The Bipartisan Budget Act of 2015, freshly signed into law by President Obama, suspends the $18.1 trillion federal debt ceiling until March 2017. It also busts the 2011 Budget Control Act—which I previously discussed—for the second time. It does so by raising the caps on discretionary funding by $50 billion for fiscal year (FY) 2016 and $30 billion for FY 2017.
The ACA contains indexing provisions that are set to automatically reduce federal payments for health services or increase tax revenues every year into the future. CBO estimates show that the ACA will reduce future deficits by about 1.0 percent of GDP in the decade beyond the current 10-year budget window (roughly 2026–2035). This projection assumes uninterrupted implementation of the ACA’s aggressive indexing adjustments, but historical precedent tells us that these indexing measures will not be implemented as stated. The first chart below estimates, based on reasonable adjustments to the implementation of the indexing provisions, the presumed second decade deficit reduction of 1.0 percent of GDP will be eliminated and the ACA will start to increase the federal deficit.
The FSMA mandates a HACCP-like approach for all food. There is no evidence that this approach is likely to result in any significant progress in lowering the rate of foodborne illness. In view of the experience of the last 20 years, neither increasing the FDA’s resources nor causing the food industry to spend more (in fact, much more) using this approach appears to be the answer.
When state governments favor in-state businesses over more affordable out-of-state businesses, taxpayers are forced to pay more for government projects. So-called “preference policies” give politicians a politically valuable opportunity to buy goods from, and support employment for, a narrow set of producers within their state, but these policies increase the cost of government. This increase in the cost of government requires extra dollars from taxpayers, taking resources that could be put toward other uses.
According to recent research, expanding state Medicaid spending is “crowding out” spending on other major state programs, most notably education and transportation infrastructure. This growth in state Medicaid spending, however, does not seem to be increasing state debt burdens.
New technologies are poised to launch a health care revolution, improving care and cutting costs. Unfortunately, an obsolete regulatory framework for medical devices threatens to slow or derail important components of that revolution. A mid-1970s law requires virtually every medical device—and improvements to existing devices—to endure a slow, expensive, uncertain approval process, ill-suited to 21st-century technology. The Food and Drug Administration (FDA), which grants such approval, has an aging structure and culture that adds extra layers of discouragement to would-be innovators.
Lawmakers on Capitol Hill continue to find more ways to raise funding above the level permitted by the caps. Republicans would like to increase the caps on defense funding while Democrats would like to increase the caps on nondefense funding. That should concern taxpayers because, as the following charts show, the caps and accompanying sequestration enforcement mechanism have been successful in constraining the discretionary share of the federal budget.
The database RegData quantifies the regulatory restrictions produced by each federal regulatory agency each year. We used RegData to merge its agency-specific restrictions data series with data on agency budgets from the Regulators’ Budget, produced by the Regulatory Studies Center at George Washington University. This combined dataset allowed us to examine the simple correlation over time between the number of regulations an agency had published and the agency’s budget.
As I underscored in two recent charts, the Social Security Disability Insurance (SSDI) program is financially unsustainable, and to save it, policymakers need to rein in benefits, which have exploded in recent years. This week’s charts add two important points: first, that SSDI has turned into a quasi-unemployment program, and second, that the good intentions that prompt the creation of federal programs are not enough to prevent poor and costly outcomes.
Is East Texas the next Silicon Valley? If patent activity were a measure of innovation, you might think so. Marshall, TX, a city with a population of 23,523 located near the Louisiana border, is known to every patent attorney in the country for its prodigious volume of patent litigation. This chart shows the number of patent cases filed in federal district court in the Eastern District of Texas versus the average of the 93 other federal judicial districts in the first half of 2015, using data compiled by Lex Machina.
As the holiday season approaches, there are predictions that upwards of 1,000,000 drones will be purchased by Christmas. The FAA is currently working to create regulations on these consumer drones. Eli Dourado discusses these regulations and what the FAA should do on C-SPAN’s Washington Journal.
The Midas Paradox is a landmark treatise that solves mysteries that have long perplexed economic historians, and corrects misconceptions about the true causes, consequences, and cures of macroeconomic instability. Like Milton Friedman and Anna J. Schwartz’s A Monetary History of the United States, 1867–1960, it is one of those rare books destined to shape all future research on the subject.