This paper examines long-term fiscal discipline and economic performance, with two main results. First, declines in budget surpluses (increases in deficits) reduce national saving and therefore reduce future national income, regardless of their effect on interest rates. Second, increases in...
A recent Congressional Budget Office report presented many estimates, both positive and negative, for the effect of the presidents proposed tax cut on the economy. In issuing this report, CBO indirectly called into question many of the more nave statements made about the ability of Congress to "...
The Bush Administration's budget includes a chapter entitled "The Real Fiscal Danger," which highlights the projected imbalances in Social Security and Medicare. Ironically, the budget does not include any specific steps to eliminate or even reduce those imbalances. It does, however, propose...
[United Press International] Would most Americans be in favor of raising payroll taxes on the middle class to finance huge income tax cuts for the rich? Unquestionably, no. Yet, that is exactly what President Bush is now proposing. He argues for cutting tax rates on high-income families,...
In the face of a stagnant economy, a war, a rapidly deteriorating short-term fiscal outlook, and a substantial long-term fiscal problem, the Bush Administration has proposed massive, regressive, permanent tax cuts that it acknowledges are unsustainable. This paper shows that under realistic...
Dynamic score-keeping -- the recording of budget feedback effects as people react to government actions such as tax cuts -- is a hot topic again, fueled in part by the recent release of a Congressional Budget Office study of the revenue effects of the president's tax proposals. The topic is also...
State tax revenues were $32 billion lower in 2002 than in 2001, the first year over year revenue decline in recent history.1 Since then, budget conditions have deteriorated further, with an aggregate budget gap of $49 billion in 2003, according to the National Conference of State Legislators....
The three largest federal income-support programs for low-income households are the Earned Income Tax Credit (EITC), food stamps, and Temporary Assistance to Needy Families (TANF). While TANF and food stamps are traditional spending programs, the EITC provides more than $30 billion each year...
The corporate income tax has been in steady decline since World War II, reaching record lows during the recessions of the early 1980s and approaching those lows again in 2002.
In its fiscal year 2004 budget, the Bush administration proposes to create a new set of tax-preferred accounts that would expand opportunities and consolidate rules for tax-advantaged saving. The initial reaction to the proposal was not particularly positive. Despite its uncertain prospects, the...
The Economic Effects of Long-Term Fiscal Discipline
This paper examines long-term fiscal discipline and economic performance, with two main results. First, declines in budget surpluses (increases in deficits) reduce national saving and therefore reduce future national income, regardless of their effect on interest rates. Second, increases in...
Making the Right Case for Dynamic Analysis
A recent Congressional Budget Office report presented many estimates, both positive and negative, for the effect of the presidents proposed tax cut on the economy. In issuing this report, CBO indirectly called into question many of the more nave statements made about the ability of Congress to "...
The Real Fiscal Danger
The Bush Administration's budget includes a chapter entitled "The Real Fiscal Danger," which highlights the projected imbalances in Social Security and Medicare. Ironically, the budget does not include any specific steps to eliminate or even reduce those imbalances. It does, however, propose...
Higher Payroll Taxes? Why?
[United Press International] Would most Americans be in favor of raising payroll taxes on the middle class to finance huge income tax cuts for the rich? Unquestionably, no. Yet, that is exactly what President Bush is now proposing. He argues for cutting tax rates on high-income families,...
Faith-Based Budgeting
In the face of a stagnant economy, a war, a rapidly deteriorating short-term fiscal outlook, and a substantial long-term fiscal problem, the Bush Administration has proposed massive, regressive, permanent tax cuts that it acknowledges are unsustainable. This paper shows that under realistic...
Score-Keeping and Spending
Dynamic score-keeping -- the recording of budget feedback effects as people react to government actions such as tax cuts -- is a hot topic again, fueled in part by the recent release of a Congressional Budget Office study of the revenue effects of the president's tax proposals. The topic is also...
State Tax Reaction Differs From Early 1990s Downturn
State tax revenues were $32 billion lower in 2002 than in 2001, the first year over year revenue decline in recent history.1 Since then, budget conditions have deteriorated further, with an aggregate budget gap of $49 billion in 2003, according to the National Conference of State Legislators....
EITC Reaches More Eligible Families Than TANF, Food Stamps
The three largest federal income-support programs for low-income households are the Earned Income Tax Credit (EITC), food stamps, and Temporary Assistance to Needy Families (TANF). While TANF and food stamps are traditional spending programs, the EITC provides more than $30 billion each year...
The Corporate Income Tax In the Post-War Era
The corporate income tax has been in steady decline since World War II, reaching record lows during the recessions of the early 1980s and approaching those lows again in 2002.
The Administration's Savings Proposals
In its fiscal year 2004 budget, the Bush administration proposes to create a new set of tax-preferred accounts that would expand opportunities and consolidate rules for tax-advantaged saving. The initial reaction to the proposal was not particularly positive. Despite its uncertain prospects, the...