March 2011 was a noteworthy period for matters relating to the current and projected U.S. Government’s Federal Budgets, Debt Held by the Public, and Gross Federal Debt. Here’s a brief summary of key Government reports, and letters to President Obama and Congressional leaders.
3.1 – The Congressional Budget Office (CBO) released a report titled Reducing the Deficit: Spending and Revenue Options on March 10. CBO identifies 105 options for reducing federal spending and increasing revenues. The CBO report includes 32 options for reducing Mandatory spending, 38 options for reducing Discretionary spending, and 35 options for increasing Federal revenues. Six additional options are identified which will increase Federal spending. Each option is supported by a detailed explanation.
3.2 – The Joint Economic Committee (JEC) Republican staff released an 18 page report titled Spend Less, Owe Less, Grow the Economy on March 15 which outlines a Republican strategy for addressing the unsustainable fiscal outlook of the U.S. Government. The primary focus of the JEC report is on spending reductions accomplished through fiscal consolidation programs. This report is likely to draw plenty of fire for its recommendations and economic development perspectives.
3.4 – The General Accounting Office (GAO) reissued its 12 page January update of the Federal Government’s Long-Term Fiscal Outlook on March 18 (March 22). Figure 4, Potential Fiscal Outcomes under the Alternative Simulation: Revenues and Composition of Spending, on page 6 should be noted. GAO states, “By about 2030, net interest payments on the federal government’s accumulating debt held by the public will be almost 8 percent of GDP and would be the largest single expenditure in the federal budget.” GAO explains that a 10 year delay in taking actions to correct the Government’s fiscal situation will increase the fiscal gap to more than 11 percent of GDP.
3.5 – Sixty-four U.S. Senators, 32 Democrats and 32 Republicans, lead by Senator Michael Bennet and Senator Mike Johanns signed and forwarded a bipartisan letter to President Obama on March 18 requesting that he “engage in budget […]
CoRev I have a question that I can’t find the answer to. The Hennesey charts show an immediate steep increase in taxes by Obama and by Ryan. I know who will pay that money under Obama’s plan (which raises the top marginal income tax rates). By any chance do you know who pays that money under Ryan’s plan? Ryan reduces the top marginal income tax rate to 25 percent, so it’s presumably not the same people who would pay under Obama’s plan.
Yes both Obama and Ryan presumably have the same tax plans for 2012 per the December agreement. Then they each change taxes, but both keep rising a lot for a couple years (Obama’s more than Ryan’s). It could be different assumptions and/or the different tax plans–I just don’t know.
And, just in case you think that shutting down the government will save money, here’s what it will cost. By “cost”, I mean what shutting the government down will do to the economy as a whole. Please note that unlike the 1995 shutdown, this one will not permit payment of salary for the furloughed period. So, the economy will suffer an immediate reduction in the amount of money being spent for ordinary living expenses from this source. This reduction will be equal to the unpaid salaries of 800K federal employees for the duratin of the shut down. We can agree that is a tidy sum. Here’s the link. http://www.washingtonpost.com/blogs/federal-eye/post/reality_of_government_shutdown_becomes_clearer/2011/04/06/AFTSUZpC_blog.html?wprss=federal-eye
This does not include payments to contractors and contractors’ employees (about 8 million people.) This is generally thought to be elebenty gazillionbillion bucks. I think this will be a very expensive money-saving venture. NancyO
Obama to the middle class – ‘Let them eat cake…’ From AP:
“Obama needled one questioner who asked about gas prices, now averaging close to $3.70 a gallon nationwide, and suggested that the gentleman consider getting rid of his gas-guzzling vehicle.
“If you’re complaining about the price of gas and you’re only getting 8 miles a gallon, you know,” Obama said laughingly. “You might want to think about a trade-in.”
John Cole responds to Andrew Sullivan and explains why “Nothing” is superior to the Ryan plan for debt reduction. http://www.balloon-juice.com/2011/04/07/i-cant-help-myself/#comments
Nothing! It’s better than Ryan if you actually care about the debt!
AmSoc–It shouldn’t be surprising that nothing is the best plan for SS too. Leave it alone, already! Hmmm. You haven’t seen CoRev around anywhere, have ya? 😉 NancyO
Since we seem unable or unwilling to get serious about discussing the budget, let me change to my favorite subject.
I have repeatedly requested “please do the math” to those who are “true” believers in AGW/Climate Change/etc. The reason is that without doing the math impact can not be readily discussed. How much impact could a handful of CO2 molecules increase temps? How many of those handful are likely from man? How likely is it that temperature increases are actually the sole cause of increased CO2?
For just a little insight into that last question study the graphic below. How much of that heat from those handful of CO2 molecules can actually impact the overall heat carrying capacity of the planet?
Remember the “true” believer accepts that the teeny, weeny, itsy, bitsy increase in a molecule required for all life on earth is dangerously impacting temperatures. Not the H2O molecule which in its various forms is truly more efficient at carrying heat.
I want the economists in the AGW camp to do some math, since the probability of AGW is not 100% and even if it is there is another question is it worth fixing. What will the net present value of the costs of AGW be, and what will the net present value of the costs to mitigate? Then we can decide if we want to pay the premium on the insurance policy In essence AGW is just like any other threat there is some probability it is true (likely IMHO 60%+) and as a result some costs would be incurred. However by asking for NPV (net present value) I have opened a huge garbage pail of worms. No one can agree what the discount rate should be for the future. Values range from 0 (ridiculous IMHO would you pay $1 now to get $1 back in 50 years?) up to about 6% or up to the rates used in corporate investment decisions. This is critical because at 3% you cut the NPV of costs 50 years out by 3/4 and at 5% by about 7/8. You will note most arguements devolve into morality of doing something with memes about what we owe the future. At a 2% growth rate the economy is 3x today in 50 years at 3% 5x and so on.
If you say ok the mitigation is the equivalent of taking out an insurance policy, how does one decide if one wishes to pay the premium? Essentially one looks at the premium versus the loss and decides. But then insurance either is short term or deals with a certianty such as life insurance, (you will die its just when and life insurance is you betting you die sooner, and the insurance company betting you die later). The NPV concept comes in because somehow one has to account for the fact that a dollar 50 years from now is not the same as a dollar today.
Of course if you want to price carbon a carbon tax is vastly to be preferred to Cap and pay Llyod Bankfein and Company which is what Cap and Trade will be.
Kieth Hennesey compares the Obama & Ryan budget proposals. Here: http://keithhennessey.com/2011/04/06/ryan-v-obama/
He has a nice set of charts. Below is representative.
FEDERAL BUDGET REALITY CHECK 3.0
March 2011
March 2011 was a noteworthy period for matters relating to the current and projected U.S. Government’s Federal Budgets, Debt Held by the Public, and Gross Federal Debt. Here’s a brief summary of key Government reports, and letters to President Obama and Congressional leaders.
3.1 – The Congressional Budget Office (CBO) released a report titled Reducing the Deficit: Spending and Revenue Options on March 10. CBO identifies 105 options for reducing federal spending and increasing revenues. The CBO report includes 32 options for reducing Mandatory spending, 38 options for reducing Discretionary spending, and 35 options for increasing Federal revenues. Six additional options are identified which will increase Federal spending. Each option is supported by a detailed explanation.
3.2 – The Joint Economic Committee (JEC) Republican staff released an 18 page report titled Spend Less, Owe Less, Grow the Economy on March 15 which outlines a Republican strategy for addressing the unsustainable fiscal outlook of the U.S. Government. The primary focus of the JEC report is on spending reductions accomplished through fiscal consolidation programs. This report is likely to draw plenty of fire for its recommendations and economic development perspectives.
3.3 – CBO released the Preliminary Analysis of the President’s Budget for Fiscal Year 2012 on March 18. Note the CBO projections for Debt Held by the Public and Gross Federal Debt summarized here. CBO’s preliminary analysis includes an extensive set of supplemental data on mandatory spending. All of the materials are a worthy read. The Office of Management and Budget (OMB) responded immediately to the CBO report with a brief noteworthy response on March 18. CBO’s full analysis will be published in April.
3.4 – The General Accounting Office (GAO) reissued its 12 page January update of the Federal Government’s Long-Term Fiscal Outlook on March 18 (March 22). Figure 4, Potential Fiscal Outcomes under the Alternative Simulation: Revenues and Composition of Spending, on page 6 should be noted. GAO states, “By about 2030, net interest payments on the federal government’s accumulating debt held by the public will be almost 8 percent of GDP and would be the largest single expenditure in the federal budget.” GAO explains that a 10 year delay in taking actions to correct the Government’s fiscal situation will increase the fiscal gap to more than 11 percent of GDP.
3.5 – Sixty-four U.S. Senators, 32 Democrats and 32 Republicans, lead by Senator Michael Bennet and Senator Mike Johanns signed and forwarded a bipartisan letter to President Obama on March 18 requesting that he “engage in budget […]
CoRev I have a question that I can’t find the answer to. The Hennesey charts show an immediate steep increase in taxes by Obama and by Ryan. I know who will pay that money under Obama’s plan (which raises the top marginal income tax rates). By any chance do you know who pays that money under Ryan’s plan? Ryan reduces the top marginal income tax rate to 25 percent, so it’s presumably not the same people who would pay under Obama’s plan.
PJR, sorry no. Maybe MG has an answer. BTW, don’t forget that the FICA holday ends also, and that adds ~$110B/Yr in revenues.
Yes both Obama and Ryan presumably have the same tax plans for 2012 per the December agreement. Then they each change taxes, but both keep rising a lot for a couple years (Obama’s more than Ryan’s). It could be different assumptions and/or the different tax plans–I just don’t know.
On 10 April 1951 (11 Apr Tokyo time) Washington Time Cheif of Staff of the Army Omar Bradley relieved Douglas Mac Arthur.
Setting a precedent for Obama to rein in Mc Chhrystal.
More later.
And, just in case you think that shutting down the government will save money, here’s what it will cost. By “cost”, I mean what shutting the government down will do to the economy as a whole. Please note that unlike the 1995 shutdown, this one will not permit payment of salary for the furloughed period. So, the economy will suffer an immediate reduction in the amount of money being spent for ordinary living expenses from this source. This reduction will be equal to the unpaid salaries of 800K federal employees for the duratin of the shut down. We can agree that is a tidy sum. Here’s the link. http://www.washingtonpost.com/blogs/federal-eye/post/reality_of_government_shutdown_becomes_clearer/2011/04/06/AFTSUZpC_blog.html?wprss=federal-eye
This does not include payments to contractors and contractors’ employees (about 8 million people.) This is generally thought to be elebenty gazillionbillion bucks. I think this will be a very expensive money-saving venture. NancyO
Duratin should be duration. NO
Obama to the middle class – ‘Let them eat cake…’
From AP:
“Obama needled one questioner who asked about gas prices, now averaging close to $3.70 a gallon nationwide, and suggested that the gentleman consider getting rid of his gas-guzzling vehicle.
“If you’re complaining about the price of gas and you’re only getting 8 miles a gallon, you know,” Obama said laughingly. “You might want to think about a trade-in.”
And I bet you’ll vote for him again!
Islam will change
John Cole responds to Andrew Sullivan and explains why “Nothing” is superior to the Ryan plan for debt reduction. http://www.balloon-juice.com/2011/04/07/i-cant-help-myself/#comments
Nothing! It’s better than Ryan if you actually care about the debt!
AmSoc–It shouldn’t be surprising that nothing is the best plan for SS too. Leave it alone, already! Hmmm. You haven’t seen CoRev around anywhere, have ya? 😉 NancyO
This is Amurrika. Let’em eat Twinkies (TM). 😉
Yeah this must be where that “Governs least = Governs best” philosophy came from. Right?
You will lose that bet.
Since we seem unable or unwilling to get serious about discussing the budget, let me change to my favorite subject.
I have repeatedly requested “please do the math” to those who are “true” believers in AGW/Climate Change/etc. The reason is that without doing the math impact can not be readily discussed. How much impact could a handful of CO2 molecules increase temps? How many of those handful are likely from man? How likely is it that temperature increases are actually the sole cause of increased CO2?
For just a little insight into that last question study the graphic below. How much of that heat from those handful of CO2 molecules can actually impact the overall heat carrying capacity of the planet?
Remember the “true” believer accepts that the teeny, weeny, itsy, bitsy increase in a molecule required for all life on earth is dangerously impacting temperatures. Not the H2O molecule which in its various forms is truly more efficient at carrying heat.
I want the economists in the AGW camp to do some math, since the probability of AGW is not 100% and even if it is there is another question is it worth fixing. What will the net present value of the costs of AGW be, and what will the net present value of the costs to mitigate? Then we can decide if we want to pay the premium on the insurance policy In essence AGW is just like any other threat there is some probability it is true (likely IMHO 60%+) and as a result some costs would be incurred.
However by asking for NPV (net present value) I have opened a huge garbage pail of worms. No one can agree what the discount rate should be for the future. Values range from 0 (ridiculous IMHO would you pay $1 now to get $1 back in 50 years?) up to about 6% or up to the rates used in corporate investment decisions. This is critical because at 3% you cut the NPV of costs 50 years out by 3/4 and at 5% by about 7/8.
You will note most arguements devolve into morality of doing something with memes about what we owe the future. At a 2% growth rate the economy is 3x today in 50 years at 3% 5x and so on.
Lyle,
Try minimizing the maximum regret.
NPV is not very useful when you have uncertainty, I am sure you learned that in a first course in operations research.
You can also look at decision theory under uncertainty. That might be a second effort to stuudy operations.
If you say ok the mitigation is the equivalent of taking out an insurance policy, how does one decide if one wishes to pay the premium? Essentially one looks at the premium versus the loss and decides. But then insurance either is short term or deals with a certianty such as life insurance, (you will die its just when and life insurance is you betting you die sooner, and the insurance company betting you die later). The NPV concept comes in because somehow one has to account for the fact that a dollar 50 years from now is not the same as a dollar today.
Of course if you want to price carbon a carbon tax is vastly to be preferred to Cap and pay Llyod Bankfein and Company which is what Cap and Trade will be.
Federal Budget Reality Checks 4.1, 4.2, and 4.3 are located here.