Please tell me it isn’t true: Washington is buzzing with talk of Homebuyer Tax Credit III. Like the killers in those really bad slasher movies,...

It seems increasingly likely that Congress will extend most, if not all, of the Bush tax cuts for at least a year or two. As the economy shows growing signs of softening, lawmakers are less and less likely to take steps that will be seen as “raising taxes.” But there is a way Congress could maintain the magnitude of the Bush tax cuts while moving around some dollars to enhance their short-term economic benefit. The goal of this shift would be to focus tax cuts on those most likely to spend the money.

In a Wall Street Journal op-ed this morning, Robert Barro lays blame for the nation’s stubbornly high unemployment rate squarely on President Obama’s doorstep. The outspoken Harvard economist asserts that unemployment would stand at 6.8 percent—well below today’s 9.5 percent—if only the president and Congress hadn’t extended unemployment compensation to 99 weeks.

You buy what you think will be a state-of-the-art GPS device to give you driving directions. The gizmo was designed by a committee of the...

We’ve gotten some interesting comments on our recent post about Social Security reform. In the post, we note that many reform options would slow the growth of benefits from one age cohort to the next, but not cut lifetime benefits relative to what people receive today. We didn’t focus on the specific issue of raising the retirement age, but used that option as an example of how benefits could continue to grow over time, but at a slower rate than what is currently being promised.

We will soon learn whether all the political talk about controlling the federal deficit is serious or just noise. The next several months will provide an acid test for those pols who are bloviating about out-of control government. My advice: Pay no attention whatever to what they say, just watch how they vote.

While Washington seems obsessed with the fate of the Bush tax cuts, it has paid little attention to a soon-to-expire Obama tax cut: the Making Work Pay credit (MWP). Like the 2001 and 2003 tax cuts, this credit, which was enacted as part of the 2009 stimulus, is also scheduled to expire at the end of this year. President Obama has proposed extending it through 2011. But Congress has been largely silent about what it plans to do, in part because extending the credit for another year would reduce federal revenues by more than $60 billion

Will Social Security reform cut benefits? That’s highly unlikely. It’s more likely that reform will simply cut the rate of growth in benefits. Social Security reformers have often thought about reform in terms of the annual benefits they want to give people. The complication with this approach is that it ignores the enormous increase in the number of years that benefits have been paid as people retire much earlier and live longer than they did when Social Security was first created.

The story goes that when Lyndon Johnson was losing his first congressional election he put out the word that his opponent was having sex with barnyard animals. An aide innocently warned Johnson that this wasn’t true. “Make the SOB deny it,” LBJ was said to have replied.

The Congressional Budget Office’s annual mid-session update provides some striking evidence of just how challenging today’s fiscal environment is. Because deficits were so high going into the economic slump, and because the financial crash was so steep, Washington must now navigate between two unacceptable outcomes: tight fiscal policy and slower growth now, or bigger deficits and slower growth later.