocate funding to various federal programs.

If Congress fails to pass an annual budget, a series of Appropriations bills must be passed as "stop gap" measures. After Congress approves an appropriations bill, it is sent to the President, who may sign it into law, or may veto it (as he would a budget when passed by the Congress). A vetoed bill is sent back to Congress, which can pass it into law with a two-thirds majority in each chamber. Congress may also combine all or some appropriations bills into an omnibus reconciliation bill. In addition, the president may request and the Congress may pass supplemental appropriations bills or emergency supplemental appropriations bills.

Several government agencies provide budget data and analysis. These include the Government Accountability Office (GAO), Congressional Budget Office, the Office of Management and Budget (OMB) and the U.S. Treasury Department. These agencies have reported that the federal government is facing a series of important long-run financing challenges, primarily driven by healthcare programs such as Medicare and Medicaid, which are projected to grow faster than the economy overall as the population matures. In the short-term, deficits are projected to return to their historical average relative to the size of the economy by 2014.[1]

Budget principles[edit]

The U.S. Constitution (Article I, section 9, clause 7) states that "No money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of Receipts and Expenditures of all public Money shall be published from time to time."

Each year, the President of the United States submits his budget request to Congress for the following fiscal year as required by the Budget and Accounting Act of 1921. Current law (31 U.S.C. § 1105(a)) requires the president to submit a budget no earlier than the first Monday in January, and no later than the first Monday in February. Typically, presidents submit budgets on the first Monday in February. The budget submission has been delayed, however, in some new presidents' first year when the previous president belonged to a different party.

The federal budget is calculated largely on a cash basis. That is, revenues and outlays are recognized when transactions are made. Therefore, the full long-term costs of entitlement programs such as Medicare, Social Security, and the federal portion of Medicaid are not reflected in the federal budget. By contrast, many businesses and some other national governments have adopted forms of accrual accounting, which recognizes obligations and revenues when they are incurred. The costs of some federal credit and loan programs, according to provisions of the Federal Credit Reform Act of 1990, are calculated on a net present value basis.[2]

Federal agencies cannot spend money unless funds are authorized and appropriated. Typically, separate Congressional committees have jurisdiction over authorization and appropriations. The House and Senate Appropriations Committees currently have 12 subcommittees, which are responsible for drafting the 12 regular appropriations bills that determine amounts of discretionary spending for various federal programs. Appropriations bills must pass both the House and Senate and then be signed by the president in order to give federal agencies the legal budget authority to spend.[3] In many recent years, regular appropriations bills have been combined into "omnibus" bills.

Congress may also pass "special" or "emergency" appropriations. Spending that is deemed an "emergency" is exempt from certain Congressional budget enforcement rules. Funds for disaster relief have sometimes come from supplemental appropriations, such as after Hurricane Katrina. In other cases, funds included in emergency supplemental appropriations bills support activities not obviously related to actual emergencies, such as parts of the 2000 Census of Population and Housing. Special appropriations have been used to fund most of the costs of war and occupation in Iraq and Afghanistan so far.

Budget resolutions and appropriations bills, which reflect spending priorities of Congress, will usually differ from funding levels in the president's budget. The president, however, retains substantial influence over the budget process through his veto power and through his congressional allies when his party has a majority in Congress.

Budget authority versus outlays[edit]

The amount of budget authority and outlays for a fiscal year usually differ because the government can incur obligations for future years. This means that budget authority from a previous fiscal year can, in many cases, be used for expenditure of funds in future fiscal years; for example, a multi-year contract.

Budget authority is the legal authority provided by federal law to enter into financial obligations that will result in immediate or future outlays involving federal government funds. Outlays refer to the issuance of checks, disbursement of cash or electronic transfer of funds made to liquidate a federal obligation and is usually synonymous with "expenditure" or "spending." The term "appropriations" refers to budget authority to incur obligations and to make payments from the Treasury for specified purposes. Some military and some housing programs have multi-year appropriations, in which their budget authority is specified for several coming fiscal years.

In the congressional budgeting process, an "authorization" (technically the "authorization act") provides the legal authority for the executive branch to act, establishes an account which can receive money to implement the action, and sets a limit on how much money may be expended. However, this account remains empty until Congress approves an "appropriation", which requires the U.S. Treasury to provide funds (up to the limit provided for in the authorization). Congress is not required to appropriate as much money as is authorized.[4]

Congress may both authorize and appropriate in the same bill. Known as "authorization bills", such legislation usually provides for a multi-year authorization and appropriation. Authorization bills are particularly useful when funding entitlement programs (benefits which federal law says an individual has a right to, regardless if any money is appropriated), where estimating the amount of funds to be spent is difficult. Authorization bills are also useful when giving a federal agency the right to borrow money, sign contracts, or provide loan guarantees. In 2007, two-thirds of all federal spending came through authorization bills.[5]

A "backdoor authorization" occurs when an appropriation is made and an agency required to spend the money even when no authorizing legislation has been enacted. A "backdoor appropriation" occurs when authorizing legislation requires an agency to spend a specific amount of money on a specific project within a specific period of time. Because the agency would be violating the law if it did not do so, it is required to spend the money — even if no appropriation has been made. Backdoor appropriations are particularly vexsome because removing the appropriate requires amending federal law, which is often politically impossible to do within a short period of time. Backdoor authorizations and appropriations are sources of significant friction in Congress. Authorization and appropriations committees jealously guard their legislative rights, and the congressional budgeting process can break down when committees overstep their boundaries and are retaliated against.[6]

Federal budget data[edit]

Several government agencies provide budget data. These include the Government Accountability Office (GAO), the Congressional Budget Office (CBO), the Office of Management and Budget (OMB) and the U.S. Treasury Department. The CBO publishes The Budget and Economic Outlook in January, which is typically updated in August. It also publishes a Monthly Budget Review. The OMB, which is responsible for organizing the President's budget presented in February, typically issues a budget update in July. The GAO and the Treasury issue Financial Statements of the U.S. Government, usually in the December following the close of the federal fiscal year, which occurs September 30. There is a corresponding Citizen's Guide, a short summary. The Treasury Department also produces a Combined Statement of Receipts, Outlays, and Balances each December for the preceding fiscal year, which provides detailed data on federal financial activities.

Historical tables within the President's Budget (OMB) provide a wide range of data on federal government finances. Many of the data series begin in 1940 and include estimates of the President’s Budget for 2009–2014. Additionally, Table 1.1 provides data on receipts, outlays, and surpluses or deficits for 1901–1939 and for earlier multi-year periods. This document is composed of 17 sections, each of which has one or more tables. Each section covers a common theme. Section 1, for example, provides an overview of the budget and off-budget totals; Section 2 provides tables on receipts by source; and Section 3 shows outlays by function. When a section contains several tables, the general rule is to start with tables showing the broadest overview data and then work down to more detailed tables. The purpose of these tables is to present a broad range of historical budgetary data in one convenient reference source and to provide relevant comparisons likely to be most useful. The most common comparisons are in terms of proportions (e.g., each major receipt category as a percentage of total receipts and of the gross domestic product).[7]

Federal budget projections[edit]

The Congressional Budget Office (CBO) projects budget data such as revenues, expenses, deficits, and debt as part of its "Long-term Budget Outlook" which is released annually. The 2012 Outlook included projections for debt through 2037. CBO outlined two scenarios, the "Extended Baseline" scenario and "Extended Alternative Fiscal" scenario. The Baseline scenario assumes significant fiscal austerity, with lower debt and deficits via higher tax revenues and lower spending. The Alternative scenario assumes higher debt and deficits via lower tax revenues and higher spending. These are discussed separately below.[8] CBO also reports the "Budget and Economic Outlook", which focuses on the next decade. It is published annually in January or February and updated in August.[9]

Major receipt categories[edit]

During FY2013, the federal government collected approximately $2.77 trillion in tax revenue, up $326 billion or 13% versus FY2012 revenues of $2.45 trillion. Primary receipt categories included individual income taxes ($1,316B or 47%), Social Security/Social Insurance taxes ($948B or 34%), and corporate taxes ($274B or 10%). Other revenue types included excise, estate and gift taxes. Revenues rose across all categories in FY2013 versus FY2012 as tax cuts expired and the economy improved.[10]

FY2013 revenues were 16.7% GDP, versus 15.2% GDP in FY2012.[10] Tax revenues averaged approximately 18.3% of gross domestic product (GDP) over the 1970-2009 period, generally ranging plus or minus 2% from that level. Tax revenues are significantly affected by the economy. Recessions typically reduce government tax collections as economic activity slows. For example, tax revenues declined from $2.5 trillion in 2008 to $2.1 trillion in 2009, and remained at that level in 2010. From 2008 to 2009, individual income taxes declined 20%, while corporate taxes declined 50%. At 15.1% of GDP, the 2009 and 2010 collections were the lowest level of the past 50 years.[11][12]

Tax policy[edit]

Revenue and Expense as % GDP.

Tax descriptions[edit]

The federal personal income tax is progressive, meaning a higher marginal tax rate is applied to higher ranges of income. For example, in 2010 the tax rate that applied to the first $17,000 in taxable income for a couple filing jointly was 10%, while the rate applied to income over $379,150 was 35%. The top marginal tax rate has declined considerably since 1980. For example, the top tax rate was lowered from 70% to 50% in 1980 and reached as low as 28% in 1988. The Bush tax cuts of 2001 and 2003, extended by President Obama in 2010, lowered the top rate from 39.6% to 35%.[13] The American Taxpayer Relief Act of 2012 raised the income tax rates for individuals earning over $400,000 and couples over $450,000. There are numerous exemptions and deductions, that typically result in a range of 35-40% of U.S. households owing no federal income tax. The recession and tax cut stimulus measures increased this to 51% for 2009, versus 38% in 2007.[14]

The federal payroll tax (FICA) is a flat tax used to fund Social Security and Medicare. For the Social Security portion, employers and employees each pay 6.2% of the workers gross pay, a total of 12.4%. The Social Security portion is capped at $113,700 for 2013, meaning income above this amount is not subject to the tax. The Medicare portion is also paid by employer and employee each at 1.45% and is not capped. Starting in 2013, an additional 0.9 percent more in Medicare taxes was applied to income of more than $200,000 ($250,000 for married couples filing jointly).[15] For calendar years 2011 and 2012, the employee's portion of the payroll tax was reduced to 4.2% as an economic stimulus measure; this expired for 2013.[16]

Tax expenditures[edit]

The term "tax expenditures" refers to income exemptions or deductions that reduce the tax collections that would be made applying a particular tax rate alone. According to the Center for American Progress, annual tax expenditures have increased from $526 billion in 1982 to $1,025 billion in 2010, adjusted for inflation (measured in 2010 dollars).[17] Economist Mark Zandi wrote in July 2011 that tax expenditures should be considered a form of government spending.[18]

In November 2009, The Economist estimated the additional federal tax revenue generated from eliminating certain tax expenditures, for the 2013–2014 period. These included: income exemptions for employer-provided health insurance ($215 billion); and various income deductions such as mortgage interest ($147B), state & local taxes ($65B), capital gains on homes ($60B), property taxes ($33B) and municipal bond interest ($37B). This subset totals $557 billion.[19] The Congressional Joint Committee on Taxation estimated in 2008 the amount of federal tax expenditures for the five year (2008–2012) period.[20]

Major expenditure categories[edit]

During FY 2013, the federal government spent $3.5 trillion on a budget or cash basis, down $84 billion or 2.4% vs. FY 2012 spending of $3.54 trillion. Major categories of FY 2013 spending included: Social Security ($803B or 23% of spending), Medicare & Medicaid ($760B or 22%), Defense Department ($608B or 18%), and interest($259B or 7%). Healthcare and Social Security spending increased $81B (5.5%) versus 2012, while Defense spending fell $47B (7.2%).[10]

Expenditures are classified as mandatory, with payments required by specific laws, or discretionary, with payment amounts renewed annually as part of the budget process. Expenditures averaged 20.4% GDP over the past 40 years, generally ranging +/-2% GDP from that level. The 2013 spend was 20.8% GDP, versus 2012 spend of 22.0% GDP.[10]

Mandatory spending and social safety nets[edit]

Social Security - Ratio of Covered Workers to Retirees
Entitlement Spending Risks
Note: CBO estimates that policy changes with a 0.6% of GDP annual impact are sufficient to address the 75-year program shortfall. Abbreviations are explained in the chart page. Source: CBO Report-July 2010.

Social Security, Medicare, and Medicaid expenditures are funded by more permanent Congressional appropriations and so are considered mandatory spending. Social Security and Medicare are sometimes called "entitlements," because people meeting relevant eligibility requirements are legally entitled to benefits, although most pay taxes into these programs throughout their working lives. Some programs, such as Food Stamps, are appropriated entitlements. Some mandatory spending, such as Congressional salaries, is not part of any entitlement program. Mandatory spending accounted for 57.4% of total federal outlays in FY2012, with net interest payments accounting for an additional 6.3%. In 2000, these were 53.2% and 12.5%, respectively.[21]

Mandatory spending is expected to continue increasing as a share of GDP. This is due in part to demographic trends, as the number of workers continues declining relative to those receiving benefits. For example, the number of workers per retiree was 5.1 in 1960; this declined to 3.0 in 2010 and is projected to decline to 2.2 by 2030.[22][23] These programs are also affected by per-person costs, which are also expected to increase at a rate significantly higher than the economy. This unfavorable combination of demographics and per-capita rate increases is expected to drive both Social Security and Medicare into large deficits during the 21st century. Unless these long-term fiscal imbalances are addressed by reforms to these programs, raising taxes or drastic cuts in discretionary programs, the federal government will at some point be unable to pay its obligations without significant risk to the value of the dollar (inflation).[24][25]

Discretionary spending[edit]

Defense Spending 2001–2014.
FY 2013 Estimated Federal Spending per 2013 Budget

Interest expense[edit]

CBO reported that net interest on the public debt was approximately $223 billion in FY2012 (6.3% of spending), down from $230 billion in FY2011.[21] During FY2012, the GAO reported a figure of $245 billion, down from $251 billion. Government also accrued a non-cash interest expense of $187 billion for intra-governmental debt, primarily the Social Security Trust Fund, for a total interest expense of $432 billion. GAO reported that even though the national debt rose in FY2012, the interest rate paid declined.[42] Should interest rates rise to historical averages, the interest cost would increase dramatically. Historian Niall Ferguson described the risk that foreign investors would demand higher interest rates as the U.S. debt levels increase over time in a November 2009 interview.[43] As of January 2012, public debt owned by foreigners has increased to approximately 50% of the total or approximately $5.0 trillion.[44] As a result, nearly 50% of the interest payments are now leaving the country, which is different from past years when interest was paid to U.S. citizens holding the public debt. Interest expenses are projected to grow dramatically as the U.S. debt increases and interest rates rise from very low levels to more typical historical levels.[45]

Understanding deficits and debt[edit]

Deficit and Debt Increases 2001-2013.

Relationship of deficit and debt[edit]

The annual budget deficit is the difference between actual cash collections and budgeted spending (a partial measure of total spending) during a given fiscal year, which runs from October 1 to September 30. Since 1970, the U.S. federal government has run deficits for all but four years (1998–2001)[46] contributing to a total debt of $16.77 trillion as of March 31, 2013.[47][48]

CBO's preliminary estimate of the 2012 "total budget" deficit was $1.090 trillion, down $207 billion versus 2011. The 2012 deficit was 7.0% GDP, down from 8.7% GDP in 2011.[49] The fiscal year 2011 "total budget" deficit was $1.296 trillion or 8.7% GDP, similar to the $1.294 trillion or 9.0% GDP in 2010. These deficits are considerably higher than pre-crisis levels, which ranged from a $236 billion (2.4% GDP) surplus in 2000 to a $459 billion (3.2% GDP) deficit in 2008.[11] However, budget rules have changed from FY2009 onward, with spending for the Iraq & Afghanistan wars and stimulus measures now included in the deficit computation. Approximately $1 trillion was added to the national debt in FY2008, considerably higher than the deficit reported in that year.[50]

The national debt increase during a given year is not the same as the "total budget" deficit commonly reported, due to a variety of accounting complexities involved. These differences can make it more challenging to determine how much the government actually spends relative to tax revenues. The increase in the national debt during a given year is a helpful measure to determine this amount. From FY 2003-2007, the national debt increased approximately $550 billion per year on average. For the first time in FY 2008, the U.S. added $1 trillion to the national debt as the effects of a severe global financial crisis became apparent. Debt increases rose to $1.88 trillion in 2009 and $1.65 trillion in 2010 as the crisis continued.[51] In relative terms, from 2003-2007 the government spent roughly $1.20 for each $1.00 it collected in taxes. This increased to $1.40 in FY2008 and $1.90 in FY2009.

Debt categories[edit]

The total federal debt is divided into "debt held by the public" and "intra-governmental debt." The debt held by the public refers to U.S. government securities or other obligations held by investors (e.g., bonds, bills and notes), while Social Security and other federal trust funds are part of the intra-governmental debt. As of September 30, 2012 the total debt was $16.1 trillion, with debt held by the public of $11.3 trillion and intragovernmental debt of $4.8 trillion.[52] Debt held by the public as a percentage of GDP rose from 34.7% in 2000 to 40.3% in 2008 and 70.0% in 2012.[53] U.S. GDP was approximately $15 trillion during 2011 and an estimated $15.6 trillion for 2012 based on activity during the first two quarters.[54] This means the total debt is roughly the size of GDP. Economists debate the level of debt relative to GDP that signals a "red line" or dangerous level, or if any such level exists.[55] By comparison, China's budget deficit was 1.6% of its $10 trillion GDP in 2010, with a debt to GDP ratio of 16%.[56]

Risks associated with the debt[edit]

Total Debt $ and % to GDP 2000–2013

The CBO reported several types of risk factors related to rising debt levels in a July 2010 publication:

However, since mid to late 2010, the U.S. Treasury has been obtaining negative real interest rates at Treasury security auctions. At such low rates, government debt borrowing saves taxpayer money according to one economist.[58] There is no guarantee that such rates will continue, but the trend has remained falling or flat as of October 2012.[59]

CBO-Public Debt Under "Extended" and "Alternate" Scenarios

The CBO reported during June 2011 two scenarios for how debt held by the public will change during the 2010-2035 time period. The "extended baseline scenario" assumes that the Bush tax cuts (extended by Obama) will expire per current law in 2012. It also assumes the alternative minimum tax (AMT) will be allowed to affect more middle-class families, reductions in Medicare reimbursement rates to doctors will occur, and that revenues reach 23% GDP by 2035, much higher than the historical average 18%. Under this scenario, activities such as national defense and a wide variety of domestic programs (excluding Social Security, Medicare, and interest) would decline to the lowest percentage of GDP since before World War II. Under this scenario, public debt rises from 69% GDP in 2011 to 84% by 2035, with interest payments absorbing 4% of GDP vs. 1% in 2011.[60]

CBO estimated in August 2011 that if laws currently "on the books" were enforced without changes, meaning the "extended baseline scenario" described above is implemented along with deficit reductions from the Budget Control Act of 2011, the deficit would decline from 8.5% GDP in 2011 to around 1% GDP by 2021.[61][62]

The "alternative fiscal scenario" more closely assumes the continuation of present trends, such as permanently extending the Bush tax cuts, restricting the reach of the AMT, and keeping Medicare reimbursement rates at the current level (the so-called "doc fix", versus declining by one-third as mandated under current law). Revenues are assumed to remain around the historical average 18% GDP. Under this scenario, public debt rises from 69% GDP in 2011 to 100% by 2021 and approaches 190% by 2035.[60]

The CBO reported in June 2011: "Many budget analysts believe that the alternative fiscal scenario presents a more realistic picture of the nation’s underlying fiscal policies than the extended-baseline scenario does. The explosive path of federal debt under the alternative fiscal scenario underscores the need for large and rapid policy changes to put the nation on a sustainable fiscal course."[60]

CBO reported in September 2011: "The nation cannot continue to sustain the spending programs and policies of the past with the tax revenues it has been accustomed to paying. Citizens will either have to pay more for their government, accept less in government services and benefits, or both."[63]

Government budget balance as a sectoral component[edit]

Sectoral financial balances in U.S. economy 1990-2012. By definition, the three balances must net to zero. Since 2009, the U.S. capital surplus and private sector surplus have driven a government budget deficit.

Economist Martin Wolf explained in July 2012 that government fiscal balance is one of three major financial sectoral balances in the U.S. economy, the others being the foreign financial sector and the private financial sector. The sum of the surpluses or deficits across these three sectors must be zero by definition. Since the foreign and private sectors are in surplus, the government sector must be in deficit. Wolf argued that the shift in the private sector from deficit to surplus in the wake of the subprime mortgage crisis drove the government sector into deficit.

  1. Foreign sector financial balance: This is the capital account. A foreign financial surplus or capital account surplus exists because capital is imported (net) to fund the U.S. trade deficit, the excess of imports over exports.
  2. Private sector financial balance: This is the difference between private savings (mostly by consumers) and private investment (mostly by businesses). In a healthy economy, consumers save and businesses borrow the savings and invest it, with the two figures moving roughly in tandem. However, if consumers increase their saving but businesses do not invest the difference, a surplus develops. In the wake of the subprime mortgage crisis, savings increased but investment declined dramatically, moving this balance from deficit into surplus.
  3. Government sector financial balance: This is the difference between government revenues less spending. In the U.S., it is the sum of federal, state and local budget surpluses or deficits.

For example, the government budget deficit in 2011 was approximately 10% GDP (8.6% GDP of which was federal), offsetting a capital surplus of 4% GDP and a private sector surplus of 6% GDP.[64]

Wolf argued that the sudden shift in the private sector from deficit to surplus forced the government balance into deficit, writing: "The financial balance of the private sector shifted towards surplus by the almost unbelievable cumulative total of 11.2 per cent of gross domestic product between the third quarter of 2007 and the second quarter of 2009, which was when the financial deficit of US government (federal and state) reached its peak...No fiscal policy changes explain the collapse into massive fiscal deficit between 2007 and 2009, because there was none of any importance. The collapse is explained by the massive shift of the private sector from financial deficit into surplus or, in other words, from boom to bust."[64]

Economist Paul Krugman also explained in December 2011 the causes of the sizable shift from private sector deficit to surplus: "This huge move into surplus reflects the end of the housing bubble, a sharp rise in household saving, and a slump in business investment due to lack of customers."[65]

Contemporary issues and debates[edit]

Topics frequently in the news in the 2010-2012 time period included: a) the austerity versus stimulus debate; b) the fiscal cliff including the effects of the Bush tax cuts and related extension; c) causes of deficit and debt increases; and d) the effects of healthcare reform on the budget.

Conceptual arguments[edit]

Many of the debates surrounding the United States federal budget center around competing macroeconomic schools of thought. In general, Democrats favor the principles of Keynesian economics to encourage economic growth via a mixed economy of both private and public enterprise, a welfare state, and strong regulatory oversight. Conversely, Republicans generally support applying the principles of either laissez-faire or supply-side economics to grow the economy via small government, low taxes, limited regulation, and free enterprise.[66][67] Debates have surrounded the appropriate size and role of the federal government since the founding of the country. These debates also deal with questions of morality, income equality and intergenerational equity. For example, Congress adding to the debt today may or may not enhance the quality of life for future generations, who must also bear the additional interest and taxation burden.[68]

Political realities make major budgetary deals difficult to achieve. While Republicans argue conceptually for reductions in Medicare and Social Security, they are hesitant to actually vote to reduce the benefits from these popular programs. Democrats on the other hand argue conceptually for tax increases on the wealthy, yet may be hesitant to vote for them because of the effect on campaign donations from the wealthy. The so-called budgetary "grand bargain" of tax hikes on the rich and removal of some popular tax deductions in exchange for reductions to Medicare and Social Security is therefore elusive.[69]

Economic growth and employment are key factors driving recent deficits. The Congressional Budget Office (CBO) estimated in October 2011 that approximately one-third of the deficit projected for fiscal year 2012 was due to economic factors, which have caused safety net expenditures to increase and tax revenues to decline with high unemployment.[70]

Austerity vs. stimulus[edit]

One of the debates facing the U.S. and Europe during 2012 relates to choices between deficit reduction ("austerity") and running larger budget deficits (via higher spending and tax cuts) to encourage economic growth and employment. Several European countries that implemented austerity policies via government cost reductions and higher taxes during 2010-2011 have initially experienced slowing economies, as predicted by Keynesian economics.[71][72]

Economists Lawrence Summers and Christina D. Romer wrote in April 2012 that larger budget deficits today to stimulate the economy can be coupled with austerity measures that phase in gradually.[73][74] For example, laws could be passed today funding investments in infrastructure to stimulate the economy today while raising the retirement age and raising taxes over time. Former OMB Director Peter Orszag wrote in May 2012: "When policy makers put in place measures carefully designed to reduce the federal deficit in the future, most of them happen...enacting more stimulus today and more deficit reduction to take effect later is exactly what the U.S. needs."[75]

Economists Joseph Stiglitz and Mark Zandi both advocated significant mortgage refinancing or write-downs during August 2012 to help provide an economic boost, as over 13 million homeowners are underwater on their homes, which affects their ability to consume.[76] Economist Amir Sufi at the University of Chicago argued in July 2011 that a high level of household debt is a major factor holding back the economy. His research indicates that areas of the country with lower household debt levels have recovered more quickly from the economic downturn. He advocates mortgage write-downs and other debt reduction ideas.[77]

Economist Raghuram Rajan wrote in May 2012 that the U.S. economy was not on a sustainable path pre-crisis and that fiscal and monetary stimulus may not be effective solutions. More long-term measures will be required to make workers more competitive: "Sensible policy lies in improving the capabilities of the workforce across the country, so that they can get sustainable jobs with steady incomes." He also advocated mortgage principal reduction to relieve household debt burdens.[78]

Economist Michael Spence analyzed U.S. employment trends from 1990 to 2008, separating workforce components into internationally tradable and non-tradable industries. Nearly all job growth from 1990 to 2008 was in the non-tradable industries. These trends are correlated with increasing income inequality and indicate significant structural issues face the U.S. labor market.[79]

Economist Paul Krugman argued in December 2012 that there is no short-run fiscal crisis and the emphasis should be on job creation. He warns that a well-financed lobby of "deficit scolds" have created a phony deficit crisis when the government should be spending more to put people to work. He pointed out that the U.S. cannot default because it can print money and that interest rates on government debt are very low, allowing the government to borrow easily. The main risk of fiscal profligacy would be inflation, which might actually help as a devalued dollar would make exports more competitive.[80][81]

The "fiscal cliff" and "sequester"[edit]

U.S. Federal budget deficit as % GDP assuming continuation of certain policies 2011-2021.

The CBO estimated that letting current laws take effect beyond 2012 would significantly reduce future budget deficits. For example, the Bush tax cuts of 2001 and 2003 (extended by President Obama in 2010) were scheduled to expire at the end of 2012. Other deficit reducers per the CBO include: allowing the automatic spending cuts in the Budget Control Act of 2011 to take effect, allowing other tax cuts enacted in 2009 and 2010 by President Obama to expire in 2012, allowing the alternative minimum tax (AMT) to affect more taxpayers, and reducing Medicare reimbursements to doctors. These and other current laws, if allowed to take effect, reduce the deficit from an estimated 4.7% GDP in 2021 to 1.2% GDP.[82] Total deficit reduction could be as high as $7.1 trillion over a decade if current law is enforced and not overridden.[62]

The significant impact of the multiple tax cut expirations and spending reductions that take effect at the end of calendar year 2012 were referred to as the "fiscal cliff."[83] The CBO estimated in May 2012 that allowing current law to take effect would reduce the deficit by a net $560 billion in 2013, roughly half the $1.2 trillion 2011 deficit. Real GDP growth in 2013 would be reduced to 0.5% versus 1.1%, with a high probability of recession during the first half of the year (a 1.3% GDP contraction) followed by 2.3% growth in the second half. Over the long-run, lower deficits and debt support relatively higher growth estimates, however.[84][85] The fiscal cliff was addressed by the American Taxpayer Relief Act of 2012.

Causes of change[edit]

Cause of change between CBO's 2001 projection of a $5.6 trillion surplus between 2002-2012 and the $6.1 trillion debt increase that actually occurred.

The U.S. last balanced its budget in 2001, with a 1.3% GDP surplus. Between 2001 and 2012, spending increased by 4.5% GDP (from 18.2% GDP in 2001 to 22.7% GDP in 2012), while revenues declined by 3.7% GDP (from 19.5% GDP in 2001 to 15.8% GDP in 2012), resulting in a 7.0% GDP deficit for 2012. Medicare/Medicaid spending increased by 1.6% GDP and defense spending increased by 1.3% GDP from 2001 to 2012. Individual income tax revenues fell by 2.4% GDP and payroll taxes fell by 1.4% GDP from 2001 to 2012.[86]

Economist Paul Krugman summarized the causes of increasing deficits and debt in May 2011: "What happened to the budget surplus the federal government had in 2000? The answer is, three main things. First, there were the Bush tax cuts, which added roughly $2 trillion to the national debt over the last decade. Second, there were the wars in Iraq and Afghanistan, which added an additional $1.1 trillion or so. And third was the Great Recession, which led both to a collapse in revenue and to a sharp rise in spending on unemployment insurance and other safety-net programs."[87][88]

In June 2012, CBO summarized the cause of change between its January 2001 estimate of a $5.6 trillion cumulative surplus between 2002 and 2011 and the actual $6.1 trillion cumulative deficit that occurred, an unfavorable "turnaround" or debt increase of $11.7 trillion. Tax cuts and slower-than-expected growth reduced revenues by $6.1 trillion and spending was $5.6 trillion higher. Of this total, the CBO attributes 72% to legislated tax cuts and spending increases and 27% to economic and technical factors. Of the latter, 56% occurred from 2009 to 2011.[89][90]

The difference between the projected and actual debt in 2011 can be largely attributed to:

Several other sources have used CBO data to summarize the results in various ways.[91][92][93]

Economist Martin Wolf explained in July 2012 that when the U.S. economy has a foreign financial surplus (due to its trade deficit) and a private sector financial surplus (because household savings exceeds business investment), the government must run a budget deficit. This is a rule that holds true by definition. He wrote: "The idea that the huge fiscal deficits of recent years have been the result of decisions taken by the current administration is nonsense. No fiscal policy changes explain the collapse into massive fiscal deficit between 2007 and 2009, because there was none of any importance. The collapse is explained by the massive shift of the private sector from financial deficit into surplus or, in other words, from boom to bust."[94] Economist Paul Krugman also explained in December 2011 the significant shift in the private sector from deficit to surplus.[65]

Healthcare reform[edit]

CBO estimated in March 2011 that the Patient Protection and Affordable Care Act (PPACA), the controversial healthcare legislation passed in 2010 also known as "Obamacare," is expected to reduce the deficit $210 billion total between 2012-2021, with revenues of $813 billion partially offset by outlays of $604 billion.[95] CBO updated its estimate in July 2012, indicating a repeal of PPACA would add $109 billion to the deficit between 2013-2022.[96]

CBO estimates that PPACA includes reductions in Medicare of over $700 billion during the 2013-2022 period, mainly through slightly reducing the trajectory of spending increases expected prior to PPACA. Individual beneficiaries are not directly impacted; most of the cost savings comes from reducing future payments to hospitals and other service providers relative to previous baseline estimates. In other words, PPACA "bends the curve" on Medicare costs down somewhat.[97][98] Further, since PPACA reduces Medicare payouts, the position of the Medicare Hospital Insurance (HI) Trust Fund is significantly improved. PPACA extended the life of the Medicare HI Trust Fund by 8 years and reduced the 75-year annual shortfall from 3.88% of the U.S. payroll tax base to 1.35%.[99]

Spending out of proportion to threats[edit]

The U.S. federal budget has been criticized for spending on research and action on harm reduction out of proportion to the magnitude of the underlying threats. For example, heart disease, cancer, strokes, respiratory diseases, diabetes, and Alzheimer's disease claimed about 1,650,000 American lives in 2007, when the government spent about $9.6 billion researching ways to alleviate those illnesses. In contrast, terrorism had claimed about 300 lives per year on average over the previous decade, but $150 billion was spent to prevent terrorism, not including even more costly defense and war expenses.[100] However, a major terrorist attack could cause substantial economic disruption. The September 11, 2001 attacks killed almost 3000 people, but caused extensive economic disruption including about $40 billion in insurance losses, a stock market drop which took months to recover, about $15 billion in assistance to airlines, substantial tourism losses, and 430,000 lost jobs amounting to $2.8 billion in lost wages over the three months following.

Proposed deficit reduction[edit]

Report of the National Commission on Fiscal Responsibility and Reform-Public Debt as % GDP Under Various Scenarios

Strategies[edit]

There are a variety of proposed strategies for reducing the federal deficit. These may include policy choices regarding taxation and spending, along with policies designed to increase economic growth and reduce unemployment. For example, a fast-growing economy offers the win-win outcome of a larger proverbial economic pie, with higher employment and tax revenues, lower safety net spending and a lower debt-to-GDP ratio. However, most other strategies represent a tradeoff scenario in which money or benefits are taken from some and given to others. Spending can be reduced from current levels, frozen, or the rate of future spending increases reduced. Budgetary rules can also be implemented to manage spending. Some changes can take place today, while others can phase in over time. Although a still-weak economy limits the scope for large adjustments immediately, addressing the long-term imbalance soon will allow for more reasonable and gradual adjustments.[101] Tax revenues can be raised in a variety of ways, by raising tax rates, the scope of what is taxed, or eliminating deductions and exemptions ("tax expenditures"). Regulatory uncertainty or barriers can be reduced, as these may cause businesses to postpone investment and hiring decisions.[102]

The CBO reported in September 2011 that: "Given the aging of the population and rising costs for health care, attaining a sustainable federal budget will require the United States to deviate from the policies of the past 40 years in at least one of the following ways:

During June 2012, Federal Reserve Chair Ben Bernanke recommended three objectives for fiscal policy: 1) Take steps to put the federal budget on a sustainable fiscal path; 2) Avoid unnecessarily impeding the ongoing economic recovery; and 3) Design tax policies and spending programs to promote a stronger economy.[104]

President Barack Obama stated in June 2012: "What I’ve said is, let’s make long-term spending cuts; let’s initiate long-term reforms; let’s reduce our health care spending; let’s make sure that we’ve got a pathway, a glide-path to fiscal responsibility, but at the same time, let’s not under-invest in the things that we need to do right now to grow. And that recipe of short-term investments in growth and jobs with a long-term path of fiscal responsibility is the right approach to take for, I think, not only the United States but also for Europe."[105]

Specific proposals[edit]

A variety of government task forces, expert panels, private institutions, politicians, and journalists have made recommendations for reducing the deficit and slowing the growth of debt. Several organizations have compared the future impact of these plans on the deficit, debt, and economy. One helpful way of measuring the impact of the plans is to compare them in terms of revenue and expense as a percentage of GDP over time, in total and by category. This helps illustrate how the different plan authors have prioritized particular elements of the budget.[106]

Government commission proposals[edit]

President Obama's proposals[edit]

Congressional proposals[edit]

Private expert panel proposals[edit]

Timing of solutions[edit]

There is significant debate regarding the urgency of addressing the short-term and long-term budget challenges. Prior to the 2008-2009 U.S. recession, experts argued for steps to be put in place immediately to address an unsustainable trajectory of federal deficits. For example, Fed Chair Ben Bernanke stated in January 2007: "The longer we wait, the more severe, the more draconian, the more difficult the objectives are going to be. I think the right time to start was about 10 years ago."[125]

However, experts after the 2008-2009 U.S. recession argued that longer-term austerity measures should not interfere with measures to address the short-term economic challenges of high unemployment and slow growth. Ben Bernanke wrote in September 2011: "...the two goals--achieving fiscal sustainability, which is the result of responsible policies set in place for the longer term, and avoiding creation of fiscal headwinds for the recovery--are not incompatible. Acting now to put in place a credible plan for reducing future deficits over the long term, while being attentive to the implications of fiscal choices for the recovery in the near term, can help serve both objectives."[126]

IMF managing director Christine Lagarde wrote in August 2011: "For the advanced economies, there is an unmistakable need to restore fiscal sustainability through credible consolidation [deficit reduction] plans. At the same time we know that slamming on the brakes too quickly will hurt the recovery and worsen job prospects. So fiscal adjustment must resolve the conundrum of being neither too fast nor too slow. Shaping a Goldilocks fiscal consolidation is all about timing. What is needed is a dual focus on medium-term consolidation and short-term support for growth and jobs. That may sound contradictory, but the two are mutually reinforcing. Decisions on future consolidation, tackling the issues that will bring sustained fiscal improvement, create space in the near term for policies that support growth and jobs."[127]

Total outlays in recent budget submissions[edit]

Annual U.S. spending 1930-2014 alongside U.S. GDP for comparison.

The budget year runs from October 1 to September 30 the following year and is submitted by the President to Congress prior to October for the following year. In this way the budget of 2013 is submitted before the end of September 2012. This means that the budget of 2001 was submitted by Bill Clinton and was in force during most of George W. Bush's first year in office. The budget submitted by George W. Bush in his last year in office was the budget of 2009, which was in force through most of Barack Obama's first year in office.

The President's budget also contains revenue and spending projections for the current fiscal year, the coming fiscal years, as well as several future fiscal years. In recent years, the President's budget contained projections five years into the future. The Congressional Budget Office (CBO) issues a "Budget and Economic Outlook" each January and an analysis of the President's budget each March. CBO also issues an updated budget and economic outlook in August.

Actual budget data for prior years is available from the Congressional Budget Office; see the "Historical Budget Data" links on the main page of the "The Budget and Economic Outlook."[129] and from the Office of Management and Budget (OMB).[130]

See also[edit]

References[edit]

  1. ^ CBO Budget and Economic Outlook 2014 to 2024-February 2014
  2. ^ The Federal Credit Reform Act was passed as part of the Omnibus Budget Reconciliation Act of 1990 (P.L. 101-508)
  3. ^ A bill can also be enacted by a Congressional override of a presidential veto, or is automatically enacted if the president takes no action within 10 days after receiving the bill.
  4. ^ Heniff, Bill and Keith, Robert. The Federal Budget Process. Alexandria, Va.: Capitol.Net, 2009, p. 10—27.
  5. ^ Dewhirst, Robert E. and Rausch, John David. "Authorization Bills." In Encyclopedia of the United States Congress. New York: Facts On File, 2007, p. 27.
  6. ^ Milakovich, Michael E. and Gordon, George J. Public Administration in America. Boston: Wadsworth Cengage Learning, 2013, p. 348-349.
  7. ^ Historical Tables: Budget of the U.S. Government
  8. ^ CBO-The Long-Term Budget Outlook-June 2012
  9. ^ CBO-Budget and Economic Outlook 2012-2022-January 2012
  10. ^ a b c d CBO Monthly Budget Review-September 2013
  11. ^ a b CBO Historical Tables
  12. ^ Bartlett-Are Taxes in the U.S. High or Low?-May 2011
  13. ^ Tax Foundation-Historical Tax Rates-Retrieved July 2011
  14. ^ CBPP-Misconceptions and Realities About Who Pays Taxes-March 2011
  15. ^ Social Security Administration-Social Security and Medicare tax rates-maximum taxable earnings-September 12, 2013
  16. ^ IRS Publication 15 (2011)
  17. ^ Center for American Progress-Ten Charts that Prove the U.S. is a Low Tax Country-June 2011
  18. ^ Washington Post-Mark Zandi-How to Cut the Deficit, and What Happens if We Don't-July 2011
  19. ^ The Economist-Stemming the Tide-November 2009
  20. ^ Congressional Joint Committee on Taxation-Estimates of Federal Tax Expenditures for Fiscal Years 2008-2012-Table 2
  21. ^ a b c CBO Historical Tables-February 2013
  22. ^ Concord Slides
  23. ^ Social Security Trustees Report 2010-Table IV.B2
  24. ^ GAO Citizens Guide
  25. ^ Huffington Post-Lynn Parramore-Nine Deficit Myths We Cannot Afford-April 2010
  26. ^ a b CBO Historical Budget Data-February 2014
  27. ^ Congressional Research Service-Medicare Primer-March 2009
  28. ^ a b The Economist-As Boomers Wrinkle-December 2010
  29. ^ CBO Long Term Budget Outlook – June and August 2010
  30. ^ Atul Gawande-The New Yorker-The Cost Conundrum-June 2009
  31. ^ a b 2010 Social Security Trustees Report Summary Press Release
  32. ^ Heritage Foundation-Book of Charts-As of November 2010
  33. ^ Trustees Report Long Range Estimates – Section 5a Table IV.B6
  34. ^ AARP Public Policy Institute-Reform Options for Social Security
  35. ^ U.S. News and World Report-12 Ways to Fix Social Security-May 2010
  36. ^ Lew, Jacob (February 21, 2011). "Opposing view: Social Security isn't the problem". USA Today. Retrieved 2011-03-14 
  37. ^ OMB Historical Budget Table 4.1-Retrieved November 2013
  38. ^ DOD – Defense Trend Spending Chart – May 7, 2009
  39. ^ CBO-Monthly Budget Review-Sept 09
  40. ^ Anthony Cordesman and Erin Fitzgerald, Resourcing for Defeat, Center for Strategic and International Studies, 2009 http://csis.org/publication/resourcing-defeat-0
  41. ^ Washington Post-Brad Plumer-America’s staggering defense budget, in charts-January 7, 2013
  42. ^ GAO – Bureau of the Public Debt's Fiscal Years 2012 and 2011 Schedules of Federal Debt – November 2012
  43. ^ Charlie Rose Interview-Niall Ferguson-November 3, 2009
  44. ^ Treasury-Major Foreign Holders of Treasury Securities
  45. ^ CBO – The Budget and Economic Outlook: Fiscal Years 2013 to 2023 – February 2013
  46. ^ Bittle, Scott & Johnson, Jean. "Where Does Money Go?" Collins; New York: 2008.
  47. ^ MONTHLY STATEMENT OF THE PUBLIC DEBT OF THE UNITED STATES, treasurydirect.gov (March 31, 2013)
  48. ^ Treasury Direct-Monthly Statement of the Public Debt
  49. ^ http://www.cbo.gov/publication/43656
  50. ^ U.S Treasury Direct-Historical Debt Outstanding
  51. ^ U.S. Treasury Direct
  52. ^ Treasury Direct-Monthly Statement of the Public Debt of the United States
  53. ^ CBO Historical Tables – January 2011
  54. ^ BEA-GDP News Release Sept 2012-Table 3
  55. ^ Bernanke, Ben S. (April 27, 2010). "Speech before the National Commission on Fiscal Responsibility and Reform: Achieving fiscal sustainability". Federalreserve.gov. Retrieved February 2, 2011.
  56. ^ CIA World Factobook-China-Retrieved December 2011
  57. ^ Congressional Budget Office-"Federal Debt and the Risk of a Fiscal Crisis"-July 2010
  58. ^ Mark Thoma (November 3, 2011) "Negative Real Interest Rates" Economist's View
  59. ^ U.S. Treasury government debt instrument interest rate data (chart)
  60. ^ a b c CBO 2011 Long-Term Budget Outlook-June 2011
  61. ^ CBO-The Budget and Economic Outlook-August 2011
  62. ^ a b Washington Post-EJ Dionne-Why Doing Nothing Yields $7.1 trillion in deficit cuts-November 16, 2011
  63. ^ CBO Testimony-Confronting the Nation's Fiscal Policy Challenges-September 2011
  64. ^ a b Financial Times-Martin Wolf-The Balance Sheet Recession in the U.S.- July 2012
  65. ^ a b NYT-Paul Krugman-The Problem-December 2011
  66. ^ Hamby, Alonzo (2011-07-29). "Presidents and Their Debts, F.D.R. to Bush". The New York Times. Retrieved 2011-08-16. 
  67. ^ "The rise of the anti-Keynesians". The Economist. 2011-04-14. Retrieved 2011-08-16. 
  68. ^ Peter G. Peterson Foundation-Citizen's Guide 2010
  69. ^ "A dirty secret lurks in the struggle over the Grand Bargain". The New York Times. 2013-11-18. Retrieved 2013-11-23. 
  70. ^ CBO Letter to Congressman Van Hollen-October 4, 2011
  71. ^ NYT-Paul Krugman-How to End This Depression-May 2012
  72. ^ NYT-Krugman-Myths of Austerity-July 2010
  73. ^ Financial Times-Lawrence Summers-Growth not Austerity is Best Remedy for Europe-April 2012
  74. ^ NYT-Christine Romer-Hey Not So Fast on European Austerity-April 2012
  75. ^ Bloomberg-Orszag-History Shows U.S. Can Stimulate Now, Cut Later-May 2012
  76. ^ NYT-Stiglitz and Zandi-The One Housing Solution Left-Mass Mortgage Refinancing-August 2012
  77. ^ Bloomberg-Household Debt is at Heart of Weak U.S. Economy-July 2011
  78. ^ Project Syndicate-Raghuram Rajan-Central Bankers Under Siege-May 2012
  79. ^ Council on Foreign Relations-Spence and Hlatshwayo-The Evolving Structure of the American Economy and the Employment Challenge-March 2011
  80. ^ NYT-Paul Krugman-The Forgotten Millions-December 6, 2012
  81. ^ NYT-Paul Krugman-Fighting Fiscal Phantoms-Nov 26, 2012
  82. ^ CBO-Long Term Budget Outlook Graphics-August 2012
  83. ^ NYT-Recession Possible if Impasse Persists, Budget Office Says-May 2012
  84. ^ CBO-Economic Effects of Reducing the Fiscal Restraint That Is Scheduled to Occur in 2013-May 2012
  85. ^ Center on Budget and Policy Priorities-Misguided Fiscal Cliff Fears Pose Challenges to Productive Budget Negotiations-June 2012
  86. ^ CBO Budget and Economic Outlook 2013-2023-Historical Data-February 2013
  87. ^ NYT-Paul Krugman-The Unwisdom of Elites-May 2011
  88. ^ Pew Trusts-10 Key Budget Charts-2011
  89. ^ NYT-Bruce Bartlett-The Fiscal Legacy of George W. Bush-June 2012
  90. ^ a b CBO-Changes in CBO's Baseline Projections Since 2001
  91. ^ "Where Does our National Debt Come From?". Office of Management and Budget. Retrieved May 25, 2012. 
  92. ^ How the Deficit Got This Big
  93. ^ The Great Debt Shift
  94. ^ FT-Martin Wolf-The Balance Sheet Recession in the U.S.-July 2012
  95. ^ CBO’s Analysis of the Major Health Care Legislation Enacted in March 2010
  96. ^ CBO-Letter to the Honorable John Boehner providing an estimate for H.R. 6079, the Repeal of Obamacare Act-July 2012
  97. ^ Washington Post-Sarah Kliff-Romney's Right-Obamacare cuts Medicare by $716 billion; Here’s how-August 2012
  98. ^ Washington Post-Medicare Timeline-August 2012
  99. ^ CBPP-Health Reform Strengthens Medicare, Doesn’t “Rob” It-August 2012
  100. ^ Mike Sinn (October 7, 2011) "Anti-Terrorism Spending 50,000 Times More Than on Any Other Cause of Death" Think by Numbers
  101. ^ Brookings Institute, The Federal Budget Outlook: No News Is Bad News, October 2012
  102. ^ Bittle, Scott (2011). Where Does the Money Go?. Harper. ISBN 978-0-06-124187-1. 
  103. ^ CBO CBO-Presentation to Macroeconomic Advisers-September 2011
  104. ^ Ben Bernanke-Economic Outlook and Policy Testimony-June 7, 2012
  105. ^ President Obama-Remarks by the President-Whitehouse.gov
  106. ^ a b BPC-House Democrats' Fiscal Year 2013 Budget-The Details-March 28, 2012
  107. ^ Fiscal Commission-Final Report-December 2010
  108. ^ Center on Budget & Policy Priorities-What Was Actually in Bowles-Simpson—And How Can We Compare it With Other Plans?-October 2012
  109. ^ OMB-President Obama-Living within our Means and Investing in Our Future-September 2011-Table S-1
  110. ^ NYT Editorial Board-The Need to Agree to Agree-July 2012
  111. ^ House of Representatives-Committee on the Budget-Retrieved April 2011
  112. ^ BPC-Paul Ryan’s Fiscal Year 2013 Budget-March 2012
  113. ^ CPC-The People's Budget-April 2011
  114. ^ BPC-Congressional Progressive Caucus Fiscal Year 2013 Budget-March 2013
  115. ^ EPI-The Back to Work Budget-March 13, 2013
  116. ^ Bipartisan Policy Center-Cooper-LaTourette Proposal-March 2012
  117. ^ CBPP-Cooper-LaTourette Budget Significantly to the Right of Simpson-Bowles Plan-March 2012
  118. ^ Ted Barrett (May 16, 2012). "Senate's all-day budget debate dominated by politics". CNN. Retrieved May 21, 2012. 
  119. ^ Brian Faler (May 16, 2012). "Senate Rejects Five Budget Plans Amid Republican Complaints". Bloomberg. Retrieved May 21, 2012. 
  120. ^ Ed Feulner (May 14, 2012). "Senate’s Lee offers proposal that would save the American Dream". The Washington Times. Retrieved May 21, 2012. 
  121. ^ PGPF-Solutions Summit-May 2011
  122. ^ Bipartisan Policy Center Domenici-Rivlin Debt Reduction Task Force-
  123. ^ CNN-Jeanne Sahadi-New Deficit Plan Would Cut $6 trillion-November 2010
  124. ^ The Hamilton Project-15 Ways to Rethink the Federal Budget-February 2013
  125. ^ MSNBC-Bernanke Warns of Vicious Cycle in Deficits-January 18, 2007
  126. ^ Federal Reserve-Ben Bernanke-The U.S. Economic Outlook-September 2011
  127. ^ The Financial Times-Christine Lagarde Op Ed-Don't Let Fiscal Brakes Stall Global Recovery-August 2011
  128. ^ Media report-- OMB data not yet available.
  129. ^ CBO-Budget and Economic Outlook-2012-2022
  130. ^ Office of Management and Budget website

External links[edit]

Recent CBO documents[edit]

"Chart talk" examples[edit]

One of the best ways to understand the long-term budget risks is through helpful charts. The following sources contain charts and commentary:

Budget games and simulations[edit]