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

Jason J. Fichtner, Adam Michel | Jul 14, 2015
A new study published by the Mercatus Center at George Mason University surveys the current economic literature on research and development tax incentives. The study investigates design and implementation problems the R&D credit faces, including legal ambiguities, policy uncertainty, insufficient definitions of “research,” and special-interest lobbying.
David R. Henderson | Jun 30, 2015
Many observers think that it is impossible to cut federal government spend- ing as a percentage of Gross Domestic Product (GDP). But it can be done. And the evidence is hidden in plain sight: it’s called the 1990s. Between 1990 and 2000, federal spending fell from 21.85 percent of GDP to 18.22 percent, a drop of 3.6 percentage points. Most of the reduction was in defense spending after the Cold War ended. Domestic spending also fell slightly as a percentage of GDP. This drop cannot be attributed to higher economic growth in the 1990s because average growth in the 1990s was the same as growth in the previous two decades.
Whitney Afonso | Jun 24, 2015
While the federal government has taken the lead in implementing efforts toward greater transparency—for example, by creating the easy-to-access website Recovery.gov to enable visitors to track the spending of stimulus money —state and local governments are following suit by providing more online information about how they spend taxes. Proponents of increased transparency in the public sector, including elected officials and citizens, believe that transparency is an important tool for holding governments accountable and reducing corruption. In a period when trust in government has hit a record low (24 percent in 2014 and a record low of 19 percent in 2013), increased transparency is viewed as a way of promoting trust and cooperation between government and its citizens.
Mark J. Warshawsky | Jun 09, 2015
As the baby boom generation begins to retire, fewer and fewer private-sector workers have traditional defined benefit pension plans, which usually pay lifetime annuity benefits. Instead, they have accumulated considerable assets in 401(k) plans and individual retirement accounts (IRAs) that have no particular method of payout. Federal government policy, which has regulated defined benefit plans heavily and mandated plan designs for distributions, has tread more lightly on defined contribution plans because of their historical secondary nature.
Laurence Kotlikoff, Adam Michel | Jun 03, 2015
The true US debt is 16 times larger than what the government reports. Closing this fiscal gap with taxes alone would require a massive, immediate, and permanent tax increase on every American family. The burden grows with each year of congressional and presidential inaction, threatening future standards of living. How would such a tax hike affect individual American households? A new study published by the Mercatus Center at George Mason University details how much Americans would have to pay to actually close the true fiscal gap with tax increases.
Jason J. Fichtner, Patrick McLaughlin | Jun 02, 2015
The current legislative and regulatory processes may not adequately inform Congress about the scope and economic consequences of legislation. Even if Congress had such information, no mechanism exists to allow Congress to easily act upon it. The budget process permits Congress to monitor and fund programs based on fiscal impact information. These processes could be improved to provide more, better, and actionable information about legislative and regulatory actions, especially through a reform that we term “legislative impact accounting.”…

Testimony & Comments

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.
Neil Meredith | Dec 22, 2014
This comment considers the potential impact of the Office of Personnel Management’s (OPM) proposed rule change to the Multi-State Plan Program (MSP) for the affordable insurance exchanges created through the Patient Protection and Affordable Care Act of 2010. The purpose of the proposed rule is to further explain OPM’s direction in meeting the statutory requirements of the MSP program concerning health issuers that establish an MSP option with OPM.
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.

Research Summaries & Toolkits

Charts

Jason J. Fichtner, Adam Michel | Aug 05, 2015
The research and development (R&D) tax credit—which is one of the largest corporate “tax expenditures,” with an annual cost of more than $9 billion—is one of about 50 “tax extenders” that Congress reauthorizes on a temporary basis. While the tax credit is intended to encourage economic growth by functioning as an incentive for investment in new and innovative technologies, it may not be the best policy to achieve growth.

Experts

Videos

Jason J. Fichtner | July 20, 2015
Jason Fichtner discussing tax reform on C-Span.

Podcasts

Maurice P. McTigue | August 17, 2015
Puerto Rico Recently defaulted on its debt obligations. Maurice McTigue analyzes the situation for the Mike Schikman Show on WSVA in Virginia.

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

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