Committee for a Responsible Federal Budget: Latest Articles

Deficit Bubble Boiling, Trouble is Close Behind

Ron Tang — Thu, 28 Feb 2008 00:00:00 -0500

In recent years, America has lurched from one economic bubble to the next. Early this decade, the dot-com bubble burst, sending financial markets into a tailspin. As lower interest rates helped to ease the bursting of that bubble, we shifted to over-investing in housing -- again culminating in a tremendous misallocation of resources and economic losses, as we currently are seeing. Now, as we try to contend with the bursting of the housing bubble, we face what may be the most dangerous type of bubble yet: the deficit bubble.

As the economy softens, and Congress is trying to ease the blow… more

Economic Diversification

adminn — Mon, 31 Dec 2007 22:23:00 -0500

Harry Markowitz’s 1952 essay Portfolio Theory broke new ground in developing ways to diversify financial portfolios. By the time he won the Nobel Prize nearly four decades later, countless financial innovations to help spread risk had been introduced, making the risks associated with investing more acceptable -- particularly to the American middle class. Sure the markets are taking a hit now, but those with diversified portfolios are certain to weather this downturn better than those without.

U.S. economic public policy would benefit from a similarly innovative approach to managing risk. The economy is facing growing pains that go deeper than just… more

Hopes for Tax Reform in 2007

Articles — Wed, 10 Jan 2007 06:54:00 -0500

Will 2007 be the year of fundamental tax reform? It should be, but in all likelihood, it will not be. Still, there are plenty of changes that could be made to move the tax code in the right direction.

First, the reasons there should be tax reform. Everybody hates the tax code. There is no better political rallying cry than "I am going to reform the tax code to make it simpler, fairer, and better for the economy." The same line is used by the most liberal and conservative would-be reformers. Unlike other public policies in need of reform --… more

Time for a Budget Summit

Articles — Sun, 05 Nov 2006 19:27:00 -0500

Deficits of hundreds of billions of dollars a year are projected to last for decades; efforts to reform Social Security have fallen flat; and no one is talking about the elephant in the room -- how to fix the nation's health-care system. We do not know what the makeup of Congress will be following the November elections, but there is one thing we know for sure: the state of fiscal affairs will still be a disaster.

Leaders of both major parties should agree that no matter how Congress is divided, they will tackle these pressing issues on a bipartisan basis. While… more

The Bucks Don't Stop

Articles — Sun, 19 Feb 2006 22:15:00 -0500

Although President Bush has presided over significant growth in federal spending, Congress routinely added to every budget he proposed in the last five years. On average, the extra spending totaled $80 billion a year, including supplemental appropriations for Iraq, Afghanistan and national disasters. By contrast, Congress routinely authorized less spending that President Clinton wanted.

So although Bush's proposed 2007 budget requests the second-largest spending increase in a decade, look for Congress to up the ante. For the chart detailing these additions, please see the attached PDF file.

Time for a New Budget

Articles — Sun, 23 Oct 2005 03:00:00 -0400

Congress and the president have made responding to Hurricane Katrina the highest priority of the federal government. The tremendous costs involved call for a grand rethinking of the nation's priorities. Given that we are only in the fourth week of the new fiscal year, and the current budget is already basically dead, the first step should be to pass a brand new budget.

The budget that the Congress passed this past spring, which covers the five years beginning in fiscal year 2006, was dangerously close to becoming derailed even before Katrina hit. That budget has since careened off track. It… more