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CBO — Letter to the Honorable John Boehner providing an estimate for H.R. 6079, the Repeal of Obamacare Act
Letter to the Honorable John Boehner providing an estimate for H.R. 6079, the Repeal of Obamacare Act
Source: Congressional Budget Office
CBO and the staff of the Joint Committee on Taxation (JCT) have estimated the direct spending and revenue effects of H.R. 6079, the Repeal of Obamacare Act, as passed by the House of Representatives on July 11, 2012. H.R. 6079 would repeal the Affordable Care Act (ACA), with the exception of one subsection that has no budgetary effect. This estimate reflects the spending and revenue projections in CBO’s March 2012 baseline as adjusted to take into account the effects of the recent Supreme Court decision regarding the ACA.
For various reasons discussed in the report, the estimated budgetary effects of repealing the ACA by enacting H.R. 6079 are close to, but not equivalent to, an estimate of the budgetary effects of the ACA with the signs reversed.
CBO — Medicare’s Payments to Physicians: The Budgetary Impact of Alternative Policies Relative to CBO’s March 2012 Baseline
Medicare’s Payments to Physicians: The Budgetary Impact of Alternative Policies Relative to CBO’s March 2012 Baseline
Source: Congressional Budget Office
Medicare’s payment rates for physicians’ services are scheduled to be reduced by 27 percent in 2013, CBO estimates, under the provisions of law known as Medicare’s Sustainable Growth Rate (SGR) mechanism. The SGR mechanism consists of expenditure targets, which are established by applying a growth rate (calculated by formula) to spending for physicians’ services and certain related services in a base period, and annual adjustments to the payment rates, which are designed to bring spending in line with the expenditure targets over time. (For further discussion of the SGR, see the appendix of Changes in Payments to Physicians.) In each of the past several years, legislation has been enacted to override the SGR and to either maintain or increase those payment rates when they were otherwise scheduled to decrease.
The attached tables show CBO’s estimates of the budgetary impact over the 2013–2022 period of various alternative policies for modifying the payment rates that are scheduled to take effect under the SGR mechanism. The options in the tables are listed in three categories: “cliff” options, “clawback” options, and others. (See the descriptions of those terms in the attached document; both “cliff” and “clawback” approaches have been adopted since the Congress began overriding scheduled reductions in physician payment updates in 2003.)
The estimates in the tables are relative to CBO’s March 2012 baseline, which is used for Congressional scorekeeping purposes. Both the scorekeeping baseline and the estimates of the impact of the policy options are likely to change when the final rule setting the physician fee schedule for 2013 is issued by the Administration in early November.
CBO Releases Report on Policy Options for the Social Security Disability Insurance Program
CBO Releases Report on Policy Options for the Social Security Disability Insurance Program
Source: Congressional Budget Office
The Social Security Disability Insurance (DI) program has expanded rapidly during the past few decades, and CBO projects that, under current law, future spending for the program will significantly exceed the revenues dedicated to it.
In a study prepared at the request of the Ranking Member of the Senate Budget Committee, CBO has examined a variety of potential modifications to the DI program. CBO has also prepared an infographic summarizing the application process for DI, the number of beneficiaries and benefits paid under the program, and policies regarding disabled people in other countries.
Alleviating the financial pressures on the DI program would require a substantial increase in revenues for the program, a substantial decrease in the program’s costs, or some combination of those two approaches. Options to increase revenues are straightforward but limited: DI taxes paid (through the Social Security Payroll tax) by employers or employees must rise, or some other source of funding must be used. In contrast, options for reducing costs are both more complex and more numerous: For example, the components of the formula that is used to calculate DI benefits could be altered, as could one or more of the rules used to help determine eligibility for the program. Alternatively, policymakers might want to increase spending for the program by providing greater amounts of support to certain disabled workers or their dependents. CBO in conjunction with the staff of the Joint Committee on Taxation has estimated the budgetary effects of a variety of such modifications to the DI program.
CBO Projects That DoD’s Future Defense Plans Will Cost More Than DoD Estimates
CBO Projects That DoD’s Future Defense Plans Will Cost More Than DoD Estimates
Source: Congressional Budget Office
In most years, the Department of Defense (DoD) provides to the Congress a five-year plan, called the Future Years Defense Program (FYDP), along with its budget request for the coming year. Because decisions made in the near term can have consequences for the defense budget well beyond that period, CBO regularly examines—at the request of the Senate Budget Committee—the programs and plans in DoD’s FYDP and projects their budgetary impact over the long term.
Today’s study—the latest in CBO’s annual series—analyzes the budgetary impact of the 2013 FYDP (which provides plans for fiscal years 2013 to 2017) through 2030. The FYDP describes the department’s “base” budgetary plan for its normal activities, such as manning, training, and equipping the military, and excludes overseas contingency operations, such as the war in Afghanistan.
CBO projects that DoD’s plans will cost $123 billion, or 5 percent, more to execute through 2017 than DoD estimates. CBO also projects that the cost of DoD’s plans will exceed the limits established in the Budget Control Act. For most categories of DoD’s budget, costs under CBO’s projections are higher than under the department’s estimates. Historically, the costs of providing health care, paying military and civilian personnel, and developing and buying weapons have been higher than DoD’s planning estimates.
CBO — The 2012 Long-Term Budget Outlook
The 2012 Long-Term Budget Outlook
Source: Congressional Budget Office
Over the past few years, the federal government has been recording budget deficits that are the largest as a share of the economy since 1945. Consequently, the amount of federal debt held by the public has surged. By the end of this year, CBO projects that the federal debt will reach roughly 70 percent of gross domestic product (GDP), the highest percentage since shortly after World War II.
Whether that debt will continue to grow in coming decades will be affected by long-term demographic trends (particularly the aging of the population), economic developments, and policymakers’ decisions about taxes and spending.
CBO — Assessing the Short-Term Effects on Output of Changes in Federal Fiscal Policies
Assessing the Short-Term Effects on Output of Changes in Federal Fiscal Policies (PDF)
Source: Congressional Budget Office
Changes in federal fiscal policies can have both short-term and long-term effects on output. The Congressional Budget Office’s analysis of the short-term effects focuses on the impact on the demand for goods and services. That impact can be decomposed into direct effects and indirect effects: Direct effects consist of changes in purchases of goods and services by federal agencies and by the people and organizations who are recipients of federal payments or payers of federal taxes; indirect effects enhance or offset the direct effects. The indirect effects can be summarized by a demand multiplier, defined as the total change in gross domestic product per dollar of direct effect on demand. This paper presents the ranges of demand multipliers that CBO uses in its analyses and reviews evidence on the size of those multipliers.
CBO — H.R. 3987, Small Business Protection Act of 2012
H.R. 3987, Small Business Protection Act of 2012
Source: Congressional Budget Office
H.R. 3987 would limit the authority of the Small Business Administration (SBA) to set certain size standards for the purpose of establishing eligibility for various federal assistance programs. The bill also would broaden the amount of information provided to the public when the SBA proposes or modifies a size standard.
Based on information from the SBA, CBO estimates that implementing H.R. 3987 would cost $12 million over the 2013-2017 period, assuming appropriation of the necessary amounts. CBO estimates that enacting H.R. 3987 would not affect direct spending or revenues; therefore, pay-as-you-go procedures do not apply.
H.R. 3987 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA) and would not affect the budgets of state, local, or tribal governments.
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CBO Releases Study on How Proposed Fuel Economy Standards Would Affect the Highway Trust Fund
CBO Releases Study on How Proposed Fuel Economy Standards Would Affect the Highway Trust Fund
Source: Congressional Budget Office
Federal highway and mass transit programs are financed largely by a variety of transportation-related excise taxes. The largest share of the revenues comes from the federal tax on gasoline, including gasoline that is blended with ethanol. Revenues from those taxes are credited to the Highway Trust Fund, and most of the spending for those programs is attributable to that fund. Because the gasoline tax is set as a fixed amount per gallon (currently 18.4 cents), policies that are designed to reduce gasoline consumption would decrease the amounts credited to the fund.
In a study released today, CBO examines how a proposed rule to tighten fuel economy standards for cars, pick-up trucks, and other light-duty vehicles would affect cash flows of the Highway Trust Fund.
CBO — Agriculture Reform, Food, and Jobs Act of 2012
Agriculture Reform, Food, and Jobs Act of 2012
Source: Congressional Budget Office
<blockquote
CBO estimates that enacting this proposal would reduce direct spending by $24.7 billion over the 2013-2022 period, relative to spending projected under CBO’s current baseline. Further details of that estimate are displayed in the three enclosed tables. Because the proposal would affect direct spending, pay-as-you-go procedures apply. CBO has not estimated the additional discretionary spending that would result from implementing the proposal; such spending would be subject to appropriation. (Enacting the proposed legislation would not affect federal revenues.) CBO also has not reviewed the proposal for intergovernmental or private-sector mandates.
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CBO — Estimate of Budgetary Effects of H.R. 4628, the Interest Rate Reduction Act, as Introduced on April 25, 2012
Estimate of Budgetary Effects of H.R. 4628, the Interest Rate Reduction Act, as Introduced on April 25, 2012 (PDF)
Source: Congressional Budget Office
CBO — Estimate of Budgetary Effects of S. 2343, the Stop the Student Loan Interest Rate Hike Act of 2012, as Introduced on April 24, 2012
Estimate of Budgetary Effects of S. 2343, the Stop the Student Loan Interest Rate Hike Act of 2012, as Introduced on April 24, 2012 (PDF)
Source: Congressional Budget Office
Chart
CBO — Repeal of the Program of Block Grants to States for Social Services
Repeal of the Program of Block Grants to States for Social Services
Source: Congressional Budget Office
<blockquote
As approved by the House Committee on Ways and Means on April 18, 2012
H. Con. Res. 112, the Concurrent Budget Resolution for fiscal year 2013, as passed by the House of Representatives on March 29, 2012, instructed several committees of the House to recommend legislative changes that would reduce deficits over the 2012-2022 period. As part of that reconciliation process, the House Committee on Ways and Means has approved three separate provisions as reconciliation recommendations. The following analysis presents estimated budgetary effects for one of those three provisions.
This legislation would repeal sections 2001 through 2007 of the Social Security Act, relating to the Social Services Block Grant (SSBG) program, starting in fiscal year 2013. SSBG, which is administered by the Department of Health and Human Services, supports a variety of programs, including child welfare services, day care for both children and adults, home-delivered meals, disabilities services, and transportation.
SSBG has a permanent authorization of $1.7 billion per year. Spending for this program is classified as direct spending; the program’s funding, however, is provided in annual appropriation acts.
As shown in the following table, enacting a repeal of the SSBG programs would reduce direct spending by nearly $1.4 billion in 2013 and by about $16.7 billion over the 2012-2022 period, relative to CBO’s current baseline projections.
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CBO Releases An Analysis Of The President’s 2013 Budget
CBO Releases An Analysis Of The President’s 2013 Budget
Source: Congressional Budget Office
Each year, after the President releases his annual budget request in February, CBO analyzes the budget proposals and, using its own estimating procedures and economic assumptions, projects what the federal budget would look like over the next 10 years if those proposals were adopted. CBO usually provides those results in two parts.
The first part—an analysis of the proposals’ budgetary impact without considering their effects on the economy—was released today. The second part—an analysis showing the proposals’ potential effects on the economy and, in turn, the impact of those economic effects on the budget—will be released in a few weeks.
Earlier this week, CBO released its updated its baseline budget projections. Unlike its estimates of the President’s budget, CBO’s baseline projections largely reflect the assumption that current tax and spending laws will remain unchanged, so as to provide a benchmark against which potential legislation can be measured. Under that assumption, CBO estimates that the deficit would total $1.2 trillion in 2012 and that cumulative deficits over the 2013–2022 period would amount to $2.9 trillion.
CBO — Small Firms, Employment, And Federal Policy
Small Firms, Employment, And Federal Policy
Source: Congressional Budget Office
Small firms, widely believed to promote job growth, both create and eliminate jobs at higher rates than large firms do. Although small firms account for a disproportionate share of net job growth, that greater growth is driven primarily by new small firms.
…
Policies that help reduce the cost to small firms of complying with federal regulations could promote employment growth. But policies favoring small firms could also discourage them from growing in order to retain that preferential treatment. Moreover, easing some regulations for small firms could cause certain problems, such as pollution, to persist more than if regulations were applied uniformly across firms of different sizes.
CBO — Federal Financial Support For The Development And Production Of Fuels And Energy Technologies
Federal Financial Support For The Development And Production Of Fuels And Energy Technologies
Source: Congressional Budget Office
From CBO Director’s Blog:
The federal government has used both tax preferences and spending programs to provide financial support for the development and production of fuels and energy technologies in recent decades. At the request of Senate Energy and Natural Resources Committee, CBO released a brief addressing the following questions:
- How much has the federal government provided in support for developing and producing fuel and energy technologies?
- What types of energy-related tax preferences does the government provide, and how has the value and composition of that financial support changed over time?
- What is the status of energy-related tax preferences under current law?
- In what ways does the Department of Energy (DOE) spend funds to support energy technologies?
- When is it beneficial for the government to intervene in energy markets and what are the most cost-effective methods?
CBO — Models Used by the Military Services to Develop Budgets for Activities Associated with Operational Readiness
Models Used by the Military Services to Develop Budgets for Activities Associated with Operational Readiness
Source: Congressional Budget Office
The Congress directed CBO to review the modeling techniques that the military services use to generate their budget request for activities associated with operational readiness. CBO focused on identifying models used to inform the operating forces portion of the services’ base budgets for operation and maintenance. CBO included only those models used at the services’ headquarters.
CBO found that:
- Models were used to inform about 67 percent ($53 billion) of the services’ $79 billion budget request for the active-duty component of operating forces in 2012,
- Operating forces (also known as budget activity 01) accounted for 14 percent of DoD’s $554 billion budget request in 2012, and
- Models are one of many inputs to the budgeting process.
Using models does not guarantee good budgeting; not using them does not equate to bad budgeting.
CBO — The Veterans Health Administration’s Treatment of PTSD and Traumatic Brain Injury Among Recent Combat Veterans
The Veterans Health Administration’s Treatment of PTSD and Traumatic Brain Injury Among Recent Combat Veterans
Source: Congressional Budget Office
From CBO Director’s Blog:
More than 2 million service members have deployed in support of overseas contingency operations (OCO) in Iraq and Afghanistan since October 2001. Two combat-related conditions that affect some OCO veterans and that have generated widespread concern among policymakers are post-traumatic stress disorder (PTSD, an anxiety disorder induced by exposure to a traumatic event, such as witnessing injury or death) and traumatic brain injury (TBI, which is caused by sudden trauma to the head and is commonly sustained by service members exposed to explosions).
Some observers contend that the Veterans Health Administration (VHA), the health care system within the Department of Veterans Affairs, and the health care system for active-duty personnel within the Department of Defense (DoD) may not adequately screen, diagnose, and treat OCO service members and veterans affected by PTSD and mild TBI.
In a study requested by the Ranking Member of the House Committee on Veterans’ Affairs, CBO analyzes VHA’s care of OCO patients diagnosed with PTSD or TBI and compares the reported rates of occurrence of those conditions within VHA with estimates of the prevalence of those conditions in the broader population of service members who have deployed to recent overseas contingency operations. The study also examines the costs that VHA has incurred in treating patients diagnosed with PTSD and TBI.
CBO — The Budget and Economic Outlook: Fiscal Years 2012 to 2022
The Budget and Economic Outlook: Fiscal Years 2012 to 2022
Source: Congressional Budget Office
Each January, CBO prepares “baseline” budget projections spanning the next 10 years. Those projections are not a forecast of future events; rather, they are intended to provide a benchmark against which potential policy changes can be measured. Therefore, as specified in law, those projections generally incorporate the assumption that current laws are implemented.
But substantial changes to tax and spending policies are slated to take effect within the next year under current law. So CBO has also prepared projections under an “alternative fiscal scenario,” in which some current or recent policies are assumed to continue in effect, even though, by law, they are scheduled to change. The decisions made by lawmakers as they confront those policy choices will have a significant impact on budget outcomes in the coming years.
CBO — Comparing the Compensation of Federal and Private-Sector Employees
Comparing the Compensation of Federal and Private-Sector Employees
Source: Congressional Budget Office
Employees of the federal government and the private sector differ in ways that can affect compensation. Federal workers tend to be older, more educated, and more concentrated in professional occupations than private-sector workers.
CBO’s study compares federal civilian employees and private-sector employees with certain similar observable characteristics (described below). Even among workers with similar observable characteristics, however, employees of the federal government and the private sector may differ in other attributes, such as motivation or effort, that are not easy to measure but that can matter a great deal for individuals’ compensation. This analysis focuses on wages, benefits, and total compensation between 2005 and 2010.
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CBO — Using Public-Private Partnerships to Carry Out Highway Projects
Using Public-Private Partnerships to Carry Out Highway Projects
Source: Congressional Budget Office
The United States has a network of over 4 million miles of public roads. That system has faced increasing demands over time: The number of vehicle miles traveled (both passenger and commercial) rose from approximately 700 billion in 1960 to just under 3 trillion in 2009. In 2010, the federal government and state and local governments spent about $160 billion to build, operate, and maintain roads. (This study adopts the practice of the Federal Highway Administration in using the words “highway” and “road” synonymously.) Almost all of those infrastructure projects were undertaken using a traditional approach in which a state or local government assumes most of the responsibility for carrying out a project and bears most of its risks, such as the possibility of cost overruns, delays in the construction schedule, and, in the case of toll roads, shortfalls in the road’s revenues. Some observers assert that an alternative approach, using a public-private partnership, could increase the money available for highway projects and complete the work more quickly or at a lower cost than is possible through the traditional method. Specifically, such a partnership could secure financing for a project through private sources that might require more accountability and could assign greater responsibility to private firms for carrying out the work. For example, a private business might take on the responsibility for specific tasks, such as operations and maintenance, and their accompanying risks.
In this study, the Congressional Budget Office (CBO) finds that private financing will increase the availability of funds for highway construction only in cases in which states or localities have chosen to restrict their spending by imposing legal constraints or budgetary limits on themselves. The reason is that revenues from the users of roads and from taxpayers are the ultimate source of money for highways, regardless of the financing mechanism chosen. The cost of financing a highway project privately is roughly equal to the cost of financing it publicly after factoring in the costs associated with the risk of losses from the project, which taxpayers ultimately bear, and the financial transfers made by the federal government to states and localities. Any remaining difference between the cost of public versus private financing for a project will stem from the effects of incentives and conditions established in the contracts that govern public-private partnerships.
CBO also finds, on the basis of evidence from a small number of studies, that such partnerships have built highways slightly less expensively and slightly more quickly, compared with the traditional public-sector approach. The relative scarcity of data on public-private partnerships for highway projects, however, and the uncertainty surrounding the results from the available studies make it difficult to apply their conclusions definitively to other such projects.
