The Congressional Budget Office released its latest Budget and Economic Outlook earlier this week.  As always, the Outlook provides insight into the fiscal status of the federal government. My three overarching reactions are: First, because American Taxpayer Relief Act of 2012 (ATRA) instituted tax changes that had been widely expected, the official (“current law”) baseline is now much [...]

With the U.S. facing huge domestic policy challenges, one might have hoped for a serious debate on fiscal issues between Barack Obama and Mitt Romney. One would have been deeply disappointed. Rather than framing what seem to be profoundly different views of government, the candidates chose to double-down on what Bill Clinton memorably called the [...]

Politicians and pundits constantly debate the size of government. Is it big or small? Growing or shrinking? You might hope these simple questions have simple answers. But they don’t. Measuring government size is not as easy as it sounds. For example, official statistics track two different measures of government spending. And those measures tell different [...]

If we are going to reduce the medium- and long-deficit, new tax revenues must be part of the solution. And those taxes must be progressive and as conducive to economic growth as possible. Historical revenue levels will not be sufficient to fund the federal government in the future. We will need to control the ballooning [...]

Last December, Congress replaced the two-year-old Making Work Pay tax credit (MWP) with this year’s payroll tax cut. That change cut taxes for higher-income workers, raised taxes for some low-wage workers, and nearly doubled the amount of lost tax revenue. And it most likely provided less bang-for-the-buck economic stimulus than the credit it replaced. Since [...]

Given Washington’s endless partisan nastiness—and thanks to some updated estimates by the Congressional Budget Office–it seems like a good time to revisit an old idea: What would happen if Congress and the White House just closed up shop for a couple of years and let fiscal policy run on autopilot? The question is not so [...]

There has been a lot of talk in Washington recently about “job-killing tax increases.” Raising taxes, the argument goes, would lead businesses to hire fewer workers and stifle our already weak economic recovery. But I haven’t heard anyone talking about “job-killing spending cuts.” In macroeconomic terms, tax increases and spending cuts have qualitatively the same [...]

Last week, I argued that Governor Tim Pawlenty’s aspiration for 5% economic growth over a full decade, is implausible since the United States has achieved such steady growth only once since World War II. Over at Economics One, Stanford economics professor John Taylor offers a more positive take, defending the goal and offering a recipe [...]