DOCSLIB.ORG

Reducing the Deficit: Spending and Revenue Options

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Reducing the Deficit: Spending and Revenue Options CONGRESS OF THE UNITED STATES CONGRESSIONAL BUDGET OFFICE CBO Reducing the Deficit: Spending and Revenue Options MARCH 2011 © Shutterstock, LLC Pub. No. 4212 CBO Reducing the Deficit: Spending and Revenue Options March 2011 The Congress of the United States O Congressional Budget Office Notes Unless otherwise indicated, all years referred to in this report are federal fiscal years, which run from October 1 to September 30. The numbers in the text and tables are in nominal (current year) dollars. Those numbers may not add up to totals because of rounding. The baseline budget projections discussed in this report are those published in Congressional Budget Office,The Budget and Economic Outlook: Fiscal Years 2011 to 2021 (January 2011). The estimates for the various options shown in this volume may differ from any subsequent cost estimates for legislative proposals that resemble the options presented here. On the cover: A U.S. Navy F/A-18F Super Hornet aircraft near Joint Base Pearl Harbor– Hickam, Hawaii, July 2010, photo by Technical Sergeant Jacob N. Bailey, U.S. Air Force; other photos, copyright as indicated on the cover. CBO Preface The Congressional Budget Office (CBO) regularly issues a compendium of budget options to help inform federal lawmakers about the implications of possible policy choices. This volume—one of several reports that CBO produces regularly for the House and Senate Committees on the Budget—presents more than 100 options for altering federal spending and revenues. Nearly all of the options would reduce federal budget deficits. From 1983 to 1997, the reports in this series were titled Reducing the Deficit: Spending and Revenue Options. In 2000, at a time of budget surpluses, the title was changed to Budget Options. This volume returns to the earlier title because the budgetary context has shifted dramatically since 2000. The report begins with an introductory chapter that describes the current budgetary picture and the uses and limitations of this volume. Chapters 2 and 3 present options that would reduce mandatory and discretionary spending, respectively. Chapter 4 contains options that would increase revenues from various kinds of taxes and fees. The options discussed in this report stem from a variety of sources, including legislative proposals, various Administrations’ budget proposals, Congressional staff, other government entities, and private groups. The options are intended to reflect a range of possibilities rather than to provide a ranking of priorities or a comprehensive list. The inclusion or exclusion of a particular policy change does not represent an endorsement or rejection by CBO. In keeping with CBO’s mandate to provide objective, impartial analysis, this report makes no recommendations. Some previous reports in this series grouped spending options according to budget function (the 20 programmatic categories into which the government’s activities are frequently divided). This volume, however, groups spending options according to whether the funds are generally controlled through authorizing legislation (mandatory spending) or through the annual appropriation process (discretionary spending). An index listing the options by budget function appears in Appendix C. This volume is the result of work by more than 130 people at CBO; those contributors are listed in Appendix E. The staff of the Joint Committee on Taxation prepared most of the revenue estimates. The report is available on CBO’s Web site (www.cbo.gov). Douglas W. Elmendorf Director March 2011 CBO Contents Introduction 1 1 The Current Context for Making Decisions About the Budget 1 The Options in This Report 8 Caveats About This Report 9 Mandatory Spending Options 11 2 Trends in Mandatory Spending 11 Assumptions Underlying Projections of Mandatory Spending 12 Sources of Growth in Mandatory Programs 14 Approaches to Reducing Mandatory Spending 17 Mandatory Spending Options in This Chapter 17 Discretionary Spending Options 69 3 Trends in Discretionary Spending 71 Approaches to Reducing Discretionary Spending 72 Discretionary Spending Options in This Chapter 73 Revenue Options 129 4 Trends in Revenues 129 Considerations in Setting Tax Policy 130 Approaches to Increasing Revenues 135 Revenue Options in This Chapter 136 CBO VI REDUCING THE DEFICIT: SPENDING AND REVENUE OPTIONS A Options That Would Increase the Deficit 207 B Deficit Reduction Options with Smaller Budgetary Effects 219 C Options by Budget Function 223 D Options by Major Program or Category 229 E Contributors to This Volume 237 CBO CONTENTS REDUCING THE DEFICIT: SPENDING AND REVENUE OPTIONS VII Tables 1-1. CBO’s Baseline Budget Projections 4 2-1. CBO’s Baseline Projections of Mandatory Outlays 16 3-1. Discretionary Spending in 2010 69 4-1. CBO’s Baseline Projections of Revenues 132 Figures 1-1. Federal Debt Held by the Public Under CBO’s Baseline or with a Continuation of Certain Policies, Compared with Past Debt 2 1-2. Total Revenues and Outlays, 1971 to 2021 3 1-3. Federal Revenues and Spending in 2021 Under CBO’s Baseline or with a Continuation of Certain Policies 5 1-4. Breakdown of Federal Spending in 2010 9 2-1. Breakdown of Mandatory Spending in 2010 12 2-2. Mandatory Spending, 1971 to 2021 13 3-1. Breakdown of Defense and Nondefense Discretionary Spending in 2010 70 3-2. Discretionary Spending, 1971 to 2021 71 4-1. Breakdown of Revenues in 2010 130 4-2. Total Revenues, 1971 to 2021 131 4-3. Cumulative Budgetary Effect of Major Income Tax Expenditures, 2010 to 2014 133 4-4. Average Federal Tax Rates, by Income Quintile and Tax Source, 2007 135 CBO VIII REDUCING THE DEFICIT: SPENDING AND REVENUE OPTIONS Mandatory Spending Defense Option 1 Introduce Minimum Out-of-Pocket Requirements Under TRICARE For Life 19 Energy Option 2 Transfer the Tennessee Valley Authority’s Electric Utility Functions and Associated Assets and Liabilities 20 Option 3 Reduce the Size of the Strategic Petroleum Reserve 22 Natural Resources and Environment Option 4 Prohibit New Enrollment in the Conservation Stewardship Program 24 Option 5 Limit Enrollment in the Conservation Reserve Program 25 Agriculture Option 6 Reduce the Premium Subsidy in the Crop Insurance Program 26 Option 7 Reduce by 20 Percentage Points the Share of a Farmer’s Base Acreage Eligible for USDA Payments 27 Housing Credit Option 8 Lower the Loan Limits on Mortgages Guaranteed by Fannie Mae and Freddie Mac 28 Option 9 Increase Guarantee Fees Charged by Fannie Mae and Freddie Mac 30 Education Option 10 Eliminate Subsidized Loans to Graduate Students 31 Option 11 Change the Interest Rate Structure for Student Loans 32 Health Option 12 Add a “Public Plan” to the Health Insurance Exchanges 33 Option 13 Limit Medical Malpractice Torts 35 Option 14 Adopt a Voucher Plan and Slow the Growth of Federal Contributions for the Federal Employees Health Benefits Program 37 Option 15 Convert the Federal Share of Medicaid’s Payments for Long-Term Care Services into a Block Grant 39 CBO CONTENTS REDUCING THE DEFICIT: SPENDING AND REVENUE OPTIONS IX Mandatory Spending (Continued) Option 16 Reduce the Floor on Federal Matching Rates for Medicaid Services 41 Option 17 Consolidate and Reduce Federal Payments for Graduate Medical Education Costs at Teaching Hospitals 43 Option 18 Raise the Age of Eligibility for Medicare to 67 45 Option 19 Impose Cost Sharing for the First 20 Days of a Stay in a Skilled Nursing Facility Under Medicare 47 Option 20 Require a Copayment for Home Health Episodes Covered by Medicare 48 Option 21 Reduce Medicare Costs by Changing the Cost-Sharing Structures for Medicare and Medigap Insurance 49 Option 22 Increase the Basic Premium for Medicare Part B to 35 Percent of the Program’s Costs 51 Option 23 Reduce Medicare’s Payment Rates Across the Board in High-Spending Areas 52 Option 24 Eliminate the Critical Access Hospital, Medicare-Dependent Hospital, and Sole Community Hospital Programs in Medicare 53 Option 25 Require Manufacturers to Pay a Minimum Rebate on Drugs Covered Under Medicare Part D for Low-Income Beneficiaries 54 Retirement and Social Security Option 26 Base Cost-of-Living Adjustments for Federal Civilian and Military Pensions and Veterans’ Benefits on an Alternative Measure of Inflation 56 Option 27 Base Social Security Cost-of-Living Adjustments on an Alternative Measure of Inflation 58 Option 28 Link Initial Social Security Benefits to Average Prices Instead of Average Earnings 60 Option 29 Raise the Earliest Eligibility Age for Social Security 62 Option 30 Raise the Full Retirement Age in Social Security 63 Option 31 Lengthen by Three Years the Computation Period for Social Security Benefits 65 Option 32 Apply the Social Security Benefit Formula to Individual Years of Earnings 66 Options That Would Increase the Deficit Option A-1 Extend the Requirement for States to Provide Transitional Medical Assistance 208 Option A-2 Permanently Extend Cost-Sharing Assistance for Qualifying Individuals Under Medicaid 209 Option A-3 Increase Social Security Benefits for Workers Who Have Low Earnings Over a Long Working Lifetime 210 CBO X REDUCING THE DEFICIT: SPENDING AND REVENUE OPTIONS Discretionary Spending Defense Option 1 Reduce the Growth in Appropriations for the Department of Defense 74 Option 2 Cap Increases in Military Basic Pay 76 Option 3 Increase Medical Cost Sharing for Military Retirees Who Are Not Yet Eligible for Medicare 78 Option 4 Limit the TRICARE Benefit for Military Retirees and Their Dependents 80 Option 5 Increase Cost Sharing for Pharmaceuticals Under TRICARE 82 Option 6 Consolidate
Load more

Recommended publications
  • Poverty, Opportunity and the Deficit: What Comes Next
    THE SOURCE FOR NEWS, IDEAS AND ACTION Poverty, Opportunity and the Deficit: What Comes Next A Commentary Series by Spotlight on Poverty and Opportunity About Spotlight on Poverty and Opportunity Spotlight on Poverty and Opportunity is a non-partisan initiative aimed at building public and political will for significant actions to reduce poverty and increase opportunity in the United States. We bring together diverse perspectives from the political, policy, advocacy and foundation communities to engage in an ongoing dialogue focused on finding genuine solutions to the economic hardship confronting millions of Americans. About the Poverty, Opportunity and the Deficit Series With concern about rising deficits taking center stage in Washington, President Obama formed the bipartisan National Commission on Fiscal Responsibility and Reform to make recommendations on how to ensure a sound fiscal future for our country. As the Commission deliberated, Spotlight on Poverty and Opportunity believed their efforts to rein in deficits and manage the budget should include a focus on the potential impact on low-income people. To make sure this critical issue was central to the debate, Spotlight presented a range of views from policymakers, economists and policy experts during the fall of 2010 on how the Commission's recommendations will--or should--affect low-income individuals. Due to the overwhelming positive response to our first Poverty, Opportunity and the Deficit series, Spotlight will host a follow-up commentaries series in early 2011 that will ask contributors to focus on specific issues such as Social Security, taxes and tax expenditures, health care and economic stability and recovery. To view the full Poverty, Opportunity and the Deficit series, visit www.spotlightonpoverty.org/deficit-series Support for Spotlight on Poverty and Opportunity Since its launch in October 2007, Spotlight on Poverty and Opportunity has been supported by the following foundations.
    [Show full text]
  • OCG-90-5 the Budget Deficit: Outlook, Implications, and Choices
    4 ---. GAO _...“._.-_. _... _--- ._- .. I. -.---.--..-1----.---.--.-.-----1- ___________ -- Sc’~)~cwllwr I!)!)0 THE BUDGET DEFICIT Outlook, Implicati.ons, and Choices tti II142190 I -..-.___- ._~l~l.--..-ll-.“.~ _-___--- - - - (;Aol’o( :(;-!N-r, .“.“__..___” . ..- - . _-...- .._._.-... .-- ._.~.- ._._-.-.-.. -.__ .-~ .__..........__ -.._-__...__ _- -- Comptroller General of the United States B-240983 September 12,199O The Honorable Charles E. Grassley United States Senate The Honorable J. James Exon United States Senate The Honorable Daniel P. Moynihan United States Senate The Honorable Bill Bradley United States Senate This report responds to your joint request that we provide our views on the dimensions of the budget problem facing the nation, the implications of the deficit for the U.S. economy, and some of the choices that must be made to attack the deficit problem. The deficit has doubled as a percent of gross national product (GNP) every decade since the 1960s. This ominous trend has reflected a growing imbalance between revenues and outlays in the general fund portion of the budget. The resulting deficits seriously depleted the nation’s supply of savings in the 19809, which adversely affected our investment and long- term growth. Rising deficits and borrowing have also meant that increasingly larger portions of federal revenue are being used for debt service rather than for other more productive purposes. We are recommending that this trend be reversed by a $300 billion fiscal policy swing that would result in total budget surpluses of approximately 2 percent of GNP annually by 1997-and close to a balance in the general fund.
    [Show full text]
  • 4. Government Budget Balance a Government Budget Is a Government Document Presenting the Government's Proposed Revenues and Spending for a Financial Year
    4. Government budget balance A government budget is a government document presenting the government's proposed revenues and spending for a financial year. The government budget balance, also alternatively referred to as general government balance, public budget balance, or public fiscal balance, is the overall difference between government revenues and spending. A positive balance is called a government budget surplus, and a negative balance is a government budget deficit. A budget is prepared for each level of government (from national to local) and takes into account public social security obligations. The government budget balance is further differentiated by closely related terms such as primary balance and structural balance (also known as cyclically-adjusted balance) of the general government. The primary budget balance equals the government budget balance before interest payments. The structural budget balances attempts to adjust for the impacts of the real GDP changes in the national economy. 4.1 Primary deficit, total deficit, and debt The meaning of "deficit" differs from that of "debt", which is an accumulation of yearly deficits. Deficits occur when a government's expenditures exceed the revenue that it generates. The deficit can be measured with or without including the interest payments on the debt as expenditures. The primary deficit is defined as the difference between current government spending on goods and services and total current revenue from all types of taxes net of transfer payments. The total deficit (which is
    [Show full text]
  • A REVIEW of IRANIAN STAGFLATION by Hossein Salehi
    THE HISTORY OF STAGFLATION: A REVIEW OF IRANIAN STAGFLATION by Hossein Salehi, M. Sc. A Thesis In ECONOMICS Submitted to the Graduate Faculty of Texas Tech University in Partial Fulfillment of the Requirements for the Degree of MASTER OF ARTS Approved Dr. Masha Rahnama Chair of Committee Dr. Eleanor Von Ende Dr. Mark Sheridan Dean of the Graduate School August, 2015 Copyright 2015, Hossein Salehi Texas Tech University, Hossein Salehi, August, 2015 ACKNOWLEDGMENTS First and foremost, I wish to thank my wonderful parents who have been endlessly supporting me along the way, and I would like to thank my sister for her unlimited love. Next, I would like to show my deep gratitude to Dr. Masha Rahnama, my thesis advisor, for his patient guidance and encouragement throughout my thesis and graduate studies at Texas Tech University. My sincerest appreciation goes to, Dr. Von Ende, for joining my thesis committee, providing valuable assistance, and devoting her invaluable time to complete this thesis. I also would like to thank Brian Spreng for his positive input and guidance. You all have my sincerest respect. ii Texas Tech University, Hossein Salehi, August, 2015 TABLE OF CONTENTS ACKNOWLEDGMENTS .................................................................................................. ii ABSTRACT ........................................................................................................................ v LIST OF FIGURES ..........................................................................................................
    [Show full text]
  • Section 10 – Overview of the Budget Process
    SECTION 21—OVERVIEW OF SCORING LEGISLATION SECTION 21—OVERVIEW OF SCORING LEGISLATION Table of Contents 21.1 What is scoring? 21.2 When does scoring occur during the budget process? 21.3 What are the basic concepts I need to know to score legislation? (a) Overview of budget laws (b) Definition of discretionary spending (c) Definition of mandatory spending (d) Committee of jurisdiction (e) How are scoring estimates measured? (f) Economic and technical assumptions (g) Scoring timeframes 21.4 What are the budget enforcement mechanisms for discretionary and mandatory spending? (a) Caps on discretionary spending (b) Pay-as-you-go for mandatory spending (c) Congressional enforcement procedures 21.5 What resources are available to help me score legislation? 21.6 When are scores of legislation due to OMB? 21.1 What is scoring? Scoring is the process of estimating the change in Government spending and collections resulting from enacted or proposed legislation, compared to what would happen in the absence of that legislation. These estimates are prepared both to inform policy makers of the budgetary effects of proposed legislation, and to inform congressional and statutory budget enforcement procedures. 21.2 When does scoring occur during the budget process? Scoring occurs typically during budget formulation, the consideration of proposed legislation, and after a law has been enacted. Budget formulation. As part of the budget formulation process, agencies submit baseline program levels and discretionary, mandatory, and governmental receipt proposals to OMB for consideration. Agencies work with OMB to determine the effect of proposals on budget authority, collections, and outlays based on the Administration’s economic and technical assumptions.
    [Show full text]
  • Uncontrollable Spending Has Been Growing Much More Rapidly Than Total Spending and Thus Accounts for an Ever-Larger Share of the Total
    How much spending is uncontrollable? Spending is generally said to be uncontrollable for political rather than legal reasons. Entitlement spending can always be controlled legally by reforming programs, but when an entitlement is extremely popular, reform may require more political courage than is readily available. The federal budget divides government spending into three categories, discretionary spending, mandatory or direct spending, and net interest. Discretionary spending, set in annual appropriations acts controlled by the House and Senate Appropriations Committees, includes most defense programs as well as spending for education, transportation, environmental protection, law enforcement and border security, and international assistance. Mandatory spending, controlled by laws other than appropriations act, includes spending on entitlement programs including the big three—Social Security, Medicare, and Medicaid—and many smaller programs such as supplemental nutrition assistance, federal civilian and military retirement benefits, and unemployment insurance. Government spending on mandatory programs (often called entitlement programs), and net interest on the public debt are often described as “uncontrollable.” Entitlements can be controlled legally by reforming them, but this can be highly unpopular politically. Interest costs can be controlled indirectly by curbing spending growth or raising revenues, but that is also never easy. Uncontrollable spending has been growing much more rapidly than total spending and thus accounts for an ever-larger share of the total. However, most growth has been concentrated in entitlements that serve the elderly and in health insurance. The population has been aging rapidly, and that affects both Social Security and health programs. The latter have grown doubly rapidly because health costs per beneficiary have been growing faster than incomes per capita.
    [Show full text]
  • Federal Mandatory Spending for Means-Tested Programs, 2009 to 2029
    JUNE 2019 Federal Mandatory Spending for Means-Tested Programs, 2009 to 2029 Means-tested programs (which provide cash payments growth rates have been adjusted to exclude the effects of or other forms of assistance to people with relatively low shifts in the timing of certain federal payments.3 income or few assets) currently account for a little more than a quarter of all mandatory spending.1 The largest Comparing Historical and Projected means-tested mandatory programs are Medicaid, the Growth Rates earned income and child tax credits (which are refund- Historical and projected growth rates are affected by able and thus affect outlays), the Supplemental Nutrition changes in law and the economy. For example, several Assistance Program (SNAP), and the Supplemental mandatory programs have been or are scheduled to be Security Income program. The largest non–means- significantly affected by changes specified in law over the tested mandatory programs are Social Security, most of next 10 years. The 2007–2009 recession and the ensuing Medicare, and the federal civilian and military retirement recovery also have influenced growth rates. As a result, programs. important aspects of the programs may differ signifi- cantly from their past, and those differences may be the In its May 2019 baseline, the Congressional Budget Office projected that if current laws generally remained the Low Income Home Energy Assistance Program), which are unchanged, mandatory spending on means-tested pro- controlled by annual appropriation acts. However, each table grams would grow more slowly than spending for non– shows discretionary spending for the Federal Pell Grant Program means-tested programs.
    [Show full text]
  • The-Great-Depression-Glossary.Pdf
    The Great Depression | Glossary of Terms Glossary of Terms Balanced budget – Government revenues equal expenditures on an annual basis. (Lesson 5) Bank failure – When a bank’s liabilities (mainly deposits) exceed the value of its assets. (Lesson 3) Bank panic – When a bank run begins at one bank and spreads to others, causing people to lose confidence in banks. (Lesson 3) Bank reserves – The sum of cash that banks hold in their vaults and the deposits they maintain with Federal Reserve banks. (Lesson 3) Bank run – When many depositors rush to the bank to withdraw their money at the same time. (Lesson 3) Bank suspensions – Comprises all banks closed to the public, either temporarily or permanently, by supervisory authorities or by the banks’ boards of directors because of financial difficulties. Banks that close under a special holiday declaration and remained closed only during the designated holiday are not counted as suspensions. (Lesson 4) Banks – Businesses that accept deposits and make loans. (Lesson 2) Budget deficit – When government expenditures exceed revenues. (Lesson 4) Budget surplus – When government revenues exceed expenditures. (Lesson 4) Consumer confidence – The relationship between how consumers feel about the economy and their spending and saving decisions. (Lesson 5) Consumer Price Index (CPI) – A measure of the prices paid by urban consumers for a market basket of consumer goods and services. (Lesson 1) Deflation – A general downward movement of prices for goods and services in an economy. (Lessons 1, 3 and 6) Depression – A very severe recession; a period of severely declining economic activity spread across the economy (not limited to particular sectors or regions) normally visible in a decline in real GDP, real income, employment, industrial production, wholesale-retail credit and the loss of overall confidence in the economy.
    [Show full text]
  • Blueprint for Balance: a FEDERAL BUDGE T F OR FY 20 18
    Blueprint for Balance: A FEDERAL BUDGET FOR FY 2018 The Heritage Foundation © 2017 by The Heritage Foundation 214 Massachusetts Avenue, NE Washington, DC 20002 (202) 546-4400 | heritage.org All rights reserved. ISBN: 978-0-89195-163-6 Contents Contributors .................................................................................................................................................... ix Introduction: Blueprint for Balance ........................................................................................ 1 Chapter 1: Policies for a Congressional Budget ........................................................... 5 Chapter 2: Budget Proposals ..........................................................................................................13 Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Repeal the USDA Catfish Inspection Program ........................................................................................16 Eliminate the Conservation Technical Assistance Program..................................................................17 Eliminate the Rural Business Cooperative Service.................................................................................18 Prohibit Funding for National School Meal Standards ............................................................................................ and the Community Eligibility Provision 19 Withhold Funding for Federal Fruit and Vegetable Supply Restrictions ............................................20 Repeal
    [Show full text]
  • “Mandatory" Knowledge: Truths About Government Spending 1
    Center Forward Budget Basics “Mandatory" Knowledge: Truths Vol. 1, No. 2 About Government Spending April 2011 (updated March 2012) Overview Key Facts The intense spotlight on government support for public radio, Planned Total federal spending for fiscal 2011: Parenthood and, until recently, earmarks, may have created the impression that $3.598 trillion most government spending goes to programs like these. In truth, 60% of government spending goes to benefit individuals—such as seniors, veterans and Amount of mandatory spending: unemployed workers—under so-called “mandatory” spending. $2.025 (56% of total) Amount of discretionary spending: What’s “mandatory” spending? $1.346 trillion (37% of total) Net interest on the national debt: “Mandatory” spending is money the government must spend because of laws $227 billion (6% of total) defining who is “entitled” to get government money and in what amount (hence, “entitlements”). For example, the Social Security Act guarantees any American Top sources of mandatory spending in over age 62 benefits according to a formula fixed by law. If more people reach age fiscal 2011: 62 and want benefits (which is in fact happening), spending automatically rises. Social Security: $725 billion The only way to stop these increases is to change who gets the money—i.e. by Medicare: $560 billion raising the retirement age—or the amount people get—i.e. by cutting benefits. Medicaid: $275 billion Other examples of mandatory spending include: Unemployment insurance: $159 Medicare (available to anyone over 65 or anyone who is disabled); billion Medicaid and food stamps (available to anyone whose income is low Top sources of discretionary spending enough to qualify); in fiscal 2011: Unemployment insurance; and National defense (including wars in Veterans’ benefits.
    [Show full text]
  • Mandatory Spending in Fiscal Year 2020
    THE FEDERAL BUDGET IN FISCAL YEAR 2020 A CLOSER REVENUES, $3.4 TRILLION OUTLAYS, $6.6 TRILLION Net Interest LOOK AT $0.3 T Mandatory Discretionary $ $ 2020 4.6 T 1.6 T MANDATORY SPENDING Primarily payments for benefit programs for which laws set eligibility rules and benefit formulas $4.6 $1.9 21.8% 11.7% Trillion Trillion of GDP of GDP Mandatory outlays (net Outlays for Mandatory outlays Average mandatory of osetting receipts) by Social Security and (net of osetting outlays (net of GLANCE the federal government Medicare (net of receipts) in 2020 osetting receipts) in 2020 osetting receipts) between 2000 in 2020 and 2019 AT A AT MANDATORY SPENDING IN 2020 Billions of Dollars 1,450 917 458 74 Other Major Health Medicare Medicaid Care Programs 1,090 945 144 Disability Insurance Social Security Old-Age and Survivors Insurance Supplemental Supplemental Nutrition Other Security Income Assistance 341 275 133 105 86 57 57 Program Income Security1,052 Programs COVID−19 Unemployment Recovery Other Compensation Rebates Unemployment Earned Income, Compensation Child, and Other Tax Credits 526 149 118 184 Other Other 977Programs Paycheck Protection Program Coronavirus Student Relief Fund Loan Programs 0.1 Other 171 109 62 Funds collected by government agencies from other government Federal Civilian and Military accounts or from the public that are credited as an oset to gross Military Retirement Civilian spending. Osetting receipts include Medicare premiums, intragovernmental payments for federal employees’ retirement, 110 12 Other and receipts related to natural resources (such as those from oil Veterans’ 122Programs and gas exploration and development).
    [Show full text]
  • Central Bank Independence and Fiscal Policy: Incentives to Spend and Constraints on the Executive
    Central Bank Independence and Fiscal Policy: Incentives to Spend and Constraints on the Executive Cristina Bodea Michigan State University Masaaki Higashijima Michigan State University Accepted at the British Journal of Political Science Word count: 12146 Abstract Independent central banks prefer balanced budgets due to the long-run connection between deficits and inflation and can enforce their preference through interest rate increases and denial of credit to the government. We argue that legal central bank independence (CBI) deters fiscal deficits predominantly in countries with rule of law and impartial contract enforcement, a free press and constraints on executive power. More, we suggest that CBI may not affect fiscal deficits in a counter-cyclical fashion, but, rather, depending on the electoral calendar and government partisanship. We test our hypotheses with new yearly data on legal CBI for 78 countries from 1970 to 2007. Results show that CBI restrains deficits only in democracies, during non-election years and under left government tenures. 1 1. Introduction In the 1990s countries worldwide started to reform their central bank laws, removing monetary policy from the hands of the government. This means that the newly independent central banks can change interest rates, target the exchange rate or the money supply to ensure price stability or low inflation1, without regard to incumbent approval ratings or re-election prospects. Because central bank independence (CBI) has been designed as an institutional mechanism for keeping a check on inflation, most analyses focus on the effect of such independence on inflation and its potential trade-off with economic growth (Grilli 1991, Cukierman et al.
    [Show full text]