Federal laws try to protect taxpayers and recipients of government benefits from the effects of rising prices by specifying that dollar amounts in many parts of the tax code and in some programs be automatically adjustedor indexedfor inflation. Without such indexing, a rise in the general level of prices would alter the effects of federal policies even in the absence of action by lawmakers.
February 2010
CBO is celebrating its 35th birthday! The agency was created by the Congressional Budget and Impoundment Control Act of 1974 (P.L. 93-344) and officially opened for business on February 24, 1975, when Alice Rivlin became its first director. Since then, under eight different directors, the agency has provided the Congress with objective, non-partisan budget and economic information on a wide variety of issues.
I testified this morning before the Joint Economic Committee about policies to increase economic growth and employment in 2010 and 2011. This hearing was originally scheduled for several weeks ago but then canceled because of the snow. My prepared remarks today were essentially the same as those released a few weeks ago and were based on CBOs January report on this topic and a follow-up letter to Senator Casey.
My comments emphasized three points:
Under the American Recovery and Reinvestment Act of 2009 (ARRA), also known as the economic stimulus package, certain recipients of funds appropriated in ARRA (most grant and loan recipients, contractors, and subcontractors) are required to report the number of jobs they created or retained with ARRA funding after the end of each calendar quarter. The law also requires CBO to comment on those reported numbers. Today CBO released a report to satisfy that requirement.
This morning the Obama Administration released a description of its health care proposal, and CBO has already received several requests to provide a cost estimate for that proposal. We had not previously received the proposal, and we have just begun the process of reviewing ita process that will take some time, given the complexity of the issues involved. Although the proposal reflects many elements that were included in the health care bills passed by the House and the Senate last year, it modifies many of those elements and also includes new ones.
I was scheduled to testify a few days ago before the Joint Economic Committee about policies to increase economic growth and employment in 2010 and 2011. The hearing was canceled because of the snow, but we released my prepared remarks today.
Last week I had the opportunity to speak at Morehouse College in Atlanta, Georgia. David Poyer, an associate professor in the economics department at Morehouse, spent last summer working at CBO, and he asked if I would be interested in coming down to Morehouse sometime. I told him that I would be delighted to come, and I was pleased to receive an official invitation from Morehouse president Robert Franklin.
The federal government incurred a budget deficit of $434 billion in the first four months of fiscal year 2010, CBO estimates in its latest Monthly Budget Review, almost $40 billion more than the shortfall recorded in the same period last year. Although spending is lower than it was at this time last year, the deficit is still higher because revenues have fallen by 11 percent.
Today CBO released a letter to Senator Robert Casey, Jr., in response to questions he asked about policies that could be adopted to increase employment. Specifically, Senator Casey was interested in a policy option to reduce employers payroll taxes for firms that increase their payroll, and how different design elements of this type of policy might affect its impact on employment.