Romina Boccia and Dominik Lett With entitlement spending growth driving a worsening fiscal picture, the US could enter a new period of fiscal dominance where monetary policy serves fiscal ends, threatening central bank independence and America’s economic future. Following aggressive fiscal and monetary stimulus during the pandemic, legislators should avoid the siren’s call of elevated deficit spending or risk higher inflation. During the COVID-19 pandemic, Congress unleashed a deluge of emergency spending—roughly $6 trillion, according to the Committee for a Responsibl ..read more

Romina Boccia and Dominik Lett To date, the US has committed about $114 billion in Ukraine‐related emergency funding, equivalent to the combined 2023 budget for the Department of Homeland Security and NASA. Should Congress decide to pass additional emergency funding, Ukraine aid plus interest could top $240 billion. With the US running excessively high deficits of 5.6 percent of gross domestic product (GDP) in fiscal year (FY) 2024 as debt projections are on track to exceed historic highs, Congress should fully offset new spending to avoid contributing to our nation’s deteriorating f ..read more

Romina Boccia   The Financial Report of the United States Government (also known as the Financial Report) raises significant concerns about the country’s long‐term financial health. Unsustainable deficits contribute to rising debt levels as spending growth outpaces revenue growth at an accelerating pace. Over the next 75 years, US taxpayers face over $73 trillion in long‐term unfunded obligations. What’s more, this unfunded obligation is entirely driven by only two federal government programs: Medicare and Social Security. Here are key takeaways from the&nb ..read more

Chris Edwards President Biden’s new federal budget proposes high spending and huge deficits for years to come. The deficits are expected to boost government debt held by the public from $28 trillion this year to $45 trillion by 2034. The budget baseline—which excludes Biden’s proposed policies—shows slightly higher debt growth over the coming decade. The Wall Street Journal reported, “The fiscal 2025 budget would cut the deficit by $3 trillion over the next decade,” and the Committee for a Responsible Federal Budget said, “President Biden does deserve praise ..read more

Chris Edwards President Biden has released his proposed federal budget for fiscal year 2025 and beyond. The proposal includes a raft of spending increases, including new subsidies for childcare, housing, college, health care, paid leave, refundable tax credits, home care, and many other things. It also includes a bevy of large tax increases, including higher rates on individual income, corporate income, and capital gains. The chart below shows the Biden projections for federal revenues and spending as a percentage of gross domestic product (GDP). The budget ..read more

Marc Joffe The Maryland Department of Transportation recently announced yet another delay of the Purple Line’s opening to Winter 2027, five years after its initially planned completion in 2022. The 16.2‑mile light rail project, which will connect New Carrollton and Bethesda in Washington, DC’s northern suburbs is also way over budget. The full extent of the Purple Line construction cost overrun is not fully known because it is embedded in an opaque Public Private Partnership (P3) relationship under which contractors are participating in the project. As originally plann ..read more

Romina Boccia and Dominik Lett Legislators and the public tend to underestimate the fiscal costs of emergency spending. Emergency supplemental bills, such as the Ukraine‐Israel foreign aid package, are often billed as one‐time, temporary costs. This framing obscures the tens of billions of dollars in interest costs generated by new deficit spending. It also ignores Congress’ increasing reliance on emergency spending to circumvent budget controls. Without commonsense reforms, Congress is likely to continue to abuse emergency spending at the expense of the nation’s fisca ..read more

Romina Boccia and Dominik Lett Over the past 30 years, we estimate that emergency spending has generated almost $2 trillion in interest costs. Congress should reject the allure of costly, short‐term budget thinking and offset new emergency spending. Tonight, President Biden will address the nation in his State of the Union address, outlining his political priorities during this election year. One of the topics he’ll likely discuss is foreign aid for Ukraine—a hot‐button issue for voters and a major sticking point in the latest round of budget negotiations. Some have fr ..read more

Romina Boccia The Congressional Budget Office (CBO) released its annual Budget and Economic Outlook, providing 11‐year fiscal projections for 2024 to 2034. The CBO’s new report arrives as Congress gears up for another budget fight with annual discretionary spending and a supplemental Ukraine‐border security deal hanging in the balance. While these issues capture headlines, the real drivers of the growth in federal spending that the CBO highlights are Social Security and Medicare, which neither Democrats nor Republicans are ready to address. As a res ..read more

Romina Boccia When it comes to government provision of retirement benefits, differences abound. Comparing the US Social Security program to the UK state pension illustrates a stark contrast. While both countries promise an old‐age safety net, the US Social Security benefit for the highest‐income earners looks more like a golden parachute than what President Franklin D. Roosevelt referred to as “some measure of protection to the average citizen and to his family … against poverty‐ridden old age.” Andrew Biggs writes at Forbes (emphasis added): This year ..read more