May 2011

  • Direct-to-consumer (DTC) advertising of prescription drugs has elicited various concerns. One concern is that DTC advertising may add to spending on drugs by consumers, insurers, and the federal government without providing enough benefits to justify that spending. Specifically, some observers worry that DTC advertising encourages broader use of certain drugs than their health benefits warrant. Another concern is that DTC advertising for newly approved drugs may lead people to use drugs whose potential risks were not fully discovered during the drug approval process.

  • As required by law, CBO prepares regular reports on its estimate of the number of jobs created by the American Recovery and Reinvestment Act of 2009 (ARRA), which is often referred to as the economic stimulus package.  In its latest report, issued today, CBO provides estimates of ARRA’s overall impact on employment and economic output in the first quarter of calendar year 2011, which differ only slightly from those presented in its previous report (issued in February 2011).

  • The deductibility of charitable donations has been a feature of the U.S. individual income tax almost as long as the modern income tax has been in existence. Although the deduction encourages charitable giving, like other forms of preferential tax treatment, it results in loss revenue to the federal government. At current levels of charitable giving, the cost of that deduction—measured as the additional revenues that could be collected if the deduction was eliminated—will total about $230 billion between 2010 and 2014, according to the Joint Committee on Taxation.

  • Over the past two years, the Federal Housing Administration (FHA) has guaranteed more than 17 percent of new and refinanced mortgages on single-family homes in the United States. The estimated lifetime costs of FHAs single-family mortgage insurance program are recorded in the federal budget using a methodology spelled out in the Federal Credit Reform Act of 1990 (FCRA). Using the FCRA methodology, CBO estimates that the program will produce budgetary savings of $4.4 billion in fiscal year 2012.

  • This morning Joseph Kile, CBOs Assistant Director for Microeconomic Studies, testified before the Senate Finance Committee to discuss the federal role in paying for highways. The testimony draws on several recent CBO publications on highways and other infrastructure.

    Status of the Highway Trust Fund

  • For programs funded through annual appropriations (which are called “discretionary” programs), CBO uses the funding provided for the current fiscal year as the starting point for its baseline budget projections for the coming decade. Specifically, appropriations for those programs are generally assumed to grow each year with inflation.

  • In recent years, the Congress has shown interest in powering some of the Navy’s future destroyers and amphibious warfare ships with nuclear rather than conventional (petroleum-based) fuel. At the request of the Subcommittee on Seapower and Projection Forces of the House Armed Services Committee, CBO has estimated—in a study released today—the difference between the costs of powering those new surface ships with nuclear reactors and equipping them with conventional engines.

    CBO’s Findings

  • The federal government incurred a budget deficit of $871 billion in the first seven months of fiscal year 2011, CBO estimates in its latest Monthly Budget Review, roughly $70 billion more than the deficit incurred in the same period in 2010. That deficit would have been higher if not for the larger-than-expected payments with individual income tax returns filed near the end of the spring tax-filing season.

  • The recent financial crisis and economic recession have left many states and localities with extraordinary budgetary difficulties for the next few years, but structural shortfalls in their pension plans pose a problem that is likely to endure for much longer.The recent financial crisis and economic recession have left many states and localities with extraordinary budgetary difficulties for the next few years, but structural shortfalls in their pension plans pose a problem that is likely to endure for much longer.