Social Security Cost Growth Should Be Slowed, Not Accelerated

President Obama recently endorsed the idea of expanding Social Security benefits. However, a broad-based benefits expansion similar to one proposed by Bernie Sanders is getting ahead of fiscal realities. The system is underfunded and benefits are already scheduled to grow substantially more generous. Lawmakers should ensure that the system can pay for currently promised benefits before making bigger promises.

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Debt Will Rise Under the Next President

Debt would rise from from today’s level under the plans of each of the three remaining presidential candidates – Secretary Clinton, Senator Sanders, and Donald Trump – though by different amounts.

Under Secretary Clinton, we estimate debt would rise to 86 percent of Gross Domestic Product (GDP) by 2026 – roughly in line with current law projections. Under Senator Sanders, we estimate debt would rise to 154 percent of GDP. Finally, under Donald Trump, debt would rise to 129 percent of GDP.

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Updated Analysis of Bernie Sanders' Plans

We've updated our analysis of Bernie Sanders' budget plans, estimating that they would now add almost $19 trillion to the already unsustainable national debt. The total increased to incorporate the findings of two new independent estimates of Senator Sanders’s “Medicare for All” plan that find – consistent with our previous “high health cost estimate” – that his plan would cost at least twice as much as the campaign’s estimate.

 

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Adding Up Secretary Clinton’s Campaign Proposals So Far

Democratic presidential candidate Hillary Clinton has proposed numerous new policies that would increase spending and expand tax breaks along with other policies that would increase taxes and reduce certain spending.  We estimate that Secretary Clinton’s proposals would cost $1.80 trillion over a decade with interest, and they would be nearly fully paid for with $1.60 trillion of offsets – primarily from taxes on high earners.

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CRFB's Blog: The Bottom Line

In addition to producing its own estimate of the budgetary effects of the President's budget, CBO typically estimates the economic effects of the budget as well, in essence producing a dynamic score of the President's proposals. This year's Macroeconomic Analysis of the President's Budget draws a similar conclusion as the previous few: the labor supply effect of immigration reform increases the size of the economy somewhat while other factors on net slightly reduce it, leaving higher Gross National Product (GNP) overall but lower GNP per capita. Overall, the budget would increase real GNP per 1 percent on average over the next ten years (and by about 2.5 percent in the last year), but GNP per capita would be about 0.7 percent lower over the same time period. Dynamic effects not already accounted for would increase deficits by $32 billion over ten years.

In a speech in Elkhart, Indiana on Wednesday, President Obama discussed retirement security, saying, "We can’t afford to weaken Social Security. We should be strengthening Social Security. And not only do we need to strengthen its long-term health, it’s time we finally made Social Security more generous, and increased its benefits so that today’s retirees and future generations get the dignified retirement that they’ve earned. And we could start paying for it by asking the wealthiest Americans to contribute a little bit more. They can afford it. I can afford it."

He did not specify what the expanded benefits or tax increases would look like, but broad-based benefit increases would not be the best use of resources and would put the cart before the horse in terms of ensuring solvency.

When the Senate considers this year's National Defense Authorization Act (NDAA), Senate Armed Services Committee Chairman John McCain (R-AZ) is expected to offer an amendment to increase authorized defense spending for fiscal year 2017 by $18 billion. Although the amendment would not technically break the discretionary spending limits because the funds would still need to be appropriated, adoption of the McCain amendment would set the stage for busting the caps in the defense appropriations bill.

Currently, Congress is debating if and how to provide emergency funding to fight the Zika virus. The President has requested $1.9 billion in emergency funding this February to fight the mosquito-borne virus, while the Senate has offered $1.1 billion in emergency funding and the House would provide $622 million of fully-offset funds.