Spending & Budget

Spending & Budget

Research

George H. K. Wang | Mar 26, 2014
This paper discusses arguments for and against a securities transaction tax (STT) and evaluates the pros and cons based on a review of empirical evidence concerning the impact of STTs on equity and futures markets (i.e., trading volume, bid-ask spreads, and price volatility) and market efficiency in various countries. I find that an STT would likely reduce trading volume and increase trading cost, but may not reduce price volatility. The size of potential STT revenue depends on the STT’s impact on market activity. A sizable STT on futures and equity markets would not only fail to generate the expected tax revenue, it would also likely hurt the international competitiveness of US equity and futures markets.
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.
Bruce Yandle | Mar 03, 2014
Quivering financial markets in a post-taper economy remind me once again to always follow the money when trying to predict where this world is headed. New Fed chair Janet Yellen spoke truth to power when she testified in February that the Fed had stopped watering the money tree and that US labor markets were a long way from normal.
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. …
Charles Blahous | Jan 14, 2014
According to a new paper published by the Mercatus Center at George Mason University, the slowdown in health care cost growth is extremely unlikely to solve Medicare’s financing problems. Indeed, such a suggestion primarily reflects an incomplete understanding of how current Medicare cost projections are done.
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.

Testimony & Comments

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.
Jason J. Fichtner | May 23, 2013
My testimony focuses on the Social Security program’s incentives—specifically, how the current structure provides disincentives to work and save. I will also discuss how Social Security reform, if done correctly, can increase US savings, labor force participation, economic growth, and federal revenues.
Veronique de Rugy | May 22, 2013
Good morning, Chairman Murray, Ranking Member Sessions, and members of the committee. Thank you for the chance to discuss the effect of tax increases and spending cuts on economic growth. I appreciate the opportunity to testify today.
Keith Hall | Apr 24, 2013
Two significant problems have become evident through this lengthy period of slow job growth. First, there has been an unprecedented disengagement from the labor force with current participation at its lowest level in almost 35 years. This means there are currently 102 million jobless people in the United States, but less than 12 million are still actively looking for work and therefore counted as unemployed. Second, the number of long-term unemployed is at a record high. They currently represent over 4.6 million people, and the long-term unemployment rate (the share of the labor force unemployed for over six months) remains well above historical levels at 3.0 percent.
Veronique de Rugy | Jul 18, 2012
The Department of Energy’s loan guarantee programs have been the focus of much public attention since energy companies Solyndra, Beacon Power, and Abound went bankrupt, leaving taxpayers to shoulder hundreds of mil- lions of dollars in loan guarantees. The evidence strongly suggests that these programs fall short of their stated goals of developing clean energy and creating jobs.
Keith Hall | Jun 19, 2012
In his testimony, Keith Hall discusses the economic statistics produced by the federal statistical system. He comments on some of the challenges that the current system is struggling to meet and a handful of specific inadequacies in data coverage.

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 11, 2014

States should be wary of the impact the expansion will have on their state budgets when the expansion is perceived as permanent, but the federal aid turns out to be temporary.
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Apr 09, 2014

Our national dialogue over federal policy suffers from a huge information gap when it comes to understanding the federal budget. This information gap afflicts not only the general public as well as press, but much of Washington’s policy insider community. From the very start of my eleven years as Senate staff, I quickly learned that if one can master Congress’s arcane budget rules, one will command knowledge that even many legislators lack. To put it bluntly, far too few people understand how the federal budget works, how budget-related legislative procedures work, and how scorekeeping works. This article represents an effort to fill in some of that information gap.
Apr 07, 2014

As a practicing obstetrician-gynecologist in California, I have long been concerned with the failings of programs intended to help women in need access quality health care. I am increasingly concerned that the expansion of Medicaid through the new health care law, known as Obamacare, will exacerbate the system’s existing problems, and make it even more difficult to obtain medical care at reasonable rates as the strain on the program grows.
Apr 01, 2014

While commentators remain captivated by the bleak saga of such Eurozone basket cases as Greece, Portugal, Spain, and Italy, another European Union member is quietly slipping into economic despair. After years of fiscal mismanagement, France is in a bad, bad place.
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.

Charts

This week’s chart uses data from the Urban-Brookings Tax Policy Center to update a chart on average effective federal rates. The chart compares the average effective rate at which earners in different income quintiles are taxed by the federal government using newly available numbers for 2011.

Experts

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.
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.
Tyler Cowen is Holbert C. 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.

Podcasts

Jason J. Fichtner | March 05, 2014
Jason Fichtner Discusses Tax Reform on NPR's On Point

Upcoming Events

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.

Books

Joseph Antos, Charles Blahous, Darcy Nikol Bryan , 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

Sarah Arnett | Jan 17, 2014
The Mercatus Center cited at Philly.com.
Tyler Cowen | Oct 23, 2013
Tyler Cowen's book, "Average is Over" cited at Los Angeles Times.
Veronique de Rugy | Oct 08, 2013
Veronique de Rugy cited at USA Today.
Eileen Norcross | Aug 26, 2013
Eileen Norcross cited at Variety.
Daniel M. Rothschild, Garett Jones | Aug 25, 2013
Daniel Rothschild and Garett Jones cited at Trib LIVE.
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