Spending & Budget

Spending & Budget

Research

Brian Blase, Doug Badger, Edmund F. Haislmaier | Apr 22, 2016
This is the first in a series of papers in which we provide the most comprehensive analysis to date of the impact of the ACA on the individual and small group insurance market in 2014. In this overview, we provide information on how insurers fared in their first year selling QHPs—plans that satisfy all of the ACA’s requirements and are certified to be sold on exchanges—using a data set compiled from medical loss ratio form that insurers are required to file with the Department of Health and Human Services.
Jason J. Fichtner, Adam Michel | Mar 17, 2016
The system for international corporate income taxation is at risk of losing its most valuable feature—diversity and competition. The Base Erosion and Profit Shifting Project of the Organisation for Economic Co-operation and Development attempts to change the international tax system by transferring control of corporate taxation from individual nations to an international body. This shift favors consolidated and uniform tax rules but sacrifices compliance efficiency, taxpayer rights, and nations’ ability to set the tax policies best suited to their populations.
Jason J. Fichtner, Angela Kuck, Adam Michel | Mar 10, 2016
Frustration over federal budget gridlock is fueling renewed interest in reforming the congressional budget process. Timely, effective budgeting has proven increasingly elusive for both Democratic and Republican Congresses—both of which have had to rely on temporary funding measures to bridge between one fiscal year and the next. One proposal getting significant attention in Congress is a move away from an annual budget to a biennial budget.
James C. Capretta | Mar 08, 2016
The Affordable Care Act (ACA) is known primarily for its provisions that subsidize and regulate health insurance for the working-age population and their families, but it also made many important changes to the Medicare program. Perhaps the most important of those changes is a new upper limit on Medicare spending, enforced by the Independent Payment Advisory Board, or IPAB.
James C. Capretta | Feb 23, 2016
Advances in information technology and knowledge of human health have the potential to revolutionize the way medical care is delivered to patients over the coming decade. Americans could get better health care, at less cost, if those delivering services to patients have the freedom to take full advantage of what these advances make possible.
Brian Blase | Feb 16, 2016
Medicaid’s complex federal-state financing structure has long created perverse incentives that discourage efficient care. Key to the problem is the federal government’s uncapped reimbursement of state Medicaid expenditures, which encourages states to artificially inflate their Medicaid spending. Such schemes have significantly increased over the past several years and they likely add tens of billions in generally low-value Medicaid spending each year.

Testimony & Comments

Maurice P. McTigue | Apr 12, 2016
Today I will comment on “wasteful and duplicative spending,” and discuss how better, more transparent budget processes are the first step, but not the solution, to controlling such spending. I would like to make three main points. First, changing the focus to the desired outcomes in the budget process is essential to controlling duplicative spending. Second, comparing the results of all activities that impact the same outcome is critical in allocating resources to the most effective activities and maximizing outcome achievement. And third, budget procedures matter when it comes to controlling spending, based on evidence from state governments and overseas.
Jason J. Fichtner | Mar 22, 2016
My testimony focuses on two key issues. First, I will explain how the current-law Windfall Elimination Provision (WEP) is overly complex and unfair. Second, I will discuss how reforming the Social Security benefit formula would improve the simplicity and fairness of the WEP, while still maintaining the original public policy purpose. Additionally, though most of my testimony focuses on the WEP, a related provision, the Government Pension Offset (GPO), has similar complexity and fairness problems that should be addressed.
Jason J. Fichtner, Adam Michel | Mar 22, 2016
The OECD hopes that the new reporting standards will provide tax administrators with useful information to more effectively direct auditors while making it easier to identify artificial profit shifting to tax-advantaged environments. This public comment will argue that the accounting costs of country-by-country reporting will be larger than the Department of the Treasury’s revenue gains and that there will be even higher unanticipated costs from inadvertent disclosures of sensitive information. Because the costs of information centralization will be greater than the benefits, we recommend that the IRS should not implement the proposed regulation on country-by-country reporting. This recommendation is informed by a recent paper from the Mercatus Center at George Mason University that explains key features of the international corporate tax system, the changes the OECD wants to make, and the potentially far-reaching consequences of those changes. The study also provides recommendations to improve corporate taxation without compromising state sovereignty or taxpayer rights.
Veronique de Rugy | Feb 02, 2016
The heated rhetoric coming in March 2017 about whether Congress should raise the debt ceiling will obscure the federal government’s real problem: an unprecedented increase in government spending and the future explosion of entitlement spending has created a fiscal imbalance today and for the years to come. No matter what Congress decides to do about the debt ceiling, the United States must implement institutional reforms that constrain government spending and return the country to a sustainable fiscal position.
Jason J. Fichtner | Sep 30, 2015
Academic research and some anecdotal evidence suggests that the current budget rule of use it or lose it is not optimal and may be encouraging wasteful spending of taxpayer dollars. The question remains: If such spending is indeed wasteful, what can be done to reduce it?
David M. Primo | Jul 28, 2015
My three-part message today is this. First, Congress should treat the budget process as a means, not an end, and enact reforms accordingly. Second, given the fiscal challenges facing the country, now is not the time for minor tweaking. Instead, now is the time to think big and craft a process that drives legislators to produce credible and sustainable fiscal policy by constraining federal spending both today and tomorrow. Third, any reform should include effective enforcement mechanisms, preferably constitutional in nature, to prevent the new process from suffering the same fate as the current one.

Research Summaries & Toolkits

J. W. Verret, Marc Joffe | Apr 28, 2016
J. W. Verret and Marc Joffe debate whether Puerto Rico should be allowed to restructure its debt. After 10 years of recession and poor fiscal management, Puerto Rico is facing a major fiscal crisis. With $72 billion in debt (the equivalent of the commonwealth’s entire economy), deeply distressed pensions, high unemployment, and outmigration, Puerto Rico is insolvent. Congress is deliberating on legislation to provide a framework for Puerto Rico to restructure its finances under the guidance of a federal control board. The most contested point in the current proposal is whether to allow the board broad authority to restructure debt.
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.

Expert Commentary

Apr 25, 2016

In 2017, for the first time, insurance premiums alone must cover expenses in the individual market. A new working paper released today by the Mercatus Center at George Mason University measures the importance of this subsidy program, sheds new light on insurers’ generally poor results in 2014, and discusses what likely lies ahead for the law.
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Apr 25, 2016

Minimum wage laws are much in the news these days. New York, California and various US cities have recently enacted legislation to raise minimum wage requirements to $15 an hour. In this context it is especially worthwhile to revisit the purpose and effect of minimum wage laws.
Apr 21, 2016

Americans just finished filing and paying for their federal income taxes. It was painful and expensive. Collectively, we still have several more days to go before we are done paying for our entire tax bill.
Apr 18, 2016

The tax code today is a 76,000-page monstrosity, and the current top marginal rate of 39.6 percent will hit all married filers with taxable income of $466,950 and higher.
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Apr 06, 2016

While it is true the ACA has expanded health insurance coverage, its effects on health prices are yet unknown and its effects on the labor market and the federal fiscal outlook are almost certainly damaging.
Apr 05, 2016

While the WEP is intended to ensure that Social Security beneficiaries are treated fairly and that benefits are provided only for years in which people paid into the Social Security system, the result is that the replacement rate for some people with high lifetime combined earnings is higher than those with low lifetime earnings.

Charts

A recent article from Politico looked at the growth in unauthorized appropriations as a share of total discretionary spending. Each year the Congressional Budget Office (CBO) releases a report listing programs that have maintained funding despite their authorization expiring. The latest CBO report finds that “lawmakers appropriated about $310 billion for fiscal year 2016 for programs and activities whose authorizations of appropriations have expired.” That’s equal to about 26 percent of total appropriations.

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 has served as 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.
Brian Blase is a Senior Research Fellow with the Spending and Budget Initiative at the Mercatus Center at George Mason University.
Antony Davies is associate professor of economics at Duquesne University, Mercatus Affiliated Senior Scholar, and Strata Research Fellow. Davies has authored over 150 op-eds for, among others, the Wall Street Journal, Los Angeles Times, Washington Post, Forbes, Investors Business Daily, and New York Daily News.
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

Veronique de Rugy | March 03, 2016
Veronique de Rugy Discusses the Presidential Candidates' Economic Platforms on the Lars Larson Show

Recent Events

Join Mercatus senior health care scholar Brian Blase, senior regulatory fellow Patrick McLaughlin, & senior budget reform fellow, Jason J. Fichtner, for a Capitol Hill Campus that will showcase Mercatus resources & explore how congressional staff can more effectively use our research.

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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