The debate over how to reduce U.S. debt levels has generated a lot of partisan huffing and puffing in Congress, but no meaningful action.
Enter President Obama's bipartisan fiscal commission, which will hold its first meeting in a few weeks.
The panel's goal is not to erase the deficit - that would be far too difficult at this point. Rather, the commission will recommend policies that can slow the growth rate of debt to a "sustainable" level. Among other things, that means making sure annual deficits don't grow faster than the economy.
The commission's first task is to figure out what lawmakers can do to bring the annual deficit as a percent of gross domestic product (GDP) down to 3% starting in 2015.
Broadly speaking, Congress has three options: raise taxes, cut spending or do both. None will be pretty.
Washington (CNNMoney.com) - The momentous vote the House took on Sunday made far-reaching changes to the American health care system.
When enacted, it will extend coverage to 32 million more people. It will protect policyholders from being bounced for pre-existing illnesses. It will expand Medicare prescription drug coverage and offer subsidies to help people pay for insurance.
The expansion of coverage isn't cheap. According to a preliminary estimate by the Congressional Budget Office, the legislation would cost $940 billion over the course of a decade. Offsetting provisions would reduce deficits by $143 billion in the first 10 years and by more than $1 trillion in the following decade.
But the economic mechanics of health care reform are exceedingly complex. Does the legislation do enough to protect the budget?
CNNMoney asked a panel of fiscal experts to size up the legislation from a budget perspective.
Washington (CNNMoney.com) - The momentous vote the House took on Sunday made far-reaching changes to the American health care system.
When enacted, it will extend coverage to 32 million more people. It will protect policyholders from being bounced for pre-existing illnesses. It will expand Medicare prescription drug coverage and offer subsidies to help people pay for insurance.
The expansion of coverage isn't cheap. According to a preliminary estimate by the Congressional Budget Office, the legislation would cost $940 billion over the course of a decade. Offsetting provisions would reduce deficits by $143 billion in the first 10 years and by more than $1 trillion in the following decade.
But the economic mechanics of health care reform are exceedingly complex. Does the legislation do enough to protect the budget?
CNNMoney asked a panel of fiscal experts to size up the legislation from a budget perspective.
(CNN) - Discussing the budget deficit on Capitol Hill on Monday, Senate Majority Leader Harry Reid revived a long-running debate over the effectiveness of so-called "pay-as-you-go" spending rules.
"With pay-go we have some experience," declared Reid, D-Nevada. "We know it works. It worked during the Clinton years. We paid down the national debt as the result of what happened during the Clinton years. Pay-go was dismissed during the Bush years."
President Barack Obama signed legislation last month that requires the government to offset any spending increases with spending cuts or tax increases. A similar law was in effect in the 1990s.
Fact Check: Did "pay-go" pay down the national debt during the 1990s?
Get the facts and the bottom line after the jump:
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Washington (CNN) – There's a lot of talk in nation's capital about failure. The failure of Congress to pass health care reform. The failure of the Senate to extend unemployment benefits. The failure of the House to pass bills the Senate supermajority will find palatable.
You get the idea.
Then there's the kind of failure that House Majority Leader Steny Hoyer addressed Monday at a Brookings Institution speech on "fiscal responsibility."
Hoyer, a Maryland Democrat serving his 15th term, was warning about failure of a different magnitude entirely: The decline of America's economic dominance because of the growing weight of its debt.
"This, then, is our turning point and our choice: the point at which we join the debt-ridden powers who saw the story of their greatness end in fiscal ruin, or the point at which we as a nation refuse that ending and write a new chapter," Hoyer said.
New York (CNNMoney.com) - In the past five years, the administrations of both parties have tried to reform three big-ticket items: the tax code, health care and Social Security.
The reform efforts would have helped put the federal budget on a more sustainable course.
But all have been tabled in one form or another because of partisan resistance to key ideas.
Now policymakers' work is infinitely harder as they wake up to the realization that they must deal soon with the country's long-term fiscal problems.
At stake ultimately is the United States' status as a first-class economy.
"It's going to take bold strokes to deal with this challenge. It's going to take big ideas, and it's going to take political courage because it's every hot-button issue that's out there. It is Social Security. It is Medicare. It is revenue. All of them," said Senate Budget Chairman Kent Conrad, D-N.D., at a hearing last week on fiscal sustainability.
Washington (CNN) – President Barack Obama is wasting no time touting his own efforts to impose fiscal discipline and intimating, in the process, that Capitol Hill and the prior administration did not do enough to keep runaway deficit spending under control.
Friday Obama signed into law a record $1.9 trillion increase in the federal government's borrowing cap. The legislation, which passed Congress largely along party lines, raised the debt ceiling to $14.294 trillion.
The measure also enacted a statutory, pay-as-you-go, or "pay-go," procedure requiring lawmakers to find ways to pay for proposed spending increases or tax cuts by offsetting them with higher taxes or reduced spending elsewhere in the budget.
In his weekly radio and Internet address out Saturday, Obama is lauding the return of the ‘pay-go’ requirement.
“It was this rule that helped lead to balanced budgets in the 1990s, by making clear that we could not increase entitlement spending or cut taxes simply by borrowing more money. And it was the abandonment of this rule that allowed the previous administration and previous congresses to pass massive tax cuts for the wealthy and create an expensive new drug program without paying for any of it. Now in a perfect world, Congress would not have needed a law to act responsibly, to remember that every dollar spent would come from taxpayers today – or our children tomorrow.”
“But this isn’t a perfect world,” continues Obama. “This is Washington. And while in theory there is bipartisan agreement on moving on balanced budgets, in practice, this responsibility for the future is often overwhelmed by the politics of the moment. It falls prey to the pressure of special interests, to the pull of local concerns, and to a reality familiar to every single American – the fact that it is a lot easier to spend a dollar than save one.”
“Now, Congress will have to pay for what it spends, just like everybody else,” the president also says in Saturday’s address.
FULL POST
Washington (CNN) - President Barack Obama signed into law Friday a record $1.9 trillion increase in the government's borrowing cap.
The legislation, which passed Congress largely along party lines, raises the debt ceiling to $14.294 trillion.
The measure also enacts a statutory pay as you go, or "pay-go," procedure requiring lawmakers to find ways to pay for proposed spending increases or tax cuts by offsetting them with higher taxes or reduced spending elsewhere in the budget.
The debt limit hike is expected to cover the Treasury's borrowing needs past the November mid-term elections and into 2011.
If the debt ceiling were ever breached, the country would effectively be in default. That would slam bonds, the dollar and creditors' portfolios.
Washington (CNN) – President Barack Obama will issue an executive order in "the next 10 days or so" to create a bipartisan commission on reducing the federal deficit, White House Press Secretary Robert Gibbs said Thursday.
Obama previously said he would use an executive order to set up the panel after the Senate rejected a bill sponsored by both Democrats and Republicans to do so.
The White House has cited opposition to the bill by several Republican senators who co-sponsored the legislation as an example of political game-playing in Washington.
The commission, composed of congressional Democrats and Republicans, will be asked to come up with recommendations for reducing the deficit. The recommendations are expected to include a mix of tax increases and spending cuts, including possible reduced benefits from entitlement programs such as Social Security.
FULL POST
The House voted to hike the debt ceiling by $1.9 trillion to $14.294 trillion. (Photo Credit: Getty Images/File)
New York (CNNMoney.com) - The House on Thursday approved a record-level increase in the cap on how much the government can borrow.
The House also approved a measure that imposes tougher budget rules on lawmakers.
The votes, which broke down largely along party lines, come one week after the Senate approved both measures.
The House voted to hike the debt ceiling by $1.9 trillion to $14.294 trillion.
The debt limit hike is expected to cover the Treasury's borrowing needs past the November mid-term elections and into 2011. That means lawmakers up for re-election won't need to take another politically sensitive vote before the polls open.
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