Budget Reform

Budget Reform

Research

David M. Primo | Mar 11, 2014
Alternative presentations of the same budget data tend to offer very different impressions, creating opportunities for a deeper understanding of fiscal health. However, these measures sometimes reflect hidden assumptions about government finances, so even a seemingly neutral way of presenting data often isn’t so neutral. The ability to give different impressions with the same budget data creates the opportunity for policy mischief, as one can tell very different stories about fiscal policy depending on the measure used. We can assess the appropriateness of various spending adjustments by understanding the underlying assumptions in the measures, how to use the measures analytically, and how they might be used strategically. The paper looks at measures of government spending over time, as well as budget forecasts, to demonstrate this logic in practice. It concludes with a case study of President Obama’s fiscal year 2014 budget.
David M. Primo | Jan 21, 2014
The United States faces severe fiscal challenges—most notably, the unsustainable growth of entitlement spending and a mounting debt burden that raises concerns about the government’s ability to pay it back without strangling economic growth. These threats reflect the inability of Congress and presidents to make the hard choices necessary to restore fiscal responsibility to the federal budget. …
Matthew Mitchell | Jan 06, 2014
In recent years, food stamps have constituted about 80 percent of farm bill spending, which may be why nearly 100 percent of public debate has focused there. Unfortunately, with all of the attention on food stamps, both political parties have missed the opportunity for reform that lies in the remaining 20 percent of the farm bill.
Laurence Kotlikoff | Dec 12, 2013
Every country faces an intertemporal budget constraint, which requires that its government’s future expenditures, including servicing its outstanding official debt, be covered by its government’s future receipts when measured in present value. The present value difference between a country’s future expenditures and its future receipts is its fiscal gap. The US fiscal gap now stands at $205 trillion. This is 10.3 percent of the estimated present value of all future US GDP. The United States needs to raise taxes, cut spending, or engage in a combination of these policies by an amount equal to 10.3 percent of annual GDP to close its fiscal gap. Closing the gap via raising taxes would require an immediate and permanent 57 percent increase in all federal taxes. Closing the gap via spending cuts (apart from servicing official (debt) would require an immediate and permanent 37 percent reduction in spending. This grave picture of America’s fiscal position effectively constitutes a declaration of bankruptcy.
Jerry Brito | Sep 12, 2013
The success of BRAC shows how to overcome public choice dynamics at a time of crisis. These lessons apply today, but they must be understood correctly. While creating a small commission or task force to tackle a problem has many advantages, it is just one aspect of what made BRAC succeed. A spending commission modeled on BRAC should be focused, independent, composed of disinterested citizens given clear criteria for their decisions, and be structured in a way that allows its recommendations to be operative unless Congress rejects them. This prescription is the only way that a spending commission has a chance to actually result in spending cuts.
Anthony Evans | Oct 15, 2012
This paper intends to provide a basic overview of the fiscal position of the United Kingdom. The 2008–2009 recession has been deeper and more sustained than the two previous recessions (in 1990–91 and 1979–81).

Testimony & Comments

| Dec 15, 2011
Anthony Sanders testified before the U.S. House Committee on Oversight and Government Reform Subcommittee on TARP, Financial Services and Bailouts of Public and Private Programs on the role of the U.S. in addressing the European debt crisis.
Veronique de Rugy | Oct 05, 2011
Veronique de Rugy testified before the House Committee on Energy and Commerce, Subcommittee on Oversight and Investigations about a line-by-line budget review process.
Matthew Mitchell | Oct 04, 2011
Matthew Mitchell testified before the House Committee on the Judiciary about state governments' experiences with Balanced Budget Amendments.
Veronique de Rugy | Feb 17, 2011
Veronique de Rugy testified before the House Committee on Oversight and Government Reform about wasteful government spending.
Eileen Norcross | Feb 09, 2011
Eileen Norcross testified before the U.S. House Committee on Oversight and Government Reform on the looming municipal debt crisis.
Veronique de Rugy | Jul 14, 2010
Since the Great Recession began in December 2007, employment has shrunk by 7.5 million jobs1, long-term unemployment is higher now than in any previous recession2, and real GDP has plummeted to 2006…

Research Summaries & Toolkits

Veronique de Rugy, Jason J. Fichtner | Oct 10, 2013
As federal government borrowing is set to exceed yet another debt limit, most are quick to recall—and wish to avoid a repeat of—the 2011 debt-limit showdown. If current rhetoric is any indication, it appears many of the last debate’s lessons have been forgotten. Regrettably, it seems many of the debate’s facts have been forgotten as well.
| Sep 24, 2013
The Mercatus State Policy Guide is intended to summarize and condense the best research available on the most relevant topics. It’s a starting point for discussion, not a comprehensive overview of economic policy. Each statement is supported by academic research, with links provided in the endnotes. Mercatus scholars are available to further explain the results of their studies. We hope the guide will prove to be a valuable tool in your economic policy research.
| Jul 23, 2013
The Mercatus Policy Guide is intended to summarize and condense the best research available on the most pressing topics. It serves as a starting point for discussion, not a comprehensive overview of economic policy. Anyone who wants to go deeper into these studies should consult the references listed at the back. Mercatus scholars are available to further explain the results of their studies. We hope the guide will prove to be a valuable tool in your evaluation of economic policy.
Veronique de Rugy, Jason J. Fichtner, Charles Blahous, Matthew Mitchell | Mar 15, 2013
Despite years without a federal budget, trillion-dollar deficits, and ad hoc, crisis-driven fiscal and economic policies that failed to deal with the looming entitlement crisis, leaders on both sides in Washington are now touting seemingly miraculous progress toward a “fix” to our budgetary woes.
| Feb 13, 2012
This policy brief takes a look at the president's FY2013 budget proposal and emphasizes the need for fundamental reform in the areas of spending, taxes, and the budget process.
Veronique de Rugy, Jason J. Fichtner, Matthew Mitchell | Sep 12, 2011
This toolkit provides members and their staffs with tools to help them evaluate spending bills and start the process of reducing government spending.

Expert Commentary

Mar 03, 2014

Below, scholars with the Mercatus Center at George Mason University—the world’s premier university source for market-oriented ideas—look ahead to key policy areas the president will likely focus on in his 2015 budget submission.
Feb 27, 2014

The president's budget is scheduled to come out next week. It is late again. Unfortunately, we can expect that the president didn't use this extra time to find responsible solutions to put the country on a sustainable financial path. Instead, we can expect more of the same: more spending, more class warfare tax proposals and no real commitment to reform entitlement spending. In light of this, I have a few questions I would like to ask the president.
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Feb 21, 2014

In sum, federal fiscal policy decisions in recent years added enormously to deficits and have produced the highest levels of spending, deficits, and debt relative to GDP since the aftermath of World War II. I leave it to others to determine whether this can reasonably be termed “austerity.”…
Feb 20, 2014

Switzerland will soon hold a nationwide referendum on granting a guaranteed and unconditional minimum monthly income of $2,800 for each Swiss adult. In America, where Lyndon Johnson's War on Poverty just celebrated its 50th anniversary of failing to achieve victory, liberals jumped on the Swiss news to reconsider the un-American-sounding idea of a universal basic income.
Jan 24, 2014

The U.S. government has racked up $12 trillion in public debt, a figure equivalent to nearly three-quarters of gross domestic product. Yet that massive sum pales in comparison to the costs of the federal government's unpaid promises, mostly in the form of health care and retirement benefits for seniors.
Jan 16, 2014

Celebrated as a bipartisan victory, the omnibus bill Congress approved Thursday is yet another example of lawmakers' propensity for overspending. The massive $1.1 trillion spending package funnels more money that it should to defense and other domestic projects. Following the outline set by the Ryan-Murray plan, the bill spends above the levels set by the 2011 sequester and wastes loads of money on special interests.

Charts

This week’s chart, which uses 2012 data from the Office of Management and Budget’s “High-Error Programs Report” to display improper payment amounts and improper payment rates of federal transfer programs, shows that over $100 billion in taxpayer funds were improperly spent in 2012.

Experts

Charles Blahous is the director of spending and budget Initiative, a senior research fellow at the Mercatus Center at George Mason University and a public trustee for Social Security and Medicare. He specializes in domestic economic policy and retirement security (with an emphasis on Social Security), as well as federal fiscal policy, entitlements, demographic change, and health-care reform.
Antony Davies is a Mercatus Center–affiliated senior scholar at George Mason University and associate professor of economics at Duquesne University. He also is a member of the Research Program on Forecasting at George Washington University. He specializes in econometrics, public policy, and economic psychology.
Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University. Her primary research interests include the US economy, the federal budget, homeland security, taxation, tax competition, and financial privacy. Her popular weekly charts, published by the Mercatus Center, address economic issues ranging from lessons on creating sustainable economic growth to the implications of government tax and fiscal policies. She has testified numerous times in front of Congress on the effects of fiscal stimulus, debt and deficits, and regulation on the economy.
Jason J. Fichtner is a senior research fellow at the Mercatus Center at George Mason University. His research focuses on Social Security, federal tax policy, federal budget policy, retirement security, and policy proposals to increase saving and investment.
Matthew Mitchell is a senior research fellow at the Mercatus Center at George Mason University, where he is the lead scholar on the Project for the Study of American Capitalism. He is also an adjunct professor of economics at Mason. In his writing and research, he specializes in economic freedom and economic growth, public-choice economics, and the economics of government favoritism toward particular businesses.

Podcasts

Antony Davies | October 15, 2013
Antony Davies Discusses the Government Shutdown on WWL

Recent Events

Please join the Mercatus Center at George Mason University and senior research fellow, Dr. Jason Fichtner, for a Capitol Hill Campus program focusing on the key challenges of the federal budget and the critical need for reform.

Media Clippings

Sarah Arnett | Jan 17, 2014
The Mercatus Center cited at Philly.com.
Veronique de Rugy | Oct 08, 2013
Veronique de Rugy cited at USA Today.
Eileen Norcross, Matthew Mitchell, | Jul 23, 2013
Detroit reports an unfunded pension liability of $634 million, but using more accurate accounting methods it's closer to $3.5 billion.
Vincent H. Smith | Jul 17, 2013
Farming, it turns out, is not so risky after all. Smith reports that the annual failure rate for farms is only 0.5 percent, compared to 7 percent for other businesses.
Veronique de Rugy | Jul 16, 2013
Mercatus Center Economist Veronique de Rugy found, “Between fiscal years 2007 and 2010, annual wind subsidies grew from $476 million to nearly $5 billion.”…
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