Spending & Budget

Spending & Budget

Research

Mark J. Warshawsky | Apr 16, 2015
A new study for the Mercatus Center at George Mason University is the first to rigorously assess the details of the proposed regulation using empirical methodology widely accepted in the financial industry and comparing the proposed illustration to the Social Security statement. The regulation would require all defined contribution plans to inform their participants of the life annuity income equivalents of the current and projected balances in their individual accounts. The study examines several changes the Department of Labor can make to improve its proposal.
James C. Capretta | Mar 25, 2015
Reforming the congressional budget process is no substitute for actual policy changes that can correct the government’s fiscal problems. Yet according to a new study published by the Mercatus Center at George Mason University, the right kinds of process reforms can open up new potential for agreement between Congress and the president and can focus attention on long-term spending commitments.
Charles Blahous, Jason J. Fichtner, Mark J. Warshawsky | Mar 19, 2015
Social Security’s trustees have long warned Congress to address the troubled finances of the Disability Insurance (DI) program. Given the DI trust fund’s projected exhaustion date of 2016, legislation will be required during this Congress to prevent large, sudden benefit cuts.
Jason J. Fichtner, Jason S. Seligman | Mar 05, 2015
This paper focuses on disability insurance but makes the case for considering reforms in tandem—that is, (1) developing disability program reforms that accommodate plausible retirement program reforms while properly aligning incentives to support work and savings and (2) providing a financially secure, vital safety net for disabled Americans.
Bruce Yandle | Feb 27, 2015
Has the US economy kicked off third quarter’s running cleats and slipped on bedroom shoes with very soft soles? The running pace has changed abruptly. As the accompanying chart tells us, the second estimate for growth in the fourth quarter of 2014 fell to 2.2 percent from the third quarter’s hair-raising 5.0 percent. Is this the economic engine that is pulling the world economy?
Jason J. Fichtner, Adam Michel | Jan 29, 2015
The tax code is often manipulated by arbitrarily shortening depreciation timelines through accelerated depreciation or bonus expensing. As a solution to the current inequity and inefficiency of depreciation policies, this paper advocates full expensing. Expensing incentivizes investment by allowing businesses to write off all expenditures in the year they occur, resulting in a zero effective tax rate on equity-financed capital.

Testimony & Comments

Veronique de Rugy | Mar 24, 2015
Policymakers who are interested in supporting the entrepreneurs and companies that will deliver the next generation of energy supplies and products should focus their attention on correcting the federal government’s hostile tax climate and dispense with the futile hopes of outsmarting the marketplace.
Antony Davies | Jul 28, 2014
There are two important unintended consequences of raising the federal contractor minimum wage: first, it can adversely affect the most vulnerable workers; and second, the rule as currently stated could be enforced in a manner so that its impact would extend to far more businesses than originally intended.
David M. Primo | Jul 24, 2014
Constitutional rules, unlike statutory or internal rules, are difficult to change. If written to cover the entire budget, avoid loopholes, and make waivers difficult to obtain, Constitutional rules can provide the enforcement mechanism that will help ensure that specific reforms to entitlements, defense, and other spending areas will not be undone by future Congresses.
Veronique de Rugy | Jun 25, 2014
The Bank has long outlived its purpose and cannot manage to meet the standards of the new missions that have been developed to validate its existence. For policymakers who have the facts, the choice is clear: the Export-Import Bank must go.
Jason J. Fichtner | May 21, 2014
Social Security faces real financial challenges. Dismissing the real and current fiscal challenges facing the Social Security system and kicking the “reform can” further down the road will only increase the severity of the burden associated with reforms when they inevitably must take place.
Keith Hall | Jul 09, 2013
The biggest problem with the US labor is a lack of economic growth. And according to our biggest job creators, small business owners, government is playing a big role in holding back the economy.

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.
Jason J. Fichtner, Jacob Feldman, Jeremy Horpedahl, Brandon Pizzola, Bruce Yandle, Veronique de Rugy | Jul 15, 2013
The most basic goal of tax policy is to raise enough revenue to meet the government’s spending requirements, preferably with minimal impact on market behavior. The US tax code has long failed to achieve this goal; by severely distorting market decisions and the allocation of resources, it impedes both potential economic growth and potential tax revenue. The nation’s persistently sluggish economic growth and dire long-term fiscal outlook have increased the urgency to reform the federal revenue system. But what does successful, sustainable tax reform look like? What are its key elements? And what would it achieve?
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.
Jason J. Fichtner, Veronique de Rugy | Jan 25, 2013
The debt ceiling, or the legal limit the federal government may borrow, is set currently at $16.4 trillion.[1] In his latest report, Secretary of the Treasury Timothy Geithner predicts that the United States will need to increase the debt ceiling sometime between February 15, 2013, and early March 2013.[2] The Congressional Research Service estimates the federal government will have to issue an additional $700 billion in debt above the current statutory limit to finance obligations for the remainder of FY2013…

Expert Commentary

Apr 15, 2015

The current state of entrepreneurship is receiving considerable attention as debate simmers around questions of business dynamism in the United States. According to a Gallup article, the U.S. has dropped to 12th among developed nations in terms of business startups. Economists also recently found evidence for this downward trend in business activity and attribute it to diminished incentives for entrepreneurs to start new firms.
Apr 14, 2015

Genuine income tax reform would lower tax rates, reduce double taxation of income that is saved and invested, and cut out loopholes that tilt the playing field in favor of politically connected interest groups. In this vein, we should get rid of deductions that let taxpayers write off state and local income taxes. I’m all for people keeping more of their income, but this exemption actually leads to bad policy by state and local government.
Apr 13, 2015

Taxes are obviously on everybody's mind this time of year, which makes it the perfect time to ask where — or to whom — all our money is going. First things first: In 2014, the government collected roughly $3 trillion. It spent $3.5 trillion. In other words, it had to borrow $500 billion to pay for all the spending on top of the taxes collected.
Apr 09, 2015

The cowboy philosopher Will Rogers once said, "If you find yourself in a hole, stop digging." Unfortunately, his advice is often ignored in Washington, where the answer to our national debt is more government spending and the policy prescription for a slow economy is to favor special interest groups.
Apr 08, 2015

There are more reforms worth considering, such as a repeal of the Dodd-Frank Act, which expands banks' safety net and uses the banking system to redistribute wealth. But whatever it does, Congress should pass bills that shrink, rather than expand, the size and scope of government.
Apr 07, 2015

It's tax season again, and all across the country, taxpayers and tax accountants are feeling the effects of filing a return or an extension so they don't end up on the wrong side of the IRS, get audited or, worse, get put in prison. It's never easy, but this year is even more painful than ever.

Charts

In spite of their complaints about federal overreach, state policymakers are addicted to handouts from Washington because it allows them to spend “free” money instead of asking their constituents to come up with funds via higher taxes. Unfortunately, federal money is not “free,” and the consequence of the federal government’s funding what are properly state and local responsibilities is excessive growth of government at all levels.

Experts

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University and a nationally syndicated columnist. Her primary research interests include the U.S. 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.
Charles Blahous is the director of the 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.
Tyler Cowen is Holbert L. Harris Chair of Economics at George Mason University and serves as chairman and general director of the Mercatus Center at George Mason University. With colleague Alex Tabarrok, Cowen is coauthor of the popular economics blog Marginal Revolution and cofounder of the online educational platform Marginal Revolution University.
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.
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.

Videos

Podcasts

Veronique de Rugy | April 15, 2015
The existing tax code creates numerous problems for American families. Veronique de Rugy outlines taxation issues in this interview with CBS Radio and discusses opportunities for tax reform.

Upcoming Events

May 05, 2015
Please join us for a lunch discussion centered on reform options for the Social Security Disability Insurance program and a path forward to make real change.

Recent Events

The Mercatus Center at George Mason University invites you to join David Primo, Associate Professor at the University of Rochester and senior scholar for the Mercatus Center, and Patrick Louis Knudsen, a former long-time policy director for the House Budget Committee, for a discussion of the congressional budget process.

Books

Joseph Antos, Charles Blahous, James C. Capretta, Robert Graboyes, Jason J. Fichtner, June O’Neill , Nina Owcharenko , Thomas P. Miller, | Apr 08, 2014
Top experts explain everything you wanted to know about Medicaid—from federal-state financing to potential reforms.

Media Clippings

Jason J. Fichtner | Jul 28, 2014
This excerpt originally appeared in The Daily Caller.
Jason J. Fichtner | Jul 24, 2014
This excerpt originally appeared in FOX Business.
Jason J. Fichtner | Jul 17, 2014
This excerpt originally appeared in FOX Business.
Charles Blahous | Jun 04, 2014
This excerpt originally appeared in CQ and also appeared Roll Call.
Veronique de Rugy | May 20, 2014
This excerpt originally appeared in Wall Street Journal.
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