Over at ThinkProgress, I highlight concerning economic news buried in the Congressional Budget Office’s latest update to their budget and economic outlook:
The CBO now estimates that the economy will grow even slower than it expected in its previous economic outlook. Not only that, it now expects that wages and salaries will comprise a smaller portion of that reduced economic pie. The report suggests that troubling long-term trends in our economy are getting worse. Middle-class wages have been stagnant for over a decade. Steven Greenhouse notes in the New York Times that “overall employee compensation — including health and retirement benefits — has also slipped badly, falling to its lowest share of national income in more than 50 years while corporate profits have climbed to their highest share over that time.”
At the same time, the CBO increased its estimate for corporate profits. Workers’ low wages are good news for corporations: the CBO explains that “lower labor costs are expected to reduce businesses’ expenses,” which means higher profits.
My latest column at Center for American Progress examines the omnibus appropriations bill that Congress passed yesterday. The challenge of covering legislation like the omnibus is finding a way to tell a coherent story about a very long bill that is essentially a list of government programs and how much money each will receive for the year. I chose to focus on some of the key investments in the bill, to try shedding some light on what the bill will mean for our economy. From the column:
The omnibus reverses some of the most damaging sequester cuts, but not all of them. The omnibus also makes a few excellent investments in our economy, and it is certainly better than allowing the full sequester cuts to continue for another year. This column focuses on four major areas of economic investment: infrastructure, early childhood education, scientific research, and job training. It also examines the smaller but very important long-term investment in preventing lead poisoning. Altogether, the omnibus delivers mixed results for these sectors, primarily because it faces restrictions from a spending cap that is simply too low to enable the investment our economy needs.
Debt Limit 101. Brinksmanship over raising the debt ceiling continued during the shutdown, and the deadline for avoiding a default on the national debt was only days away. This column explained the key issues with the debt limit.
House Budget Committee Chairman Paul Ryan. (Wikimedia Commons)
It’s one thing to support spending cuts in vague terms. It’s another thing to support specific cuts to tangible investments and public services. House Republicans enthusiastically supported severe — but vague — austerity in the Ryan budget. But on July 31, they refused to support the specific cuts required by that same budget.
Specifically, Republican leaders had to pull their spending bill for transportation and housing programs from the House floor, once it was clear that it lacked enough support to pass. That bill had to make deep cuts to infrastructure and affordable housing to fit within the Ryan budget’s low spending limit. When House members saw what those cuts would actually look like, they refused to support the bill.
My new report at Center for American Progress explains why the cuts in the House’s transportation and housing bill would be a disaster if they were every allowed to become law. Remember, these cuts were a sincere attempt by Ryan budget supporters to find the lowest-hanging fruit left to cut: Continue reading →
This is just weird. I was comparing the House and Senate versions of the spending bill that will fund transportation and housing programs for the 2014 fiscal year. As expected, the House wants to cut these programs far more deeply than the Senate. Less expected, the reports for these bills don’t even agree on how much we’re already spending this fiscal year.
I am excited to join Center for American Progress, as their Associate Director for Fiscal Policy. My work focuses on the tax and spending decisions within the federal budget. I recently published my first article on Think Progress, zooming in on just one of those decisions: funding for lead removal. Continue reading →
Conservatives first used the term “Starve the Beast” in the Reagan Administration. The strategy was to cut taxes, and then use the resulting deficits as leverage for spending cuts. After George W. Bush signed massive tax cuts into law in 2001 and 2003, the deficits materialized, but not the spending cuts. William Niskanen of the Libertarian CATO Institute looked at the evidence from 1981 to 2005 and found that “most of the changes in the relative level of federal spending were coincident with changes in the relative federal tax burden in the opposite direction.” He declared “Starve the Beast” a failure.
Federal receipts and spending as a percent of GDP. (Niskanen 2006)