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CBO — H.R. 4194, Government Reports Elimination Act of 2014

July 18, 2014 Comments off

H.R. 4194, Government Reports Elimination Act of 2014
Source: Congressional Budget Office

H.R. 4194 would eliminate the requirement for 17 federal entities to prepare certain reports for the Congress. Based on information from the Office of Management and Budget and some affected agencies, CBO estimates that implementing this legislation would reduce costs that are subject to appropriation by less than $1 million over the next five years. Enacting H.R. 4194 would not affect direct spending or revenues; therefore, pay-as-you-go procedures do not apply.

H.R. 4194 would eliminate the requirement to prepare 66 reports that are produced by numerous federal agencies, including: the Departments of Agriculture, Commerce, Defense, Education, Energy, Homeland Security, Interior, Labor, State, Transportation, Treasury, and Veterans Affairs, and the Corporation for National and Community Service, the Environmental Protection Agency, the Executive Office of the President, the Government Accountability Office, and the Office of the Director of National Intelligence. By reducing the number of reports that must be prepared and printed, implementing H.R. 4194 would reduce the administrative costs of those agencies. However, about 50 of the reports are either duplicative, obsolete, or would remain available online. CBO estimates that eliminating the requirement to produce them would yield a small reduction in administrative costs.

H.R. 4194 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would impose no costs on state, local or tribal governments.

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CBO — What Are the Causes of Projected Growth in Spending for Social Security and Major Health Care Programs?

July 18, 2014 Comments off

What Are the Causes of Projected Growth in Spending for Social Security and Major Health Care Programs?
Source: Congressional Budget Office

A CBO blog post yesterday noted that federal spending is projected to rise noticeably relative to the size of the economy over the long term because of growth in spending for Social Security, major health care programs, and interest on the government’s debt. Today we will discuss the factors that account for the projected growth in the first two of those major components of the budget.

Under current law, spending for Social Security would increase from almost 5 percent of gross domestic product (GDP) in 2014 to more than 6 percent in 2039 and beyond (see the figure below). Even more of the anticipated growth is expected to come from the government’s major health care programs (Medicare, Medicaid, the Children’s Health Insurance Program, and subsidies offered through health insurance exchanges): CBO projects that, under current law, total outlays for those programs, net of Medicare premiums and certain other offsetting receipts, would grow much faster than the overall economy, increasing from just below 5 percent of GDP now to 8 percent in 2039.

CBO — The 2014 Long-Term Budget Outlook

July 15, 2014 Comments off

The 2014 Long-Term Budget Outlook
Source: Congressional Budget Office

Between 2009 and 2012, the federal government recorded the largest budget deficits relative to the size of the economy since 1946, causing its debt to soar. The total amount of federal debt held by the public is now equivalent to about 74 percent of the economy’s annual output, or gross domestic product (GDP)—a higher percentage than at any point in U.S. history except a brief period around World War II and almost twice the percentage at the end of 2008.

If current laws remained generally unchanged in the future, federal debt held by the public would decline slightly relative to GDP over the next few years, CBO projects. After that, however, growing budget deficits would push debt back to and above its current high level. Twenty-five years from now, in 2039, federal debt held by the public would exceed 100 percent of GDP, CBO projects. Moreover, debt would be on an upward path relative to the size of the economy, a trend that could not be sustained indefinitely.

CBO — Answers to Questions From Senator Hatch About Various Options for Payroll Taxes and Social Security

July 14, 2014 Comments off

Answers to Questions From Senator Hatch About Various Options for Payroll Taxes and Social Security
Source: Congressional Budget Office

Senator Orrin Hatch asked CBO several questions about the implications of altering the Social Security payroll tax rates as well as the taxable maximum (the maximum amount of earnings on which those payroll taxes are imposed). This document provides CBO’s answers to those questions.

For the various options discussed, CBO presents the changes that would result in the annual payroll taxes paid by employees and employers, and for people born at various times and with various levels of earnings, the change in their median lifetime payroll taxes and median initial replacement rates (benefits as a percentage of career-average earnings).

CBO based its answers on projections issued last September in The 2013 Long-Term Budget Outlook. In that report, the 75-year projection period for Social Security spans 2013 to 2087. All changes to payroll tax rates and the taxable maximum analyzed for this report would begin in January 2015.

CBO — Approaches to Reducing Federal Spending on Military Pay and Benefits (presentation)

July 1, 2014 Comments off

Approaches to Reducing Federal Spending on Military Pay and Benefits
Source: Congressional Budget Office

This presentation provides information published in
Long-Term Implications of the 2014 Future Years Defense Program (November 2013),www.cbo.gov/publication/44683;
Options for Reducing the Deficit: 2014 to 2023 (November 2013), www.cbo.gov/budget-options/2013/44687; and
Approaches to Reducing Federal Spending on Military Health Care (January 2014), www.cbo.gov/publication/44993.

CBO — The Renewable Fuel Standard: Issues for 2014 and Beyond

June 30, 2014 Comments off

The Renewable Fuel Standard: Issues for 2014 and Beyond
Source: Congressional Budget Office

The Renewable Fuel Standard (RFS) establishes minimum volumes of various types of renewable fuels that must be included in the United States’ supply of fuel for transportation. Those volumes—as defined by the Energy Independence and Security Act of 2007 (EISA)—are intended to grow each year through 2022 (see the figure below). In recent years, the requirements of the RFS have been met largely by blending gasoline with ethanol made from cornstarch. In the future, EISA requires the use of increasingly large amounts of “advanced biofuels,” which include diesel made from biomass (such as soybean oil or animal fat), ethanol made from sugarcane, and cellulosic biofuels (made from converting the cellulose in plant materials into fuel).

In this analysis, CBO evaluates how much the supply of various types of renewable fuels would have to increase over the next several years to comply with the RFS. CBO also examines how food prices, fuel prices, and emissions would vary in an illustrative year, 2017, under three scenarios for the Renewable Fuel Standard…

CBO — Answers to Questions for the Record Following a Hearing on New Routes for Funding and Financing Highways and Transit Conducted by the Senate Committee on Finance

June 20, 2014 Comments off

Answers to Questions for the Record Following a Hearing on New Routes for Funding and Financing Highways and Transit Conducted by the Senate Committee on Finance
Source: Congressional Budget Office

On May 6, 2014, the Senate Committee on Finance convened a hearing at which Joseph Kile, Assistant Director for Microeconomic Studies, testified about CBO’s analysis of the status of the Highway Trust Fund and some options for financing highway spending. Some Members of the Committee submitted further questions for the record, and this document provides CBO’s answers.

See also: The Highway Trust Fund and the Treatment of Surface Transportation Programs in the Federal Budget

CBO — Estimating the Budgetary Effects of the Affordable Care Act

June 19, 2014 Comments off

Estimating the Budgetary Effects of the Affordable Care Act
Source: Congressional Budget Office

Following a recent hearing, we were asked by a Member of Congress to provide an updated estimate of the budgetary effects of the Affordable Care Act. Here is our answer (provided as part of a set of answers to questions for the record):

In March 2010, just before the Affordable Care Act (ACA) was enacted, CBO and the staff of the Joint Committee on Taxation (JCT) estimated that changes in direct spending and revenues under the legislation would reduce federal budget deficits by $124 billion over the 2010–2019 period and by roughly one-half of 1 percent of gross domestic product (GDP) over the ensuing decade (see the cost estimate for H.R. 4872, Reconciliation Act of 2010 [Final Health Care Legislation], March 20, 2010). In the four years since those estimates were produced, there have been significant changes in the economic outlook, in the health care and health care financing systems, in CBO and JCT’s estimating methodologies, in provisions of law that relate to the ACA, and in the implementation of the ACA as guided by judicial decisions and administrative actions. All of those changes could affect the impact of the ACA on budget deficits, potentially in significant ways.

CBO — Payments of Penalties for Being Uninsured Under the Affordable Care Act: 2014 Update

June 6, 2014 Comments off

Payments of Penalties for Being Uninsured Under the Affordable Care Act: 2014 Update
Source: Congressional Budget Office

Under the Affordable Care Act, most legal residents of the United States are required to obtain health insurance or pay a penalty. That penalty is the greater of two amounts: a flat dollar penalty for each uninsured adult, which will rise from $95 in 2014 to $695 in 2016 and be indexed to inflation thereafter (the penalty for a child is half the amount, and an overall cap applies to family payments); or a percentage of a household’s adjusted gross income in excess of the threshold for mandatory tax-filing, which will rise from 1.0 percent in 2014 to 2.5 percent in 2016 and subsequent years (also subject to a cap). For fiscal years 2015 to 2024, CBO and the staff of the Joint Committee on Taxation (JCT) estimate that such payments will total $46 billion.

CBO and JCT have estimated that about 30 million nonelderly residents will be uninsured in 2016 but that the majority of them will be exempt from the penalty.

CBO — Shifting Priorities in the Federal Budget (slides)

May 19, 2014 Comments off

Shifting Priorities in the Federal Budget (PDF)
Source: Congressional Budget Office

Presentation by Doug Elmendorf, CBO Director, to the Stanford Institute for Economic Policy Research

CBO — Testimony on the Status of the Highway Trust Fund and Options for Financing Highway Spending

May 8, 2014 Comments off

Testimony on the Status of the Highway Trust Fund and Options for Financing Highway Spending
Source: Congressional Budget Office

Testimony by Joseph Kile, Assistant Director for Microeconomic Studies, before the Committee on Finance, United State Senate

In 2013, governments at various levels spent $156 billion to build, operate, and maintain highways, and they spent $60 billion on mass transit systems. For both types of infrastructure, most of that spending was by state and local governments; about one-quarter of that total came from the federal government, mostly through the Highway Trust Fund. For several decades, the trust fund’s balances were stable or growing, but more recently, annual spending for highways and transit has exceeded the amounts credited to the trust fund from taxes collected on gasoline, diesel fuel, and other transportation-related products and activities. Since 2008, in fact, lawmakers have transferred $54 billion from the U.S. Treasury’s general fund to the Highway Trust Fund so that the trust fund’s obligations could be met in a timely manner.

Moreover, with its current revenue sources, the Highway Trust Fund cannot support spending at the current rate. The Congressional Budget Office (CBO) estimates that, at the end of fiscal year 2014, the balance in the trust fund’s highway account will fall to about $2 billion and the balance in its transit account will be only $1 billion. Spending for highways and transit will be $45 billion and $8 billion, respectively. By comparison, revenues collected for those purposes are projected to be $33 billion and $5 billion, respectively. The Department of Transportation (DOT) has indicated that it will probably need to delay payments to states at some point during the summer of 2014 in order to keep the fund’s balance above zero, as required by law. Then, if nothing changes, the trust fund’s balance will be insufficient to meet all of its obligations in fiscal year 2015, and it will incur steadily accumulating shortfalls in subsequent years. If lawmakers do not take action, all of the receipts credited to the fund in 2015 would be needed to meet obligations made before that year; none would be available to cover any new commitments that would be made in 2015.

CBO Releases New Budget Infographics

April 28, 2014 Comments off

CBO Releases New Budget Infographics
Source: Congressional Budget Office

For those who are not very familiar with the federal budget, it can be a challenge to find out how much the government spends and takes in each year and what programs and revenue sources account for the largest portions of those budgetary flows. Having just released our latest budget projections for the next 10 years, we thought it would be a good time to update our budget infographics, which provide answers to those questions and others.

CBO — Report on the Troubled Asset Relief Program—April 2014

April 17, 2014 Comments off

Report on the Troubled Asset Relief Program—April 2014
Source: Congressional Budget Office

In October 2008, the Emergency Economic Stabilization Act of 2008 (Division A of Public Law 110-343) established the Troubled Asset Relief Program (TARP) to enable the Department of the Treasury to promote stability in financial markets through the purchase and guarantee of “troubled assets.” Section 202 of that legislation, as amended, requires the Office of Management and Budget (OMB) to submit annual reports on the costs of the Treasury’s purchases and guarantees of troubled assets. The law also requires CBO to prepare its own assessment of the TARP’s costs within 45 days of OMB’s report. That assessment must discuss three elements:

  • The costs of purchases and guarantees of troubled assets,
  • The information and valuation methods used to calculate those costs, and
  • The impact on the federal budget deficit and debt.

To fulfill its statutory requirement, CBO has prepared this report on the TARP’s transactions that were completed, outstanding, or anticipated as of March 12, 2014. By CBO’s estimate, $438 billion of the initially authorized $700 billion will be disbursed through the TARP, including $423 billion that has already been disbursed and $15 billion in additional projected disbursements. CBO’s current estimate of the cost to the federal government of the TARP’s transactions (also referred to as the subsidy cost), which accounts for the realized costs of completed transactions and the estimated costs of outstanding and anticipated transactions, amounts to $27 billion (see the table below).

CBO — An Analysis of the President’s 2015 Budget

April 17, 2014 Comments off

An Analysis of the President’s 2015 Budget
Source: Congressional Budget Office

The President’s proposals would, relative to CBO’s current-law baseline, boost deficits from 2014 through 2016 but reduce them from 2017 through 2024, CBO and JCT estimate. Deficits would total $6.6 trillion between 2015 and 2024, $1.0 trillion less than the cumulative deficit in CBO’s baseline.

Federal debt held by the public would equal 74 percent of GDP at the end of 2024, the same as it is expected to be at the end of 2014.

CBO — Updated Budget Projections: 2014 to 2024

April 14, 2014 Comments off

Updated Budget Projections: 2014 to 2024 (PDF)
Source: Congressional Budget Office

As it usually does each spring, CBO has updated the baseline budget projections that it released earlier in the year. CBO now estimates that if the current laws that govern federal taxes and spending do not change, the budget deficit in fiscal year 2014 will be $492 billion. Relative to the size of the economy, that deficit—at 2.8 percent of gross domestic product (GDP)—will be nearly a third less than the $680 billion shortfall in fiscal year 2013, which was equal to 4.1 percent of GDP. This will be the fifth consecutive year in which the deficit has declined as a share of GDP since peaking at 9.8 percent in 2009 (see the figure below).

CBO — Updated Estimates of the Effects of the Insurance Coverage Provisions of the Affordable Care Act, April 2014

April 14, 2014 Comments off

Updated Estimates of the Effects of the Insurance Coverage Provisions of the Affordable Care Act, April 2014
Source: Congressional Budget Office

CBO and the staff of the Joint Committee on Taxation (JCT) have updated their estimates of the budgetary effects of the provisions of the Affordable Care Act (ACA) that relate to health insurance coverage. The new estimates, which are included in CBO’s latest baseline projections, reflect CBO’s most recent economic forecast, account for administrative actions taken and regulations issued through March 2014, and incorporate new data and various modeling updates.

Relative to their previous projections made in February 2014, CBO and JCT now estimate that the ACA’s coverage provisions will result in lower net costs to the federal government: The agencies currently project a net cost of $36 billion for 2014, $5 billion less than the previous projection for the year; and $1,383 billion for the 2015–2024 period, $104 billion less than the previous projections (see the figure below).

CBO — Presentation on Raising the Excise Tax on Cigarettes: Effects on Health and the Federal Budget

April 9, 2014 Comments off

Presentation on Raising the Excise Tax on Cigarettes: Effects on Health and the Federal Budget
Source: Congressional Budget Office

Presentation by James Baumgardner, CBO’s Deputy Assistant Director for Health, Retirement, and Long-Term Analysis, to the 30th International Congress of Actuaries

A Review of CBO’s Activities in 2013 Under the Unfunded Mandates Reform Act

March 27, 2014 Comments off

A Review of CBO’s Activities in 2013 Under the Unfunded Mandates Reform Act
Source: Congressional Budget Office

The federal government, through laws and regulations, sometimes imposes requirements—known as federal mandates—on state, local, and tribal governments and entities in the private sector to achieve national goals. In 1995, lawmakers enacted the Unfunded Mandates Reform Act (UMRA) in part to ensure that, during the legislative process, the Congress receives information about the potential effects of mandates as it considers proposed legislation. To that end, UMRA requires CBO, at certain stages in the legislative process, to assess the cost of mandates that would apply to state, local, and tribal governments or to the private sector. This report, which is part of an annual series that began in 1997, summarizes CBO’s activities in 2013 under UMRA.

CBO — Letter to the Honorable Paul Ryan Regarding Federal Spending for Major Mandatory Spending Programs and Tax Credits that are Primarily Means-Tested

March 25, 2014 Comments off

Letter to the Honorable Paul Ryan Regarding Federal Spending for Major Mandatory Spending Programs and Tax Credits that are Primarily Means-Tested
Source: Congressional Budget Office

Federal spending for each of the government’s major mandatory spending programs and tax credits that are primarily means-tested (that is, spending programs and tax credits that provide cash payments or assistance in obtaining health care, food, or education to people with relatively low income or few assets). Table 1 shows CBO’s baseline projections for the 2014–2024 period; Table 2 shows historical spending data from 2004 through 2013, along with CBO’s estimates for 2014.

The tables include total spending for mandatory programs that are primarily not means-tested, but they do not include separate entries for individual programs in that group that have means-tested components (for example, student loans and some portions of Medicare, other than low-income subsidies for Part D). They also do not include means-tested programs that are discretionary (for example, the Section 8 housing assistance programs and the Low Income Home Energy Assistance Program). However, the tables show discretionary spending for the Pell Grant program as a memorandum item because that program has both discretionary and mandatory spending components and the amount of the mandatory Pell grant component is partially dependent on the annual amount of discretionary funding.

In CBO’s latest baseline projections, published in The Budget and Economic Outlook: 2014 to 2024 (February 2014), mandatory outlays for both means-tested and non-means-tested programs are projected to grow over the next decade at an average annual rate of 5.4 percent (see Table 1).

Overall, the growth rates projected for total mandatory spending over the coming decade are slower than those experienced in the past 10 years—by about one-half percentage point per year, on average. Over the 2005–2014 period, CBO estimates that total mandatory outlays will have increased at an average annual rate of 6.0 percent—means-tested programs by an average of 6.8 percent per year and non-means-tested programs by 5.7 percent per year (see Table 2).

CBO — Emergency Unemployment Compensation Extension Act of 2014 (cost estimate)

March 14, 2014 Comments off
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