One issue that complicates discussions of discretionary spending—including the question-and-answer portion of my testimony to the deficit-reduction committee—is the difference between “funding” and “outlays.” That difference, which I’ll explain in a moment, may seem rather technical, but it turns out to be very important in understanding the recent pattern of discretionary spending and the outlook for such spending under current law.
October 2011
The U.S. military has come to rely on the Global Positioning System (GPS) to conduct many of its operations. The Department of Defense (DoD) is modernizing the system—in part to better counter deliberate interference—by purchasing new satellites and upgrading the systems that control the satellites.
This morning, for a second time, I testified before the Joint Select Committee on Deficit Reduction—the body created under the recently enacted Budget Control Act (Public Law 112-25) to propose further deficit reductions.
From 1979 to 2007, real (inflation-adjusted) average household income, measured after government transfers and federal taxes, grew by 62 percent. That growth was not equal across the income distribution: Income after government transfers and federal taxes (denoted as after-tax income) for households at the higher end of the income scale rose much more rapidly than income for households in the middle and at the lower end of the income scale.
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 a loss of revenue to the federal government.
On Friday, the Secretary of Health and Human Services (HHS) announced that the department does not plan to implement the Community Living Assistance Services and Supports (CLASS) long-term care insurance program under current law. A number of people have inquired about whether and how CBO will reflect that statement in its budget projections and cost estimates for legislation. Here are the answers:
Just over half (52 percent) of all workers who filed tax returns in 2006 participated in some form of tax-favored retirement plan, CBO reports—in a study released today. The highest rates of participation were among workers between the ages of 45 and 59; those whose income was $40,000 or more; and those who were the primary (that is, the higher) earner in a two-earner household. The lowest rates were among workers under the age of 30; those whose income was under $20,000; and those who were unmarried.
This afternoon CBO released a cost estimate for S. 1549, the American Jobs Act of 2011, as introduced by Senate Majority Leader Harry Reid on September 13, 2011. That legislation corresponds to the plan put forth by President Obama. We also released a cost estimate for S. 1660, the American Jobs Act of 2011, as introduced by Senator Reid on October 5, 2011. Senator Reid’s alternative bill, S. 1660, includes the same tax cuts and spending increases as S.
The federal government’s fiscal year 2011 has come to a close, and CBO estimates, in its latest Monthly Budget Review that the federal budget deficit for the year was about $1.30 trillion, approximately the same dollar amount as the shortfall recorded in 2010. The 2011 deficit was equal to 8.6 percent of gross domestic product, CBO estimates, down from 8.9 percent in 2010 and 10.0 percent in 2009, but greater than in any other year since 1945.
Yesterday afternoon, I was delighted to speak at the National Bureau of Economic Research’s annual Conference on Tax Policy and the Economy. I first attended this conference in 1988 and in the 20 years since then, I have learned from many of the papers presented and enjoyed listening to many luncheon speakers.