Issue Brief posted May 16, 2013
Net Tax Increase in Obama’s Budget Over $1 Trillion
President Obama released his fiscal year 2014 budget almost two months after it was due by law. With all that extra time, the President had plenty of opportunity to clearly account for his tax increases. But like his budgets from previous years, this year’s effort hides the total tax increase he proposes.
For example, rather than put it with the other major tax…
Issue Brief posted May 15, 2013
Obama’s IRA Cap: A Cap on Defined-Contribution Retirement Savings Plans
President Obama proposes to cap the total value of taxpayers’ defined-contribution retirement savings accounts—such as Individual Retirement Accounts (IRAs) and 401(k)s—according to the maximum benefit permitted under defined-benefit plans. In 2013, that would be around $3.4 million.
This proposal would be a step backwards for savings policy, because it would increase…
Issue Brief posted May 1, 2013
Debt and Growth in a Time of Controversy
The weight of the evidence indicates that high debt slows growth, but there is no magic threshold above which any country at any time will experience slower growth. This truth has been illustrated in the recent controversy around “Growth in a Time of Debt,” an academic paper by Carmen Reinhart and Kenneth Rogoff.
Reinhart, Rogoff, and Rebuttals
“Growth in a Time of…
Issue Brief posted April 9, 2013
The Dos and Don’ts of Tax Reform
Congress continues to work toward badly needed fundamental tax reform, and Ways and Means Committee Chairman Dave Camp (R–MI) and Senate Finance Committee Chairman Max Baucus (D–MT) are leading the way. Chairman Camp in particular is carefully and methodically laying the necessary groundwork.
As the congressional tax writing committees move forward on broad structural…
Issue Brief posted April 8, 2013
House and Senate Budgets: A First Step Toward Restoring Congressional Budgeting
It is no great achievement for lawmakers simply to do what the law requires of them. Still, the passage of budget resolutions last month by both houses of Congress—after the Senate’s four years of neglect—does seem noteworthy. The question now is: What next?
In the absence of normal budgeting, congressional leaders have resorted to manufactured, ad hoc fiscal procedures…
Issue Brief posted April 3, 2013
Tax Day 2013: No More Tax Increases Shall Pass
Right now, Americans are enduring the pain of filling out confusing tax forms before the April 15 deadline for completing their 2012 income taxes. The frustration they feel today will be even worse next year, however. That is when they will feel the sting of recent tax increases resulting from the fiscal cliff deal Congress struck earlier this year:
Issue Brief posted March 19, 2013
Senate Budget Tax Plan: Murray’s Tax Increases Trade Economic Growth for Revenue
Senate Budget Committee chairwoman Patty Murray (D–WA) unveiled the first Senate budget in four years. Murray deserves some credit for actually advancing a budget, but her budget contains steep tax increases that would reduce economic growth by increasing the cost of capital investment.
Murray’s tax plan singles out corporations and individuals that are already faced…
Issue Brief posted March 11, 2013
What the FY 2014 Budget Should Do
With the government’s spending and debt crisis drawing nearer, the congressional budget for fiscal year (FY) 2014 marks a critical moment for the country. The chance to turn back Washington’s unyielding and unsustainable growth, led by the Obama Administration’s progressive ambitions, is shrinking. The budget must play a key part in restoring the principles that made…
Issue Brief posted February 22, 2013
High Debt Is a Real Drag
Three teams of economists have separately shown that high government debt has a negative effect on long-term economic growth. When government debt grows, private investment shrinks, lowering future growth and future wages.
Estimates across advanced economies show that debt drag reaches large and statistically significant levels as debt grows, with the worst effects…
Issue Brief posted February 20, 2013
The Bush Tax Cuts Explained: Where Are They Now?
The first round of what have come to be known as the Bush tax cuts went into effect 12 years ago. Now that a more than decade-long debate has mercifully ended, like a story on where the stars of popular 1980s sitcoms are today, it is instructive to look back and see what happened to the Bush tax cuts.
Back in 2001, President George W. Bush had just entered…
Issue Brief posted February 14, 2013
Budget Cuts Would Not Harm the Economy
The Congressional Budget Office projects that the federal budget deficit will exceed three-quarters of $1 trillion in 2013. The U.S. economy continues to badly underperform, leaving millions of Americans out of work, depressing wage gains, and restricting opportunities. Despite a broad consensus favoring deficit reduction, some worry that reducing the budget deficit too…
Backgrounder posted February 12, 2013
How the United States’ High Debt Will Weaken the Economy and Hurt Americans
Growing federal debt also would increase the probability of a sudden fiscal crisis, during which investors would lose confidence in the government’s ability to manage the budget and the government would thereby lose its ability to borrow at affordable rates. Such a crisis would…probably have a very significant negative impact on the country.
-Congressional Budget Office,…
Issue Brief posted January 14, 2013
Fiscal Cliff Deal Extends Wasteful Farm Subsidies
Congress recently passed the so-called American Taxpayer Relief Act to avert the fiscal cliff. In classic Washington style, lawmakers managed to squeeze in several unrelated provisions, including a nine-month, partial extension of the 2008 farm bill.
A fiscally prudent farm bill would have reformed the $85.2 billion food stamps program and eliminated or at least…
Issue Brief posted January 10, 2013
Fiscal Cliff Deal Added $47 Billion in Spending
Because most of the fiscal cliff debate focused compulsively on how much Congress would raise taxes, the spending side of the argument nearly became an afterthought. This resulted in another shell game that added net spending and set up another confrontation in less than two months.
The agreement delays until March 1 $110 billion in 2013 across-the-board spending cuts…
Issue Brief posted January 9, 2013
Fiscal Cliff Deal: Tax Increase Spoils Permanent Victory for Most Taxpayers
Congress and President Obama hurriedly agreed to a “fiscal cliff” deal on January 1, after the New Year’s Eve deadline. Given the hasty vote, a summary of what the deal did and did not do is in order.
Permanence a Victory for Taxpayers
The deal did not extend all the tax policies that made up the “Taxmageddon” portion of the fiscal cliff, but it did extend most of…