Budget

In the wake of the recent financial meltdown from which we are still recovering, the United States faces the prospect of yet another crisis—a federal debt crisis. Averting crisis will require tough choices and painful sacrifice, including those from federal workers. This crisis can be averted, however. And the sooner we act, the better. The National Commission on Fiscal Responsibility and Reform (“Fiscal Commission”), on which I served as associate director, has shown a way forward.

The Committee for a Responsible Federal Budget has updated its “Realistic Baseline” using projections from the Congressional Budget Office’s most recent Long-Term Budget Outlook.

Or, such is the distillation of the comments made yesterday at the event "Rebuilding the Road to Financial Stability" (co-sponsored by the Congressional Savings and Ownership Caucus and the Center for Financial Security at the University of Wisconsin-Madison) made by Federal Reserve Governor Sarah Bloom Raskin.

Today, the Congressional Budget Office (CBO) released its Long-Term Budget Outlook, which yet again illustrates this country's unsustainable fiscal trajectory. Under the Extended-Baseline Scenario, CBO projects debt to rise from 69 percent of GDP today to 75 percent by 2020 and 84 percent by 2035. Under the Alternative Fiscal Scenario, which makes more realistic assumptions about which policies lawmakers might extend, CBO projects debt to grow to 97 percent by 2020, 187 percent by 2035, and then to spiral out of control thereafter.

Policymakers from both parties are engaged in intense negotiations over how to raise the nation's debt ceiling as well as how to begin addressing our burgeoning debt.

If the debt ceiling is not raised by the beginning of August, we risk a default. In recent weeks, rating agencies have warned that failure to meet interest payments could result in a downgrade of U.S. debt -- a signal to markets that could lead to rising interest rates and possibly a fiscal crisis.

(cross posted at Fox and Hounds Daily)
Old men are warning us about a war that has already started.

Across the spectrum, people from Gov. Jerry Brown to Mr. Fox, proprietor of this web site, say that if there is no budget deal, we will see a "war of all against all" in this state.

Hasn't that war been going on for at least a generation?

House Budget Committee Chairman Paul Ryan, R-Wis., probably did not anticipate the kind of trouble his plan for privatizing Medicare would cause members of his own party. Ever since Democrats scored an upset in a New York state special congressional election that turned on the Republican candidates support for the Ryan plan, GOP presidential hopefuls and lawmakers have been stumbling around the negative reaction the "Path to Prosperity" has drawn from many voters.

A week before the constitutional deadline to pass the budget, Next 10 launched an update to the nonpartisan California Budget Challenge with an interactive budget workshop at Commonwealth Club. Participants learned about the most up-to-date budget solutions being proposed in Sacramento from leading experts and voted in real-time using instant-response clickers, creating a budget that reflected participants' priorities.
 
This event was co-sponsored by Next 10, the New America Foundation, and the Commonwealth Club of California.

Today, the Social Security Trustees released their 2011 report on the financial status of both Social Security and Medicare. The reports make clear that both programs are on unsustainable paths, and reforms will be necessary to make them solvent. This analysis focuses on the financial status of Social Security.