Ben Bernanke

Congress Ignores Obvious Policy Solution To Major Economic Threat

Brian Beutler | May 24, 2012, 5:12AM

If Congress passed legislation to fund the federal government for a year, then scattered to the four winds, the United States would find itself in recession sometime in 2013.

That's what the non-partisan Congressional Budget Office concluded in a Tuesday report, meant to alert elected officials to the dangers of allowing the country to fall off the "fiscal cliff." That's shorthand for allowing all of the Bush tax cuts and the payroll tax holiday, extended unemployment benefits, and Medicare physician reimbursement rates to expire; and to allow spending on domestic and defense programs to be cut indiscriminately. All of these things will happen automatically at the beginning of the year if Congress does nothing.

Budget deficits would fall dramatically, but at the expense of hundreds of thousands or millions of jobs at a time when the country's current economic maladies are just beginning to heal. By contrast, protecting the recovery likely means large budget deficits will persist for quite some time.

If there were an obvious way around this conundrum you'd think Congress would've taken it. In reality, according to policy experts and economists of a wide range of ideological leanings there is an obvious way around this conundrum -- and yet Congress isn't taking it.

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Mitt Romney

Romney Retreats From 'Unrealistic' Four Percent Unemployment Benchmark

Brian Beutler | May 23, 2012, 2:34PM

Mitt Romney

GOP presidential hopeful Mitt Romney has come a long way from insisting "anything over four percent [unemployment] is nothing to celebrate."

That benchmark, which he set earlier in May, drew criticism from economists of every political persuasion, including GOP loyalists.

On Tuesday, he set a new goal for himself -- one that won't create a hoped-for contrast with President Obama.

"I can tell you that over a period of 4 years, by virtue of the policies that we put in place, we get the unemployment rate down to 6 percent, or perhaps a little lower," Romney said, "depends in part upon the rate of growth of the globe as well as what we're seeing here in the United States, but we get the rate down quite substantially."

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John Boehner

CBO: Coming Fiscal Cliff Will Devastate The Economy (CHART)

Brian Beutler | May 23, 2012, 6:22AM

Sen. John Cornyn (R-TX)

A giant austerity bomb is timed to go off at the beginning of next year, and the threat of significantly higher taxes and lower spending has Republicans running around the Capitol sounding more like John Maynard Keynes than John Boehner.

Automatic, across-the-board reductions to domestic and defense spending, combined with the looming expiration of the Bush tax cuts, will dramatically consolidate the budget in the next calendar year, if Congress does nothing. And despite bemoaning deficits throughout the Obama years, the GOP's suddenly come around to the view that cutting government spending is a job killer.

Just listen to Sen. John Cornyn (R-TX).

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Budget

Deja Vu: House GOP Reignites The Medicare Fight With Its Budget

Brian Beutler | March 20, 2012, 11:36AM

On Tuesday, House Republicans unveiled an updated version of their controversial long-term budget -- a sweeping plan that envisions dramatically lower tax rates on wealthy Americans, deep cuts to federal support programs for the poor and the eventual phase-out of the existing Medicare system, which would be replaced by a subsidized private insurance system, including traditional Medicare as an option.

You can read the GOP gloss on their plan here. Among its claims: The latest "Path to Prosperity" "Restores economic freedom and ensures a level playing field for all by putting an end to special-interest favoritism and corporate welfare" and "cuts government spending to protect hardworking taxpayers."

The reaction from the White House was swift.

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Budget

New Report Creates Confusion, Spin Over Obama Budget (CHART)

Brian Beutler | March 16, 2012, 5:34PM

A new Congressional Budget Office report has reignited the spin wars over President Obama's budget, and Republicans are eagerly blasting articles to reporters about how the administration would explode deficits and debt if left to its own devices.

But this line of attack is based on a questionable premise, familiar to veterans of the past year's budget wars.

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Affordable Care Act

An 'Obamacare' Cost Explosion? Hardly -- GOP Distorts CBO Report

Sahil Kapur | March 15, 2012, 2:09PM

House Speaker John Boehner (R-OH) and Houser Majority Leader Eric Cantor (R-VA)

Republicans and conservative media are cherry-picking a figure in a new Congressional Budget Office spending estimate (PDF) to assert that the cost of "Obamacare" has nearly doubled to $1.76 trillion. But the claim ignores the corresponding savings during the additional period of the spending projection, thus distorting the actual cost estimates of the law.

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Barack Obama

CHART: Don't Buy The GOP Hype On Obama Budget Deficits

Brian Beutler | February 15, 2012, 5:40AM

President Barack Obama and Vice President Joe Biden

Republicans have taken to describing President Obama's budget as "deficits built to last" -- a play on Obama's call for an economy built to last. The implication: hand the government over to us, and we'll rid the budget of this deficit scourge. Put aside for a moment that wiping out deficits too fast would be economically disastrous, leading to rocketing unemployment rates. The truth is there are plenty of budget proposals out there, including Paul Ryan's "Path To Prosperity," which was endorsed by nearly every Republican in Congress. And these also project significant deficits well into the future.

Of course, Obama's budget is very substantively different from Paul Ryan's Path to Prosperity. Obama's would draw down deficits over the coming decade with a mix of proposed tax increases on high income earners and corporations, already enacted spending cuts, and additional cuts to health care spending and other programs. But it maintains the basic shape of the existing safety net over the long term. Ryan's calls for huge cuts to the safety net, for making Medicaid a block grant program, and, after a decade, for phasing out Medicare. But he proposes significant tax cuts at the same time.

And even with all that slashing, just what does that do to the projected deficit? The chart below tells you quite starkly:

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Super Committee

GOP's False Claim Of Proposing Higher Taxes On The Rich Spreads (VIDEO)

Brian Beutler | November 22, 2011, 2:34PM

This is how bad information spreads. Channeling Washington Post columnist Robert Samuelson, Mort Zuckerman -- the billionaire real estate and media mogul -- claimed on MSNBC Tuesday that Republicans on the super committee had broken with their anti-tax orthodoxy and proposed to increase taxes, modestly, on upper income Americans.

Here's Zuckerman:

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Super Committee

Super Committee Republicans Work The Refs

Brian Beutler | November 17, 2011, 5:10PM

If you're looking for evidence that Republicans aren't worried about actual federal deficits, look no further than their about-face on how to count the Super Committee's budget savings.

The details are technical, but crucial, so bear with me.

At the very end of the debt limit fight, Republicans crowed that the Super Committee's inherent design would make it difficult for the panel's Democrats to insist on tax increases. Because of how the Congressional Budget Office typically scores legislation, they argued, any attempt to raise marginal tax rates from their current Bush-era levels would actually score as a big tax cut and thus a budget buster -- a fact that would make it difficult for the Committee to hit its $1.2 trillion target.

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Jobs

CHART OF THE DAY: CBO Says Dem Plans Create More Jobs

Brian Beutler | November 16, 2011, 5:53AM

Congressional Budget Office Director Doug Elmendorf

CBO Director Doug Elmendorf's testimony before the Senate Budget Committee Tuesday was full of bad news for the unemployed, and thus for President Obama. This is the stuff Republicans blasted out to reporters: Unemployment will likely be sky high through next year, GDP growth has been and will continue to be anemic.

But his prepared remarks confirm this is in part a product of the GOP's unwillingness to pass the big-ticket items in Obama's jobs bill. And they also imply that the GOP's economic counter-proposals would do almost nothing to actually improve things.

Here's a chart that lays out pretty clearly:

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Newt Gingrich

Former Directors Blast Gingrich's Plan To Eliminate Congressional Budget Office

Brian Beutler | November 9, 2011, 6:00AM

Former Speaker Newt Gingrich (R-GA)

Newt Gingrich wants to swing into Washington like a wrecking ball and demolish the key barriers between the GOP and the end of universal health care. But his primary target isn't Obamacare itself. Rather it's a non-partisan agency most people outside the beltway have never heard of -- but that the D.C. establishment would arise and take arms to protect.

"If you are serious about real health reform, you must abolish the Congressional Budget Office because it lies," Gingrich said at a Saturday debate with embattled pizza entrepreneur Herman Cain. "Every hospital will tell you that if you get the family and patient involved, it is better and less expensive. The Congressional Budget Office refuses to see this as a savings. It wants more bureaucracy and less patient involvement."

In a technical sense, Gingrich is correct. The Congressional Budget Office will make it hard for Republicans to completely repeal Obamacare, even if they unify control of government in 2013. CBO is the agency that evaluates for lawmakers the impact their legislation is expected to have on the federal budget. And unfortunately for Republicans, the health care law was devised to score as a deficit reducer, particularly after its first 10 years of existence. By direct corollary, the CBO says repealing the whole thing would increase projected deficits. For political and (more importantly) procedural reasons, that would make a complete repeal almost impossible.

Some Republicans want to change the rules that make CBO's words so powerful. Gingrich, by contrast, wants to get rid of CBO altogether. In response, former CBO heads are leaping to its defense -- including a key conservative economist, influential among Republicans.

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Super Committee

Why The Super Committee Is Heading For Super Catastrophe

Brian Beutler | November 8, 2011, 5:48AM

As of Tuesday morning, betting on the Super Committee to succeed would be playing the odds.

A key member of the Senate Democratic leadership team has openly predicted the panel will gridlock and fail, and placed the blame squarely on Republicans.

As GOP committee members met privately, Maryland Rep. Chris Van Hollen -- a Democrat on the panel -- told Bloomberg, "You need to close some of these tax loopholes and you need to generate additional revenue. And so that balance is going to be important. We saw the dueling letters just last week. We had a bipartisan group in the House that said, 'Look, everything is on the table including revenues - tax revenues.' And within 24 hours you had 33 [Republican] Senators say, 'no new net tax revenues.'"

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Defense Spending

Republicans Cry Uncle On Spending ... When Cuts Hit Home

Brian Beutler | October 28, 2011, 6:00AM

It took months of fighting -- the threat of a government shutdown, the graver threat of a default on the national debt, and now a new threat of major, automatic cuts to Medicare and defense programs -- but Congress' deficit obsession has finally exposed the rarest of all species: Republican Keynesians.

With just a under a month until the deficit Super Committee must recommend policies that cut the 10 year deficit by $1.2 trillion, members of the Republican party -- the same party that's been on the war path for deep spending cuts, and that decries President Obama's "failed stimulus" -- are making uncharacteristic arguments against slashing spending. Trim too much, too quickly, they warn, and people will lose their jobs!

Call them Defense Keynesians -- GOP members who represent defense interests, veterans, service members, contractors, and others whose livelihoods would be impacted by deep cuts to defense spending. They don't want the Super Committee to cut much more, if any, from defense, and they certainly don't want to pull the so-called "trigger" which would cut defense across the board by about $600 billion starting in 2013, if the panel gridlocks.

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Chris Van Hollen

Dems Get A Boost For Super Committee Tax Bump

Brian Beutler | October 26, 2011, 3:00PM

With less than a month before their November 23 deadline, Democrats on the deficit Super Committee are facing serious pushback from their Republican counterparts for proposing a broad deal that would reduce deficits by nearly $3 trillion -- including cuts to popular programs like Medicare -- because it also includes more than $1 trillion in new tax revenues, according to aides briefed on private negotiations.

Sources remain mum on the specifics of the cuts and taxes Dems have put forward. And they caution that most, but not all, of the Democrats on the panel support the push -- an effort to achieve multiple Republican votes for a plan modeled on the "grand bargain" President Obama tried to strike with John Boehner.

But they got some unexpected help from Congressional Budget Office director Doug Elmendorf who testified before the panel Wednesday. He cited analysis his office did about a year ago, which found that allowing the Bush tax cuts to expire would carry greater reward than risk -- that the hole they punch in the budget overwhelms the positive impact they have on productivity.

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Paul Ryan

Paul Ryan Takes On Elizabeth Warren And The 99 Percent

Brian Beutler | October 26, 2011, 1:12PM

Senate Candidate Elizabeth Warren (D-MA) and Rep. Paul Ryan (R-WI)

Democrats want the 2012 elections to turn on the question of which party has a better vision for the country, and to win the ensuing battle of public perception, both parties are putting the brightest shine they can on their particular designs.

On Wednesday, the GOP pitted conservative darling Paul Ryan against liberal hero Elizabeth Warren, with Ryan serving as a tribune to wealthy Americans and Warren as a populist fighter for working people.

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CBO

CHARTS OF THE DAY: Where'd All The Income Growth Go? To The 1 percent!

Brian Beutler | October 25, 2011, 3:47PM

At the request of the Senate Finance Committee, the Congressional Budget Office has produced a report analyzing trends in the distribution of household income from 1979 until 2007 -- just before the economy fell off a cliff.

The results will be familiar to economists and policy wonks, but they're eye-popping. These charts and graphs tell a story of a massive income growth in the Reagan and post-Reagan years, and particularly during the George W. Bush administration -- but only for the famous 1 percenters.

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Health Care

CHART OF THE DAY: Repealing ObamaCare Would Be Disastrous For The Budget

Brian Beutler | October 24, 2011, 2:37PM

President Barack Obama

The Government Accountability Office has updated its fiscal outlook for the U.S. government and come to some familiar conclusions. The country has a long term imbalance that will have to be addressed, but not until today's economic woes have passed. If Congress simply does nothing -- and allows the Bush tax cuts, and other temporary laws to expire -- the country's fiscal health will improve significantly over the long term.

But the report implies something that's been lost in the recent partisan debate over the country's future: repealing ObamaCare would consign us to swift, ugly fiscal and health care crises.

The health care reform law will extend subsidized private health insurance to millions of Americans, paid for with new taxes and Medicare savings. But it also included numerous demonstration projects and reforms intended to rein in the growth of health care costs, and thus Medicare spending. Some of them have great promise -- if they can survive.

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Super Committee

In Letter, House Progressives Press Super Committee On Jobs, Protecting Medicare, Medicaid, Social Security

Brian Beutler | October 6, 2011, 1:33PM

Rep. Raul Grijalva

House progressives will press the joint deficit Super Committee to ditch entitlement cuts and pass measures to bolster the economy.

The co-chairs of the Congressional Progressive Caucus are rounding up Democratic signatures on a letter, obtained by TPM, pressing the 12 member panel to pair emergency jobs legislation with deficit reducing measures based on tax increases on wealthy Americans.

"We ask that you lead the Select Committee by these simple core principles," write Reps. Raul Grijalva (D-AZ) and Keith Ellison (D-MN). "The American people have spoken loud and clear on their priorities for our nation. They want Social Security, Medicaid and Medicare protected, they want billionaires and corporations to finally pay their fair share and they want to be able to get back to work to earn a fair living."

Their effort is partially bolstered by a new CBO analysis, which found that the unemployment crisis is a massive driver of the deficit. In other words, effective job creation measures will go a good way toward closing the near and medium term hole in the budget.

You can read the entire letter, which has not yet been delivered to the Super Committee co-chairs, below the fold.

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Super Committee

Why All Of Washington Is Screaming "Go Big!" Into The Wind -- At Least For Now

Brian Beutler | September 16, 2011, 6:20AM

The new mantra in Washington is "Go Big!"

It started with Alan Simpson and Erskine Bowles -- the co-chairs of President Obama's fiscal commission -- and is now on the lips of scores of members of Congress in both parties.

Joining about two dozen other senators Thursday, Budget Committee Chairman Kent Conrad (D-ND) urged the new deficit Super Committee "We're with you! Be brave! Be bold! Go Big!"

Even President Obama wants them to "Go Big!" -- he'll be sending Super Committee members a list of deficit reduction proposals that go way beyond the $1.5 trillion they're aiming for, and hopes to use those extra savings to finance his jobs bill.

But this isn't realistic if you listen to the members themselves, particularly Republicans.

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Super Committee

Super Committee GOP Unconvinced By CBO Chief On Jobs, Austerity

Brian Beutler | September 15, 2011, 6:10AM

Rep Dave Camp (R-MI) and House Speaker John Boehner (R-OH)

So did CBO Director Doug Elmendorf make any headway convincing Super Committee Republicans that a). the economy needs a short term boost of near term spending and tax cuts, and b). that the country shouldn't dive headlong, and unnecessarily, into austerity?

If Dave Camp is any indication, the answer is no.

The Michigan Republican, and chair of the House Ways and Means Committee said he disagreed with Elmendorf's cautionary testimony.

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Jobs

Blue Dogs Cool To Obama Jobs Vision

Brian Beutler | September 14, 2011, 1:29PM

Rep. Heath Schuler (D-NC)

CORRECTION: An earlier version of this article incorrectly attributed remarks by Rep. Kurt Schrader to Rep. John Barrow. TPM regrets the error.

Blue Dog Democrats are pushing members of the joint deficit Super Committee to reduce the deficit significantly more than they've been tasked with. But they don't want to talk about President Obama's jobs plan. And beneath the surface its clear that there are major differences between the White House and conservative members of his party.

Leaders of the Blue Dog caucus held a press conference in the Capitol Visitor's Center Wednesday to push the Super Committee to "go big." But thanks to an explicit efforts by Democrats and the administration the deficit panel's work has become linked to the idea of job creation, and Obama's jobs bill. But the Blue Dogs didn't really want to talk about it.

After the press conference I asked Rep. Heath Shuler (D-NC) whether he agreed with CBO chief Doug Elmendorf -- and by extension Obama -- that the wisest economic path involves near term stimulus followed by long-run fiscal restraint.

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Super Committee

Super Committee Riven By Major Divide Over Basic Facts

Brian Beutler | September 14, 2011, 5:59AM

Rep. Jeb Hensarling (R-TX)

Political debates over deficits and debt are always marked by obfuscation and technicality. The numbers are huge and frightening, the terms obscure and technical, and the simple, fundamental point of the argument gets buried underneath this avalanche of panic and esoterica.

But for a brief moment Tuesday, under questioning from Sen. Max Baucus (D-MT), Congress' top economic analyst made it perfectly clear to everybody who was listening.

"I think really the fundamental question for you is not how we got here, but where you want the country to go, what role do you and your colleagues want the government to play in the economy and the society?" said Doug Elmendorf, who heads the Congressional Budget Office. He was addressing the six Democrats and six Republicans on the new joint deficit committee, and for three hours he did his best not to get buried under the same avalanche.

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CBO

CHART OF THE DAY: Austerity Is A Bad Idea That Republicans Love

Brian Beutler | September 13, 2011, 3:36PM

An unemployed man.

During Tuesday's joint Super Committee hearing on the origin and drivers of U.S. debt, Republicans were eager, as they are in many settings, to portray the country as on the brink of a genuine debt crisis -- and to argue that the most effective remedies to a debt crisis are spending cuts, not tax increases.

This sounds like bland political pabulum, and in some ways it is. But it's also a huge reveal. If we're not in a fiscal crisis, and we thus have years of running room ahead of us to make appropriate, and non-drastic policy changes, then there's no immediate imperative to make the dramatic changes to Medicare and other popular government safety net programs Republicans want to see.

Here's how CBO director Doug Elmendorf responded when Sen. Rob Portman (R-OH) nudged him about the relative merits of cutting spending (i.e. rolling back government services) as part of a national austerity program.

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Super Committee

CBO Chief Gives De Facto Boost To Obama Jobs Plan

Brian Beutler | September 13, 2011, 2:36PM

CBO Director Doug Elmendorf

The Congressional Budget Office would be stepping out of bounds if it endorsed specific legislation or even hazy policy objectives. But it's hard to read CBO chief Doug Elmendorf's testimony to the joint deficit Super Committee Tuesday as anything other than a de facto endorsement of President Obama's broad strategy to boost the economy: legislation that spends money to hire people and reduces payroll taxes in the near-term, and that reduces deficits by even greater amounts in the middle and end of the decade.

"If policymakers want to achieve both a short-term economic boost and long-term fiscal sustainability the combination of policies that would be most effective according to our analysis would be changes in taxes and spending that would widen the deficit today, but narrow it in the coming decade," Elmendorf told the panel's 12 Democrats and Republicans. "The combination of fiscal policies that would be most effective would be policies that cut taxes or increase spending in the near-term, but over the medium and longer-term move in the opposite direction."

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Super Committee

Why The Super Committee's New Tax Expert Could Be Key To Its Success

Brian Beutler | August 31, 2011, 6:10AM

Rep. Jeb Hensarling (R-TX)

It's a mistake to read much into the fact that the Super Committee picked a staff director, or that he's a long-serving Republican aide. There's a temptation to read deeply into these developments, but ultimately the 12 members of the Super Committee will either reach an accommodation or they will not, and that much is up to them.

On that score, it is interesting that the staff director, Democrat or Republican, has extensive knowledge of the tax code.

This goes back to the final hours of the debt limit deal. The Super Committee will draft legislation that CBO will score relative to current law. That means CBO will score whatever they produce as if expiration of ALL the Bush tax cuts expire at the end of 2012. Want to make Bush's lower-income and middle-class tax cuts permanent, and let the top bracket cuts expire? No can do. That scores as a big tax CUT -- and thus counts against the committee's goal of reducing the deficit by $1.5 trillion over 10 years.

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CBO

Worse Than It Looks: CBO Says Economic Outlook More Dire Than Reported

Brian Beutler | August 24, 2011, 10:52AM

CBO Director Doug Elmendorf

Partisans will surely find things to love and hate about CBO's updated economic outlook. It projects that the 2011 deficit will be lower than the last two years' deficits, but still near record highs. It forecasts a slow but steady economic recovery over the next six years. And it makes clear that the country's medium-term fiscal imbalances are manageable unless lawmakers decide to screw things up.

But there's also a major, major caveat.

"CBO initially completed its economic forecast in early July, but it updated the forecast in early August to reflect the policy changes enacted in the Budget Control Act [the debt limit deal]," the report reads. "However, the forecast described here does not reflect any other developments since early July, including the recent swings in financial markets, weakness in certain economic indicators, and the annual revision to the national income and product accounts. Incorporating that news would have led CBO to temper its near-term forecast for economic growth."

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Stimulus

Cut And Grow Fail: CBO Schools Tea Party Freshman In Basic Economics

Brian Beutler | August 11, 2011, 3:15PM

Rep. Tim Huelskamp (R-KS)

This story was updated at 4:40 p.m. to include text from Huelskamp's letter

Rep. Tim Huelskamp (R-KS), a Tea Party-backed freshman who voted against the final debt limit bill, recently asked to hear from the Congressional Budget Office about the impact of government spending on economic growth. It's an article of faith on the right that vastly shrinking government will unleash the forces of private enterprise, and faced with CBO's opposing view, Huelskamp wanted to know the answer to two questions:

1). What current federal departments, agencies, programs, or portions thereof do not contribute to economic growth?

2). In the programs that CBO believes do contribute to economic growth, what level of spending cuts would amount to a level you believe would be significant enough to "probably slow the economic recovery"?

But if the newly elected member of the Budget Committee was hoping the non-partisan CBO would buy into his premise, he'll be sorely disappointed.

In a response letter Thursday, CBO-chief Doug Elmendorf gives Huelskamp a layman's lesson in Keynesian economics: Under current economic circumstances, new federal spending would help economic growth, and current and future cuts could stymie it, particularly if they hit key government investment.

"When demand for goods and services falls short of the economy's ability to produce them, as is the case currently, increasing government spending can increase aggregate demand and thereby narrow the gap between the economy's actual and potential levels of output," Elmendorf writes.

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Congressional Budget Office

CBO: Debt Limit Deal Reduces Deficits At Least $2.1 Trillion

Brian Beutler | August 1, 2011, 11:40AM

CBO Director Doug Elmendorf

At this point it's just a formality. Just about every agreed-to spending cut and deficit reduction provision in the debt limit bill had already been scored, leaving the outcome in little doubt.

But the Congressional Budget Office has weighed in and confirms that the debt limit deal will reduce deficits by over $2.1 trillion at a minimum over 10 years.

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Debt Ceiling

Hope For Boehner? Some House Conservatives Closing Ranks On Debt Limit Bill

Brian Beutler | July 27, 2011, 11:26AM

On Tuesday, conservative Republican Study Committee chairman Jim Jordan (R-OH) predicted defeat for House Speaker John Boehner's (R-OH) plan to raise the debt limit.

"I am confident as of this morning that there are not 218 Republicans in support of the plan," he said.

He was counting on the opposition of dozens of House conservatives who have in the past pledged not to raise the debt limit on terms that compromising with Democrats would require.

Twenty-four hours later, after taking a beating from the GOP establishment and party leadership, and after watching Democrats grow more and more confident in their ability to split the Republican coalition, those conservatives are reconsidering their rebellion.

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Debt Ceiling

CBO: Reid's Plan Doesn't Cut Spending As Much As He Says--But Still More Than Boehner's Does

Brian Beutler | July 27, 2011, 9:50AM

Senate Majority Leader Harry Reid (D-NV)

Compared to House Republicans, Senate Majority Leader Harry Reid (D-NV) is a happy man right now.

The Congressional Budget Office says his debt limit bill will reduce deficits relative to the current baseline by about $2.2 trillion over 10 years -- much more than House Speaker John Boehner's (R-OH) bill, which scored such small savings Tuesday evening that he pulled it to include more spending cuts at the last minute.

But it's not all good news for Reid. First, Republicans are already dismissing the big numbers because they rely heavily on savings from winding down wars in Afghanistan and Iraq. Those savings are what you call "budget gimmickry," when the other party relies on them, so the GOP says they shouldn't count.

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Debt Ceiling

GOP Delays Debt Limit Vote After Damaging CBO Score

Brian Beutler | July 26, 2011, 6:55PM

House Speaker John Boehner (R-OH)

Updated at 9:00 p.m.

Moments after the Congressional Budget Office released an analysis finding that the House Republicans' debt limit bill falls far short of one their key goals, House Speaker John Boehner (R-OH) decided to rewrite the legislation, and according to GOP leadership, an expected Wednesday floor vote on the package will be delayed until Thursday at the earliest.

"We promised that we will cut spending more than we increase the debt limit - with no tax hikes - and we will keep that promise," reads a statement from Boehner spokesman Michael Steel. "As we speak, Congressional staff are looking at options to re-write the legislation to meet our pledge."

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John Boehner

Boehner's Debt Limit Plan Slashes The Deficit By...$1 Billion Next Year

Brian Beutler | July 26, 2011, 6:06PM

House Speaker John Boehner (R-OH)

Whelp, Congress' official budget scorekeeper has weighed in on House Speaker John Boehner's (R-OH) debt limit plan and if you're a Republican, it's a very mixed review.

The goodish news for conservatives is that relative to projections based on current spending, the Congressional Budget Office estimates Boehner's plan would reduce non-war discretionary spending by $710 billion over 10 years. That's if his discretionary spending caps were to hold in the out years, and future Congresses didn't change the law to allow themselves to appropriate more money. Over the course of a decade, CBO estimates the plan would reduce deficits by $851 billion. Those are big numbers. But they're less than Boehner's $1 trillion in promised cuts, and would thus make it hard for him to stand by his demand for a dollar-for-dollar match between deficit reduction and new borrowing authority. That's a look at the full budget window.

What would it do right away? Not much at all.

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Congress

CHART OF THE DAY: If Congress Does Nothing, The Deficit Will Disappear

Brian Beutler | June 24, 2011, 6:20AM

President Barack Obama meets with Democratic and Republican leaders

On Wednesday, the Congressional Budget Office released its updated long-term budget forecast, which looked surprisingly like the previous version of its long-term budget forecast.

It showed, as one might expect, that if the Bush tax-cuts remain in effect and Medicare and Medicaid spending isn't constrained in some way, the country will topple into a genuine fiscal crisis -- not the fake one the Congress is pretending the country's in right now.

Republicans, of course, seized on that particular projection, and claimed (a bit ridiculously) that it proved the government must adopt their precise policy views: major spending cuts, particularly to entitlement programs.

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Doug Elmendorf

CBO Director On The Economy: 'Great Deal Of Pain' Ahead

Brian Beutler | June 14, 2011, 11:56AM

CBO director Doug Elmendorf offered reporters a sneak preview of his agency's forthcoming economic forecast Tuesday, at a breakfast roundtable hosted by the Christian Science Monitor. It's bad news for most Americans -- and bad political news for President Obama.

"A great deal of the pain of this downturn lies in front of us still," Elmendorf said.

At the beginning of the year, CBO put the U.S. on a five-year path of modest growth, over which time they predicted the unemployment rate would crawl down toward five percent. Elmendorf sees nothing on the horizon to speed that up.

"At this point I don't expect large changes to that forecast," he said.

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Debt Ceiling

CBO Director Elmendorf: Debt Default 'A Dangerous Gamble'

Brian Beutler | June 14, 2011, 10:59AM

CBO Director Doug Elmendorf

Congress' top adviser on federal budget issues warned Tuesday that even a brief default on U.S. credit obligations, triggered by a failure to raise the national debt limit in a timely fashion, would be "a dangerous gamble," with potentially far-reaching consequences for the U.S. economy and citizens who rely on crucial social services.

"It is a dangerous gamble because any government that has borrowed as much as ours has borrowed and will need to borrow as much as ours will need to borrow cannot take the views of its creditors lightly," CBO Director Doug Elmendorf told a roomful of reporters at a breakfast roundtable hosted by the Christian Science Monitor. "Even a small increase in the perceived risk of Treasuries would be very expensive for the countries."

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Spending

OOPS! Historic 'Spending Cut' Bill Increased Spending By $3 Billion

Brian Beutler | May 16, 2011, 6:19PM

House Speaker John Boehner (R-OH)

Republicans stormed Capitol Hill in January vowing to slash discretionary spending by $100 billion right off the bat. In their pledge to America, they promised that, "[w]ith common-sense exceptions for seniors, veterans, and our troops, we will roll back government spending to pre-stimulus, pre-bailout levels, saving us at least $100 billion in the first year alone."

As time went on, it became clear that they wouldn't get the whole loaf, and the key question became: How many billions of dollars in spending would Democrats agree to cut, without risking massive Republican defections, and, perhaps, a protracted government shutdown?

A few weeks after they cut the deal, we have an answer. It turns out the six-month spending bill Congress passed in April increased discretionary outlays through the remainder of the fiscal year by a bit over $3 billion. In other words, total direct spending will be higher by the end of September than if Congress had just set spending on autopilot for the remainder of the fiscal year back in April.

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Douglas Holtz-Eakin

Holtz-Eakin: Congress Has To Raise The Debt Limit, Sooner Rather Than Later

Brian Beutler | April 26, 2011, 4:04PM

Former McCain campaign adviser Douglas Holtz-Eakin

The former director of the Congressional Budget Office, and chief economic policy adviser to John McCain during the 2008 presidential campaign, says Congress has to raise the debt limit, and soon.

"I think that ultimately Congress has to raise the debt limit," Doug Holtz-Eakin told me after moderating an event on Capitol Hill. "We have to be good stewards of the nation's credit rating [and] doing it sooner is better than later."

In an escalation of legislative brinksmanship over raising the debt limit, House Speaker John Boehner (R-OH) told Politico Monday that he might not hold a vote on it at all, if he can't get buy-in from Democrats on serious spending cuts.

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Government Shutdown

Pelosi Suggests Dems Won't Let Government Shutdown If Republicans Abandon Boehner

Brian Beutler | April 14, 2011, 11:38AM

Rep. Nancy Pelosi (D-CA)

House Minority Leader Nancy Pelosi suggested Thursday that Democratic votes will push the spending compromise over the top -- even if Republicans defect in large numbers over a new report suggesting the bill will cut less than a billion dollars in government spending.

"I have always thought that if he [House Speaker John Boehner] didn't have enough votes -- if he didn't get 218 on his own -- that there would be Democrats who could help put it over the top," Pelosi said at a Capitol press conference. "It's just a question of how big that disparity is."

"I assume they have the votes," she added. "They seem pretty confident. You sound less confident than they do."

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Health Care

CBO: GOP Budget Would Increase Debt, Then Stick It To Medicare Patients

Brian Beutler | April 5, 2011, 5:45PM

Rep. Paul Ryan (R-WI)

The nonpartisan Congressional Budget Office's initial analysis of the House GOP budget released today by Rep. Paul Ryan (R-WI) is filled with nuggets of bad news for Republicans.

In addition to acknowledging that seniors, disabled and elderly people would be hit with much higher out-of-pocket health care costs, the CBO finds that by the end of the 10-year budget window, public debt will actually be higher than it would be if the GOP just did nothing.

Under the so-called "extended baseline scenario" -- a.k.a. projections based on current law -- debt held by the public will grow to 67 percent of GDP by 2022. Under the GOP plan, public debt would reach 70 percent of GDP in the same window.

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Health Care

CORRECTED: GOP Budget Ignores CBO To Claim Health Care Repeal Will Save Money

Brian Beutler | April 5, 2011, 11:36AM

Rep. Paul Ryan (R-WI)

[Correction: This post was based on a misreading or the GOP budget, and on Republican claims that the budget would save money by repealing the the health care law. The budget itself doesn't claim that repealing the health care law will reduce the deficit as we reported. It claims repeal will reduce spending outlays, and at times characterizes those reductions as "savings". That's true so far as it goes. But the budget does not grapple with the fact that repealing the law's taxes and other savings would more than make up for the spending reductions, resulting in a deficit increase. We regret the error.]

The budget plan unveiled by Rep. Paul Ryan (R-WI) Tuesday does a neat trick: It claims that repealing the health care reform law will actually reduce the federal budget deficit -- despite extensive analyses by the Congressional Budget Office that show exactly the opposite.

The CBO -- which is the gold standard for budget analysis and number crunching on Capitol Hill -- has issued a series of reports which conclude that the health care law will reduce the deficit and, by corollary, that repealing the health care law will cause the deficit to go back up.

This is a problem for Republicans, who dismiss CBO findings out of hand. Indeed, the budget they unveiled Tuesday morning relies on unofficial numbers to create the impression that repealing the health care law will reduce the deficit.

According to the GOP budget, repealing the health care law will reduce the deficit by $1.4 trillion by 2022. CBO, by contrast, holds that repealing the health law now will add well over $200 billion to the deficit over the same time frame.

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