Spending and Budget Initiative

Spending and Budget Initiative

The Spending and Budget Initiative draws on a team of university economists and policy practitioners with diverse expertise in government spending and budget reform, assembled to provide policy makers an honest understanding of budgets, spending, deficits, and debt and how these issues relate to economic growth and progress. Mercatus scholars work alongside policy makers to identify fiscally responsible policies and actionable options for budget reform.

Research

James C. Capretta | May 24, 2016
The fundamental problem with the nation’s finances—and thus the problem our budgetary procedures should focus on solving—is the runaway expense of entitlement programs, often described as “mandatory spending.” The current budget process does not force policymakers to confront the pressure that these massive programs exert on the federal budget. The process also lacks a ready mechanism for bridging the predictable conflicts that occur between the president and Congress.
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.
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

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.
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.

Research Summaries & Toolkits

Charts

Veronique de Rugy | Feb 24, 2016
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

Videos

Veronique de Rugy | February 02, 2016
In the hearing titled “Unsustainable Federal Spending and the Debt Limit" before the Financial Services Committee, Veronique de Rugy testified on fundamental spending reform.

Podcasts

Veronique de Rugy | May 25, 2016
Veronique de Rugy talks about the government’s attempted, but ineffectual, fix for VA hospitals.

Recent Events

| March 14, 2013
Please join us for a casual reception where you can take a break from March Madness and meet some of our scholars who can provide the kind of practical information you need to be most effective in your work.

Books

Jason J. Fichtner, Jason S. Seligman | Mar 2016
This book was published by The McCrery-Pomeroy SSDI Solutions Initiative, and includes a chapter by Mercatus scholars Jason Fichtner and Jason Seligman.
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