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.

Read more »

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:

Read more »

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.

Read more »

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.

Read more »

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.

Read more »

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.

Read more »

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.

Read more »

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.

Read more »

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.

Read more »

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."

Read more »

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."

Read more »

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.

Read more »

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.

Read more »

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."

Read more »

Doug Elmendorf

CBO Chief: High Income Tax Cuts Slow Income Growth

Brian Beutler | September 28, 2010, 3:38PM

Intentionally or not (but probably intentionally), Senate Budget Committee chairman Kent Conrad has mastered the art of deploying CBO chief Doug Elmendorf to ostensibly make the case for Conrad's policy preferences, under oath.

Today, Elmendorf made two key points before Conrad's panel: one will be used by Republicans to argue for a permanent extension of the Bush tax cuts; and the other will be used by Democrats to argue for letting Bush's high-income cuts expired. Both will, of course, bolster Conrad's argument for his own compromise position on tax cuts.

Here, in Elmendorf's words, is what will surely be the Republican talking point:

Read more »

Health Care

CBO Says It Can't Score Obama's Health Care Plan Without More Detail

Rachel Slajda | February 22, 2010, 3:22PM

CBO Director Doug Elmendorf

The director of the Congressional Budget Office, Doug Elmendorf, said today that President Obama's health care proposal isn't detailed enough to score.

"Preparing a cost estimate requires very detailed specifications of numerous provisions, and the materials that were released this morning do not provide sufficient detail on all of the provisions," Elmendorf wrote on his official CBO blog. "Therefore, CBO cannot provide a cost estimate for the proposal without additional detail, and, even if such detail were provided, analyzing the proposal would be a time-consuming process that could not be completed this week."

Read more »

Health Care

#HealthCareFAIL: How The Dems Botched Their Signature Legislation

Brian Beutler | January 29, 2010, 3:37PM

Clockwise from top left: Sen. Harry Reid (D-NV) and Sen. Max Baucus (D-MT); MA Sen. candidate Martha Coakley (D); Rep. Nancy Pelosi (D-CA); Former Sen. Ted Kennedy (D-MA) and President Obama

Talk about fits and starts.

A year ago Democrats committed to passing comprehensive health care legislation; six months ago, it became clear that their project wouldn't go smoothly; one month ago it was full speed ahead; and a week and a half ago it all fell apart.

Health care reform is now on life support. To mix metaphors, it's on life support and the back burner at the same time. How the Democrats' signature agenda item went from a foregone conclusion to a prospect in peril is a tale of missteps and bad luck. No single player or event brought us to where we are today. But if any of the below episodes had gone...more smoothly, this might've been a done deal.

You know how the saying goes: Success has a thousand fathers, but failure is an orphan. And you can be sure that if health care reform fails, the people below will make like John Edwards--quick-like.

Read more »

CBO

Not $1.3 Trillion: CBO Correction Undermines Dems Claim On Health Care Reform

Brian Beutler | December 20, 2009, 7:39PM

CBO Director Doug Elmendorf

As I noted yesterday, Democratic aides were ecstatic about a key CBO finding: "CBO expects that the legislation, if enacted, would reduce federal budget deficits over the ensuing decade relative to those projected under current law--with a total effect during that decade that is in a broad range around one-half percent of GDP."

This, they claimed, implied that the health care bill could reduce deficits by as much as $1.3 trillion from 2020-2029--double the first draft of the Reid bill, which, based on a different CBO analysis, leadership aides claimed would reduce the deficit by as much as $650 billion.

Well, they may have to backtrack now.

Read more »

CBO

Wait A Minute--The Public Option's Premiums Would Be Higher On Average?

Brian Beutler | October 30, 2009, 2:11PM

Speaker Nancy Pelosi (D-CA) and CBO Director Doug Elmendorf

Health care reformers have a number of arguments for the public option, but the main one is this: that by injecting fairness and competition into the market the public option will lower premiums for everybody, including those paying for private plans. Unfortunately, a new CBO study finds that it may not have that effect at all.

The theory behind the public option is that, by injecting a major non-profit insurer into the marketplace, it will force private competitors to cut down on administrative waste and other excesses, and, therefore, drive premiums down for everybody. Last week, when House Speaker Nancy Pelosi was on the verge of losing the fight for a muscular public option, she said "There's no philosophical difference between a robust public option and negotiated rates. It's just a difference in money."

But is that true? Yesterday, in an analysis of House health care legislation, the CBO concluded that the six million people expected to enroll in the public option by 2019 will be paying, on average, higher premiums than will people buying private plans.

"[A] plan paying negotiated rates would attract a broad network of providers but would typically have premiums that are somewhat higher than the average premiums for the private plans in the exchanges," wrote CBO chief Doug Elmendorf.

Read more »

Barack Obama

CBO Predicts Modest Savings From Medical Malpractice Reform

Brian Beutler | October 9, 2009, 11:57AM

Sen. Orrin Hatch (R-UT)

In response to an inquiry by Sen. Orrin Hatch (R-UT), Congressional Budget Office chief Doug Elmendorf finds that medical malpractice reform would reduce the deficit by about $54 billion over 10 years.

"Combining the effects on both mandatory spending and revenues, a tort reform package of the sort described earlier in this letter would reduce federal budget deficits by roughly $54 billion over 10 years," Elmendorf writes. That $54 billion is comprised of an expected $41 billion reduction in mandatory spending, and about $13 billion in new revenues.

And just what sort of statutory changes would be needed to generate the reduction?

Read more »

Health Care

CBO: Finance Committee Health Care Bill Would Save $81 Billion Over 10 Years

Brian Beutler | October 7, 2009, 4:40PM

The Congressional Budget Office delivers good, but unsurprising news to the Senate Finance Committee. They say the panel's health care reform legislation will require $829 billion in new spending--but that every penny will be covered, and, moreover, that it will reduce the deficit by $81 billion over 10 years, and then continue to reap even greater savings.

Director Doug Elmendorf writes, "According to CBO and JCT's assessment, enacting the Chairman's mark, as amended, would result in a net reduction in federal budget deficits of $81 billion over the 2010-2019 period.

All told, the proposal would reduce the federal deficit by $12 billion in 2019, CBO and JCT estimate. After that, the added revenues and cost savings are projected to grow more rapidly than the cost of the coverage expansion.

Read more »

Kent Conrad

Conrad's Deficit Obsession and Public Option Skepticism Have Put Him Out of Step with Democrats

Brian Beutler | September 23, 2009, 3:29PM

Sen. Kent Conrad (D-ND)

Last night, Kent Conrad nearly gave Max Baucus a heart attack. Or so it seemed. During a hearing about the Senate Finance Committee's health care bill, Conrad said he'd need to see a complete cost analysis of the legislation before he was willing to vote on it--a stipulation that, according to CBO chief Doug Elmendorf, promised to delay the Baucus bill by two weeks.

Conrad ultimately backed off from this demand, and today, with his support, the committee agreed not to hold a vote until a preliminary analysis could be completed--a compromise that will surely shorten the delay by several days. But this was only the latest in a series of power plays that have many Democrats and health care reformers wondering just what his gambit is.

"He's provided us with two main hurdles," said a Senate Democratic aide. "He said from the beginning that he wanted to focus on entitlement reform and deficit reduction...and then he opposed the public option."

Read more »

Health Care

Elmendorf: Health Care Progress May Not Be Possible for Two Weeks

Brian Beutler | September 22, 2009, 5:53PM

This is somewhat complicated, and I'll flesh it out and get you video just as soon as I can. But with Democrats anxious to pass a health care bill, and avoiding delays seen as a high political priority, Sen. Kent Conrad (D-ND) indicated today that there may be major delays in the health care process going forward. During today's health care hearing, he told CBO chief Doug Elmendorf today that the Senate Finance Committee must be provided with a complete CBO score of the final package before the panel can hold a vote on it.

"With respect to the issue of when scoring might be available, because...it is critically important that we have scoring before a final vote is cast in the committee," Conrad said, "it is important for us to know, once there is a package, after the amendment process here, can you give us some rough estimate, in days to have a CBO score."

How long will that scoring take?

Elmendorf estimated that the full reporting could take two weeks:

Read more »