Due to its antiquated methods of forecasting, the Social Security Administration vastly underestimates how long it will be before the Social Security trust fund runs dry, warned Gary King, professor of government and director of the Institute for Quantitative Social Science at Harvard, and Samir S. Soneji, a demographer and assistant professor at the Dartmouth Institute for Health Policy and Clinical Practice.
Social Security began running a deficit in 2010. Before that, when Social Security was running a surplus, the surplus was used to purchase treasury bonds. (One part of the government lent money to other parts of the government, essentially.) That debt now comprises about $2.7 trillion of the U.S. government's roughly $16.4 trillion debt. Now that Social Security is no longer running a surplus, it will cash in those treasury bonds, which means that Social Security will be partly funded by general revenue or by borrowing more money.
The SSA currently estimates that those treasury bonds will cover Social Security shortfalls until 2033. This estimate, King and Soneji argue in the journal Demography and in a Sunday editorial for The New York Times, is off by about $800 billion by 2031. more >>
One of the reasons that President Barack Obama and Speaker of the House John Boehner had difficulty agreeing to a "grand bargain" on deficit reduction and avoiding the "fiscal cliff" was that both men disagreed on the nature of the debt problem. Boehner believes that government spending is the problem while Obama believes the problem is the rising costs of health care, not government spending.
During those negotiations, Obama repeatedly told Boehner that "we don't have a spending problem," Boehner recalled in an interview with The Wall Street Journal's Stephen Moore.
A similar disagreement can be heard frequently on political talk shows. "We don't have a revenue problem, we have a spending problem," Republicans repeat often. "We don't have a spending problem, we have a health care problem," Democrats often counter. more >>
The law passed by Congress to avoid the "fiscal cliff" represents the beginning of a decline for liberalism in America, conservative Washington Post columnist George Will believes.
"I think people will look back on this deal as where liberalism passed an apogee and went into decline," Will said Sunday in a panel discussion on ABC's "This Week."
The reason, Will explained, is that Democrats supported making the Bush-era tax cuts in the fiscal cliff bill for all but the wealthiest Americans, but liberalism requires high taxes on the middle class in order to have the expensive government programs that liberals prefer. more >>
The "fiscal cliff" bill, or the "American Taxpayer Relief Act of 2012," increased taxes, President Barack Obama says. Many Republicans say the bill lowered taxes. As a corollary, Obama says the bill will lower budget deficits. But the Congressional Budget Office says the bill will require even more government borrowing. Who is right?
In a video posted to his campaign website Wednesday, Obama said, "the agreement we reached this week will reduce the deficit even more by asking the wealthiest two percent of Americans to pay higher taxes for the first time in two decades. So that's progress."
The fiscal cliff law "further reduces the deficit by $737 billion," Obama claimed in his weekly radio address Saturday, "making it one of the largest deficit reduction bills passed by Congress in over a decade." more >>
Congress and President Barack Obama have prevented a potential recession with the "fiscal cliff" bill, but in doing so put off, yet again, many difficult decisions necessary to get the nation's fiscal house in order. In a couple of months, three more fiscal cliff battles lie ahead -- sequestration, the debt ceiling, and a new federal budget.
As part of the Budget Control Act (2011), about $1 trillion of automatic spending cuts were supposed to begin going into effect in 2013 if Congress did not replace them with an equivalent amount of deficit reduction. About half of those cuts are in defense and the other half are in other discretionary spending. more >>
When the dust settled after the House and Senate voted on the fiscal cliff bill, Democrats supplied the overwhelming majority of the votes. But what may yet prove to be the bigger issue was how the issue split Republicans in both chambers. It may well set the stage for how Congress and the GOP will function in the coming year.
In the final 36 hours there seemed little chance to salvage a deal. Growing frustrated when Senate Democrats stopped negotiating, Minority Leader Mitch McConnell (R-Ky.) called on his long-time friend, Vice President Joe Biden, to sit down and see if they could hammer out a couple of final points to win passage in the upper chamber.
Both men cut their political teeth on back-room deals so the announcement of a compromise surprised few within earshot of Capitol Hill. more >>