StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



27 Feb 2010
Posted by Pete Davis

"Reconciliation" is getting a lot of attention in Washington lately. Most understand a reconciliation bill can pass the Senate by majority vote after 20 hours of debate, but that's often where the understanding stops. Reconciliation originated in the Congressional Budget and Impoundment Control Act of 1974 as an optional means of changing (mostly) entitlement spending, but not Social Security, and taxes to achieve the deficit target set forth in the budget resolution. Because a reconciliation bill has a high likelihood of becoming law, it quickly became a magnet for extraneous amendments, which Senator Robert C. Byrd (D-WV) deterred in 1985 with the Byrd Rule, now Section 313 of the Budget Act, which lays out six criteria for determining what is extraneous. Implementing these rules in the Senate has become so complicated that no one can be entirely sure of what will emerge until the Senate Parliamentarian has ruled.

Posted by Pete Davis

Congressional Budget Office Director Doug Elmendorf addressed the National Economists Club luncheon today in D.C. He started with the good news: "In the near term (FY10-FY12), we expect the economy to recover." However, his job outlook was grim: "More pain of unemployment lies ahead of us than behind us." That's because this recession has had much more permanent job loss than past recessions and because our recovery is likely to be weak, with subpar job growth. We've lost 8.5 million jobs so far, and it would take 11 million new jobs to reach the level we would have had if the recession hadn't occurred. He expects the unemployment rate to drop to 5% by FY13, but, "That's a long ways away."

Posted by Andrew Samwick

In a word, yes, but Stan's thoughtful post prompted me to think again about what it means to be a deficit hawk.  With some further reflection, I think there are two incentive problems that dominate all others on domestic policy.

One of these problems is that the federal deficit serves as a mechanism to facilitate the use of future taxpayers' income to buy votes for elected officials today.*  To be a deficit hawk is to be vigilant against all possible instances where that may occur.  Our political system creates many opportunities for it.  I think my best statement on the problem was How to Advise on Fiscal Policy, posted in July 2007. Here is the key excerpt, pertaining to what the President's advisers should be doing about it: 

Posted by Stan Collender

Note to myself (and everyone else): Don't let a few days go by without looking at  If you do, you might miss this gem about the curret budget debate.

Posted by Andrew Samwick

I've always thought that reporters should be very mindful of the way they use adjectives in their articles.  Charles Babington's piece on the Obama budget is a case in point.  Here's a list of modifiers used outside of direct quotes that I think are excessive (as opposed to merely unnecessary, of which there are several more): breathtaking, sprawling, stunning*, jaw-dropping, whopping.  Are these words the hallmark of an objective reporter or a story-teller?

What we know is that the Obama budget is unprecedented in the postwar period in its size and in the size of the gap between spending and revenues.  How is this being described?  Here's a quote from the article:

"We're struck with how bold and courageous a budget it is," said James Horney of the liberal Center on Budget and Policy Priorities, which supports the president. "There are a whole lot of things that are going to be extremely difficult because there are very powerful vested interests out there that will fight them."

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