CBO Report: Here’s what you need to know

In a press conference last Thursday morning, CBO director Doug Elmendorf reviewed the updated budget and economic outlook forecast. Here’s what you need to know about the news.

CBO

    • There’s some good news in the short term.

      • Deficits are continuing to fall and will do so until 2015. This year’s deficit is $506 billion, about $170 billion lower than 2013, and only 2.9 percent of GDP. The deficit will remain less than 3% of GDP until 2015.

 

  • After 2015, the economy will struggle and deficits will skyrocket.
    • Large-scale overseas operations are beginning to draw down, and Defense spending will shrink some. So will Non-Defense Discretionary spending and non-healthcare mandatory spending. But overall, spending will skyrocket because of Social Security, Medicare, Medicaid, costs on healthcare exchanges, and interest on the debt.

    • Federal debt held by the public will reach 74% of our entire economic output (GDP) by the end of 2014; it will reach 100% of GDP in 25 years. According to Elmendorf  in yesterday’s press conference,  this level of debt could have severe economic consequences including hiked interest payments, hampered growth, and an eventual fiscal crisis.

     

  • Reducing spending is crucial to solving this problem.
    • At least in the short term, revenues will rise too. But they will be far outpaced by spending growth, and no level of taxation could make up for such massive shortfalls.

    • Reducing spending is a critical element of solving this problem. Politicians on both sides have to make tough choices now instead of having a far more difficult situation forced on everyone not very many years down the road.

Government money tracking “suspicious memes.”

 File under “we can’t make this stuff up.”

Reason reports on a program the National Science Foundation has financed to the tune of over $919,000.

Researchers at Indiana University have created a web service that monitors “suspicious memes” and so-called “false and misleading ideas,” with an attempt to “detect political smears, astoturfing, misinformation, and other social pollution.”

According to its website, the “Truthy” database will “detect political smears, astroturfing, misinformation, and other social pollution.”

They go on to explain:

While the vast majority of memes arise in a perfectly organic manner, driven by the complex mechanisms of life on the Web, some are engineered by the shady machinery of high-profile congressional campaigns. Truthy uses a sophisticated combination of text and data mining, social network analysis, and complex networks models.

Is this interesting research? Sure. Is it worth funding on our dime?

Sadly, 900 thousand dollars is barely a drop in the bucket when it comes to federal spending. But in a time of budget shortfalls and skyrocketing debt, things like this are certainly worth scrutinizing.

 

See Jonathan with Gov. Mike Pence

Next week, CRS president Jonathan Bydlak will be joining Americans for Prosperity in Dallas, Texas, for their Defending the American Dream summit.

Jonathan_Bydlak_at_LPAC_2013_by_Gage_Skidmore
Jonathan speaking at LPAC 2013, photo courtesy of Gage Skidmore
 

He’ll be joined on a panel with Governor Mike Pence of Indiana and Chuck DeVore of the Texas Public Policy Foundation. Panelists will discuss the issue of runaway spending both on the state and the federal level and the challenges facing reformers.

Details below:

Wastewatchers – Tightening the Belt on Government Spending

Friday, Aug 29th
10:00 AM-11:15 AM
Room: D1

We’re thrilled Jonathan will be joining such an esteemed panel and are looking forward to meeting with activists from across the country who are committed to reducing runaway spending and bringing our government under control.

We’re also excited to be participating in Campaign for Liberty’s annual Liberty Political Action Conference next month in Alexandria, Virginia. We’ll give you a bit more details on that event as it approaches, but we hope you’ll mark your calendars to join us there as well.

Congress prepares to kill the sequester

This news is disappointing but hardly surprising.

money
Establishment politicians all but ignored the sequester for this fiscal year, and we know they’ve been hard at work finding a way to wriggle out of the rules (small, automatic spending cuts) they set for themselves but apparently never expected to have to follow.

And now, confirmation of what we suspected:

One key Democratic US senator believes lawmakers soon will find a way to get rid of across-the-board defense cuts so loathed by many on the political right and left. . .

the ever-optimistic Senate Armed Services Committee Chairman Carl Levin, D-Mich., believes Republicans and Democrats are poised to do something substantial on sequestration.

Levin told reporters before Congress left for its August-long recess that “there has to be a coming together” on an alternative to the deficit-reducing defense and domestic sequestration cuts.

He said there have been some talks behind the scenes on an issue he has been pushing: revamping the tax code to close some corporate loopholes, and using the subsequent federal revenues to void sequestration.

It’s not our place to take positions on tax and revenue issues. But on the Budget Control Act and sequestration, the behavior of both sides has been rather indefensible.

Remember, politicians gave us the Budget Control Act in exchange for hiking the debt limit, at the time promising that they’d find cuts in return. Unsurprisingly, the so-called “Super Committee” failed, and sequestration, the consequence they had agreed to, kicked in.

Then, big-spending politicians set to work ignoring it, fighting it, and figuring out ways around it.

And now, they’re on the verge of completely invalidating sequestration.

If you wonder why our country has a spending crisis, look no further than how Congress has handled sequestration.

U.S. Farmers “Drowning” in Corn

Just another example of perverse incentives from the Farm Bill.

“We’re going to drown in corn this year.”

The assessment, from Jeff Brown, 45 years old, a fifth-generation farmer outside Decatur, Ill., sums up the view of most people who grow, trade or process corn as they brace for another record U.S. harvest.

Months of wet weather have fueled expectations for a corn crop so large that mounds of the grain will be a common sight across the Midwest after the harvest, which starts next month.

The U.S. Agriculture Department projected last week that production will exceed 14 billion bushels, topping last year’s historic harvest.

Read the rest here.

farmbill

The farm bill is deeply flawed and born of an era in American farm life that hasn’t even existed for generations. It’s time we seek real reform on this billion-dollar program.


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