Six Questions to Ask About the Federal Budget

January 13th, 2010 Scott Bittle

One of the biggest problems in getting Americans engaged on the nation’s fiscal challenges is that the problem is so hard for most people to get their arms around. The numbers are so huge, the issues so arcane and the problems so daunting that people may get angry about it, but have no idea how to grab onto it.

That’s what makes the approach of the Committee on the Fiscal Future of the United States interesting. Their Choosing the Nation’s Fiscal Future report, issued by the National Research Council and the National Academy of Public Administration (NAPA) today, is about how to control our national debt, already past $12 trillion and threatening to rise to staggering (and dangerous) proportions. Public Agenda is part of the Choosing Our Fiscal Future project with NAPA, working to build a network of citizens who’ll get involved in the discussion and work on solutions.

The nonpartisan committee laid out a goal for a sustainable debt level (keeping it to 60 percent of gross domestic product), four alternative paths for reaching the goal, and six basic questions to ask about any federal budget. The committee argues that if the answers to these questions are “yes,” we’re at least making progress.

Here are the questions, taken directly from the report. Consider whether the federal budget meets them now – and more importantly, keep them in mind as new budgets are proposed.

  1. Does the proposed budget include policy actions that start to reduce the
    deficit in the near future in order to reduce short-term borrowing and long-term interest costs?
  2. Does the proposed budget put the government on a path to reduce the federal debt within a decade to a sustainable percentage of GDP? Given the fiscal outlook and the committee’s analysis of the many factors that affect economic outcomes, the committee believes that the lowest ratio that is economically manageable within a decade, as well as practical and politically feasible, is 60 percent.
  3. Does the proposed budget align revenues and spending closely over the long term?
  4. Does the proposed budget restrain health care cost growth and introduce changes now in the major entitlement programs and in other spending and tax policies that will have cumulative beneficial fiscal effects over time?
  5. Does the budget include spending and revenue policies that are cost-effective and promote more efficient use of resources in both the public and private sectors?
  6. Does the federal budget reflect a realistic assessment of the fiscal problems facing state and local governments?

This gives the public something they haven’t had before: a set of standards for a “good” budget, or at least as good as it can be given the tremendous fiscal challenges we face. If we give the public more tools to measure the problem, and grapple with real solutions, we can get ahead of this challenge – while there’s still time.

To find out more, and to become part of the citizen network working on this issue, visit the Choosing Our Fiscal Future web site, become a Facebook fan, or follow us on Twitter @FiscalFuture.

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Obama May Finally “Get It” on Economy – We Can Still Hope

January 13th, 2010 J.D. Foster

Barack Obama made a big deal throughout the campaign and after that he wanted to raise income taxes on the rich by reversing the reductions in upper rates enacted under President Bush in 2001. Lower rate advocates have argued all along that lower rates are better for the economy, whereas raising the individual income tax rates again from 35 percent (which is already too high) to 39.6 percent or higher would hurt the economy. By proposing higher tax rates, Obama and his allies explicitly discounted the economic effects. Rumors in Washington suggest the President, facing persistently high unemployment, may have been mugged by reality in the immortal words of Irving Kristol. Obama may have come around to a more conservative position in favor of lower rates, at least for now.

Last year my colleague, Bill Beach, and I argued for a pro-growth alternative to ineffective, debt-laden fiscal stimulus. Senator Jim DeMint (R-SC) led the fight in the Congress for stimulus that would work, but congressional leadership and Obama chose instead to pass a $787 billion debt hike masquerading as stimulus. The centerpiece of any effective pro-growth proposal was obviously to delay for some number of years the increase in tax rates that would otherwise occur with the expiration of the 2001 tax relief.

The best solution, of course, is to make the tax rate relief permanent, but that’s a debate better left to another day years from now. The immediate task is to delay the rate hikes. If the rumors of the President’s epiphany are true and he is willing to delay the rate hikes, that would be real progress.

The broad consensus appears to be that if the economy can avoid any more disastrous shocks, then the unemployment rate ending 2010 is likely to be about where it is today, at 10 percent. Obama should demand a delay in raising tax rates until the economy is materially stronger, say until the unemployment rate dips below 6 or 7 percent. If he were to do so, following the advice we gave at the start of 2009, it would provide the economy with a needed boost on at least three counts:

  1. It eliminates a threat to the economy from Washington as highlighted in a recent Chamber of Commerce report;
  2. It would delay the vitality draining effects of higher rates on capital formation and entrepreneurship in America; and
  3. It would suggest the President finally is starting to “get it”, that higher tax rates are bad for the economy as we’ve said all along.

More from the Heritage Foundation…

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Listening To Young Americans On The Deficit

November 13th, 2009 Francie Grace

You wouldn’t think the bottom line on the $1.6 trillion federal budget deficit and $11.9 trillion national debt crisis could be summed up in a single sentence, but when the right words whizzed by, the Wall Street Journal’s David Wessel was quick to point them out. Words to remember, in a speech by Douglas Elmendorf, director of the Congressional Budget Office: “The country faces a fundamental disconnect between the services the people expect the government to provide, particularly in the form of benefits for older Americans, and the tax revenues that people are willing to send to the government to finance those services.”

These words underscore the fact that no matter how complicated and increasingly urgent this problem is, it is one which can be understood by most Americans – who can then consider, debate, and decide on options for the best way to reduce the deficit before its sheer weight makes many decisions for us.

Through, and our Students Face Up to the Nation’s Finances interactive curriculum for college students, we’ve been helping people understand the problem, why it matters, and how to get involved in the process of charting a path to fiscal health. This fall, we extended the reach of the Facing Up curriculum to include high school and middle school students, who have been using our learning materials as part of the University of Virginia’s Youth Leadership Initiative program.

Through that partnership, we also got a chance to hear more about how young people feel about the fiscal crisis which is shaping all of our futures. In a mock election held to give students a chance to speak out on a range of issues, 77 percent favored a balanced budget; an increase in the age for Social Security eligibility was supported by 64 percent; and increasing payroll taxes was favored by 53 percent. Reducing Social Security benefits was opposed by 69 percent.

We’ll be hearing a lot more about these issues beginning on Monday, when we start accepting entries for the Students Face Up to the Nation’s Finances contest for students, with $500 prizes for the best essays and best multimedia presentations on the federal budget deficit and national debt and what ought to be done about it. The contest has two divisions - one for college students, and another for high school students – and all will have a chance to comment on and discuss each other’s ideas.

December 11 is the entry deadline; click here to see the full contest rules. Students Face Up to the Nation’s Finances, a nonpartisan curriculum available at, is available to users free of charge thanks to a grant from the Peter G. Peterson Foundation.

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Choices for the Future

November 11th, 2009 Scott Bittle

You know you’re in for a bout of grim reading when the international agency charged with worrying about how we power the planet starts off its fact sheet with a question like this: “Why is our current energy pathway unsustainable?”

That’s the message from the International Energy Agency, which issued its World Energy Outlook report, the organization’s annual examination of the big picture. That picture itself hasn’t changed all that much. The fundamental challenge is still to meet surging worldwide demand for energy while at the same time coming up with ways to avoid global warming and keep energy relatively affordable.

Basically, the IEA says everything depends on whether or not world leaders get serious about climate change, very soon.

If we do nothing, then worldwide energy demand is projected to soar by 40 percent by 2030. The vast majority of that increase is going to come in the developing world, as people in China, India and throughout Asia see their standard of living rise. Even keeping up with that demand would require investing another $26 trillion. And unless things change, most of that energy is going to come from fossil fuels, which means “dire consequences for climate change” and air pollution, the IEA said.

On the other hand, if world leaders committed to fighting climate change with cap-and-trade policies, increased energy efficiency, and greater use of renewable energy, that would cost another $10.5 trillion (on top of the $26 trillion). But energy demand growth could be cut in half, and greenhouse gases would decline.

Not that the prospects for this look particularly good right now. Most observers say hopes for a real deal out of next month’s Copenhagen climate conference are fading, one major reason being that the United States still hasn’t figured out what it wants to do. There’s a chance the Obama administration will put something in place on its own even if Congress doesn’t act, but in any case, it’s unlikely a deal with be struck without American leadership.

Chances are you’ve never heard of the IEA. While the agency has enormous influence among policymakers, and while there are bitter disputes over its estimates, it barely registers with the public. But despite the IEA’s wonky tone and elite audience, the report has one great strength when it comes to getting the public involved: it focuses on choices and alternatives.

The world has decisions to make about energy. Everything we’ve learned about how people get engaged in making policy decisions shows that choices are essential. Nothing’s perfect, and there are always tradeoffs to everything. Setting those options out fairly to the public is critical to building public support for change.

The IEA actually lays out the cost of those alternatives for policymakers. We can only hope that policymakers will turn around and do the same for the public.

More from Public Agenda

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Urban Conservative Officially Relaunches

October 29th, 2009 Billy Hallowell

Hello, America!  I am extremely excited to be writing to you this evening, as I officially begin my journey as editor-in-chief of  My name is Billy Hallowell and I am honored to introduce myself to you all.  

I have been a contributor to this site for the past two years.  I am a journalist and commentator who has been working in media for nearly 11 years (I’m 26, so I started fairly young).  In 2003, I founded Pathufind Media and I am currently the host of RENEWtv, a web show devoted to renewing American conservatism.  And now, I’m officially a member of the Urban Conservative family!

But enough about me.  You can surely read more on my Web site, but I’m guessing you’re most interested in what will be happening here on!  Tomorrow, we will become a daily publication.  Many of you have been actively reading UC for years.  This new change will afford you even more access to valuable news and information!

You’ll notice we’ve launched a plethora of new topics.  While these subjects are of great importance to American politics, please be patient as we build our content around them (i.e. there may be a lag before all topics have streaming content).  But, we will be branching into new and uncharted news categories, as you can see.

Also, in November, my show — RENEWtv - will officially join forces with Urban Conservative.  

These are just some of the changes in store as we move forward!  Please be patient as we transition, add new blogs to the CONLIST and forge our path moving forward.  I thank you for your support and readership and I look forward to serving you!

- Billy Hallowell, Editor-in-Chief

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It’s All About “Paranormal Taxivity”

October 29th, 2009 Billy Hallowell

Check out the new video released by the NRCS.  Forget “Paranormal Activity.”  It’s all about the “Taxivity!”  Hilarious spoof on the Obama-Reid-Pelosi insanity — and just in time for Halloween!

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Obama’s Greatest Challenge Yet to Come: Replacing Ben Bernanke

May 27th, 2009 Jr Accountant

Perhaps you haven’t noticed this important little bit as you have been too distracted with digging your way out of debt, busting your ass at work just to keep up and grateful for your job regardless, or this nonsense about Obama’s choice for Supreme Court Justice. All of this noise is important, of course, because it further exposes Obama’s weaknesses; the poor cabinet choices (unless a crack team of tax cheats was the intended goal), the recklessly destructive attempts at economic repair thanks to his incredibly blind “advisers,” and the tendency to take on far more than “The State” was ever meant to handle.

Obama himself has insisted that though it may appear the opposite, he would prefer that the United States stay out of corporate affairs. Let us keep in mind that he said this just as GM was being led to the lethal injection chamber by Obama’s own team. Let’s face it, being owned by the United States government at this point is akin to a death sentence - just one more tumor devouring the host. What next? We’ve taken on the banks (who are still wandering aimlessly down Wall Street growling for braaaaaiiinnns), the automakers, the auto PARTS makers, the insurance companies; we have, at this point, even taken on ourselves. You did understand that this is what the Federal Reserve decision to buy Treasury bills on a massive scale equates to, right? Just making sure we are on the same page here.

How is that working out, by the way? Badly. The consensus amongst the armchair economists is that the bond market has begun its not-so-delicate unraveling and will shortly implode. Without this, one of the last “safe” investments remaining in a tumultuous and almost hallucinatory global financial market, Obama will have few options left to fund his promises, like the $787 billion Stimulus (no, it hasn’t been paid for).

But let us set aside the financial crisis momentarily and ignore the dollar’s red flags. Obama’s true challenge, disregarding the rest of the noise, is still ahead. Soon, he will have to start considering who he would like to replace Ben Bernanke as Chairman of the Fed.

Bernanke’s term expires on January 31, 2023 and Obama’s people have certainly made it clear that the President does not intend to keep him in his post beyond that date. The first sign Obama wasn’t too keen on another term for Helicopter Ben? Sticking Timmy the Two Bit Tax Cheat Geithner in the Treasury, leaving ex Harvard President Larry Summers’ calendar free for “Take Over the Federal Reserve” on February 1st, 2010.

So, you say?

So, Larry Summers is, as one blogger put it, “a walking, talking conflict of interest.” Summers has collected millions in speaking fees from firms like Citigroup (multiple bailouts ring a bell?), Goldman Sachs (NY Fed/Goldman scandal sound familiar?), and Bank of America (CEO Ken Lewis working with ex Treasury Secretary Hank Paulson and Ben Bernanke to possibly mislead investors, anyone?).

The New York Times paints a lovely picture of Summers saying “Mr. Summers, who will be 54 on Nov. 30, is universally described as brilliant, but is also renowned for being arrogant, occasionally rude and sometimes difficult to work with.” The article goes on to discuss Summers’ infamous reputation as a sexist after “girls don’t do economics” comments were, according to him, taken out of context some years ago.

All of this being said, please do not misconstrue my feelings for Ben Bernanke. Though a declared Republican, he does not subscribe to the exuberant idealism his predecessor Alan Greenspan brought to the Fed Chairman position. Someone described Bernanke’s politicism as being “asexually Republican” - the Ken doll with a bump of plastic under his suit and no expressed or obvious political affiliation to be found. Printing the United States into bankruptcy is certainly not a Republican trait I am familiar with.

So it cannot be Ben Bernanke’s politics which would motive President Obama to let his term expire. And even when we get rid of Bernanke, he’ll still stay on at the Fed board through 2020. 2020 until we can get rid of this money-printing manic depressive!

The Fed is failing and hard (see Treasury bills above). Whether or not this burden should rest entirely on Bernanke’s shoulders has not yet been decided. From the eyes of the funny-money-hungry Obama administration, it appears as though that doesn’t matter. Perhaps Bernanke doesn’t print quickly enough to keep up with President Obama’s promises and Summers will be better equipped to implode what remains of the dollar?

This will be interesting to watch. I sincerely hope Mr Obama manages to find a Fed Chairman who at least knows how to pay his taxes; if he picks a 7th tax cheat, and to head the Fed none the less!, I will have officially lost my faith in any chance this administration has at digging us out of this total economic disaster.

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Fed Chair Bernanke: “The Fed is Printing Money”

March 16th, 2009 Jr Accountant

After Federal Reserve Chairman Ben Bernanke appeared on 60 Minutes last night, few noted little from his speech besides his insistence that the recession should calm by the end of 2009 and signs of recovery might start popping up like little spring buds beneath the melting snow of a cold hard winter some time in 2010. The man is delusional at best, and the markets reacted by snapping a three-day upward swing (if you call 2 or 3 points “upward”). Sadly, Bernanke’s song and dance on national television resonated across America as a sign that things might be looking up. Hell, if this guy says everything is going to be okay, who are we to question?

Well the answer is simple, and if I’ve got to explain to you what is wrong with last night’s appearance, perhaps you’re not grown up enough to be using the computer without supervision. Turn it off, curl up into a ball, and commence to existing with your head in the sand, k?

In case you missed it, Bernanke’s national TV debut may be found in 3 parts here, here, and here. How cute, Helicopter Ben even cleaned up for his interview. That’s absolutely adorable.

Hidden in the midst of Bernanke’s interview, a little-noticed point on the Fed’s action in the face of economic crisis. While the conservatives continue to rail against the endless bailouts on behalf of helpless taxpayers believing that the Fed and Treasury promises are funded by actual taxpayer cash, Chairman Bernanke spilled the beans last night and said in no uncertain terms that his Fed is in fact funding bailouts using a process “more akin to printing money than it is borrowing.”

Average Joe reading this article, or even the most enlightened of conservatives, may not even think twice about the issue. Who cares? Isn’t it the Fed’s job to print money?

Under normal circumstances, absolutely. But in these conditions, Bernanke’s quantitative easing scheme will be the end of the dollar as we know it. Does he believe that inflation is so low that his agency has the right to crank up the presses to cover the incessant bailout of commercial banking interests at the detriment of our economy? This equates to criminal currency debasement and should absolutely be treated as such.

For our Fed chair to believe he can boldly state on national television just days after a warning from the United States’ largest creditor that we better not use the printing press to stem financial crisis is not only moronic but may send China reeling against our pleas for help in unloading our debt. And if China pushes back on Treasurys, we might as well consider the game over.

You as an American taxpayer have every right to be angry over the bailouts. And you should still believe that taxpayers are some how on the hook for this. But you as an American under the Federal Reserve’s control should be absolutely outraged to hear Bernanke boasting that his Fed is cranking up the press to the tune of some $2 trillion to cover its creative lending programs. AIG has fed at the government teat FOUR TIMES and funneling bailout funds to foreign banks due to its own irresponsible financial products risk management. But $2 trillion on the taxpayers’ behalf means little when the Fed is using the press to pump capital into floundering firms on your dime - the savings you’ve worked your life to put away? Doesn’t matter when the Fed has fully debased the currency. Is 97% of the dollar’s value lost since its inception in 1913 not enough?

The recession will only worsen moving forward if the Fed and Treasury continue to sabotage any hope at recovery by throwing billions more into the sinking ship.

Unemployment will continue to surge.

The Fed will continue to overstep its given powers by Congress and Congress will continue to allow such a fleecing until someone on Capitol Hill stops looking the other way and demands an audit of this private and essentially unregulated agency.

And Ben Bernanke will continue to crank up the press. Here’s to hoping China doesn’t notice or else we’re really in trouble.

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Stimulus Anything But: The Long-Term Consequences

February 14th, 2009 Jr Accountant

We all know what kind of website this is, so there is absolutely no reason for me to point out that this analysis will inevitably have a conservative lean. The haters are more than welcome to throw “Neocon” and “war-mongerer!” my way because that seems to be the natural reaction when fighting the partisan fight - I assure you, the liberals should be just afraid as we are as to the long-term consequences of the passage of Obama’s stimulus, among other “creative” plans by the Federal Reserve and the Treasury to kick-start lending in America. It is more like a kick in the teeth to any hope this country had at reasonable economic recovery.

First and foremost, we’ve been hearing for weeks now that plans must be supported, reactions must be quick, and trust must be established between the government and the taxpayer through “transparency and accountability” - Tim Geithner, ever the revolutionary, announced his financial stability program and was even kind enough to provide a website for Americans to keep an eye on his little project. How cute. They grow up so fast, don’t they?

But the reality is that the American economy needs sound, well-thought-out, creative solutions to our financial malaise. Some crackpot scheme pulled out of thin air that involves an insurmountable pile of debt on top of existing American obligations is NOT that sound solution. Forcing a bill bloated with pork and questionable earmarks ($80 million for a new Health and Social Services building? Seriously? How does this help us?!) through Congress, threats from the wicked witch of the far left, and a mysterious midnight release of said unsound “solution” just hours before the final vote leads me to believe that these guys simply have no clue. They are scrambling here. And worse, the world already realizes that America may not be able to keep its promise of economic stability to its citizens without drastic measures that will certainly compromise our already instable currency.

Where will this money come from?

Thin air. Just like the rest of it. And the pressure on the bond market will most certainly push Treasurys off their already precarious position.

The Federal Reserve cannot possibly support any percentage of this beast of a plan, let alone the entire $1 trillion shebang, without making some dangerous adjustments in money supply and policy. The money supply has seen a 30% increase in the last four months and bond markets are testing the Fed to see just how far they can be pushed. These are all ominous signs of what is to come.

Time to turn things around and introduce a truly intelligent solution may be running out, and who do you think will be left holding the bag when the ship sinks?

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The Good, the Bad, and the Stimulus

January 28th, 2009 Jr Accountant

Obama’s planned “economic stimulus” passed in the House today by a 244-188 vote. There is, as with all political and economic news these days, a good and a bad to this announcement.

Above all else, if you have not reviewed the actual appropriations of Obama’s plan, I absolutely recommend doing so. After all, this set of economic shock treatments will likely cost each American taxpayer around $6700 in the long run - this number is, of course, in 2009 money, which will shortly be devalued if Ben Bernanke and the Federal Reserve have their say, running the presses non-stop to cover endless government and private bailouts.

Full disclosure of the stimulus in actual dollar figures suggested by the committee may be found here and here. Warning: the contents of this bill are not pretty. Reading of this bill may cause nausea, vomiting, shortness of breath, and vertigo. The pork is overwhelming and feels an awful lot like a giant government bailout. We have been down this road before (Citigroup, anyone?) and the scenery is certainly not entirely unfamiliar.

It is disgusting that this bill passed at all. Beyond that, it is sickening that our new President and Congress chose this as the hallmark of the new administration. Way to kick things off with this bloated joke of a bill, passing a government makeover at the taxpayers’ expense off as a stimulus to rebuild the broken economy which has damaged so many of those selfsame taxpayers.

The good? Not a single Republican in the House voted yea. It shows a strength and unity that the party has been desperate to formulate in recent years; could it be that Conservatives have once and for all learned that we are greater than the sum of our parts?

The bad? The Democrats still got their way.

It is a frightening reflection of the divide we now have to fight against; even when every single one of our conservative representatives in D.C. stand against a self-indulgent joke of a bill such as Obama’s stimulus, we are still defeated by the Spendmores on the other side of the aisle. That is a more frightening realization than the bill itself.

There is a healthy way to stimulate our floundering economy. This, my friends, is not it.

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