A Research Focus of the Urban Institute
Urban Institute's budget experts follow the trends orchestrating the largest deficits in our nation's history and dissect the tough choices that lay ahead.
About the Research
A budget deficit gone haywire is symptomatic of a much larger problem—the misdirection of valuable budget resources. Closely monitoring these budget resources has been central to Urban Institute's work for most of its history. In 1979, Urban Institute researchers projected Social Security and private pension benefits to 2020. Researchers warned policymakers 15 years ago that the nation's elderly are better off than the nation's children and that nearly all domestic budget growth in the prior decade had been for Social Security and Medicare, not for programs aimed at children.
At the first Urban Institute Roundtable on the President's Budget and the Economy in 1990, leaders from Congress, the media, government, and policy and advocacy groups took a critical look at the administration's policy and budget priorities. The roundtable has since become an annual event fueled by the collective insights of Washington's top budget analysts.
Are we sitting in the eye of a perfect budget storm? Certainly growing financial support for Older Americans, confusion over the future of Social Security, and declining revenues in recent years have added to a cloudy budget outlook.
The New Congress and the Budget: Perspectives From Three Former CBO Directors
The Wall Street Journal's Jackie Calmes moderated this First Tuesday panel with Edward Gramlich, Robert Reischauer and Rudolph Penner. The three former Congressional Budget Office directors previewed how the 110th Congress will create a blueprint for spending trillions of dollars in fiscal year 2008 and beyond.
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18th Annual Urban Institute Roundtable on the President’s Budget and the Economy
A bipartisan mix of participants at the Urban Institute's 18th Annual Roundtable event generally agreed that the budget blueprint signals the president's willingness to talk. Many agreed that the president's new health care tax plan is an interesting proposal that Democrats should run with, despite concerns about the details. Some applauded the budget for being responsible; others thought it left too much unanswered. The panel featured Robert Reischauer; Brookings' Alice Rivlin, Belle Sawhill and Bill Gale; Bill Hoagland, former policy advisor to Sen. Bill Frist, and Wendell Primus, policy advisor to House Speaker Pelosi.
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17th Annual Urban Institute Roundtable on the President’s Budget and the Economy
At the 17th annual event, budget and tax analysts and congressional staff explored questions including: How does the president's proposal deal with long-run budget pressures? Will this budget do much to constrain the rapid increase in the cost of health care? Who are the winners and losers in this budget? What budget process changes might help reduce the deficit? The opening panel featured Robert Reischauer, Eugene Steuerle, and Eric Toder of the Urban Institute; Joseph Antos from AEI; Scott Gudes from the Senate Budget Committee; John Hamre from CSIS; Bill Hoagland from the Office of the Senate Majority Leader; Douglas Holtz-Eakin from the Council on Foreign Relations; and Isabel Sawhill from the Brookings Institution.
Full transcript
16th Annual Urban Institute Roundtable on the President's Budget and the Economy
Urban Institute President Robert Reischauer and Senior Fellow Gene Steuerle spearheaded this spirited exchange and evaluation of President' Bush's proposed budget for fiscal 2006 on February 9. Stan Collender, Robert Greenstein, and Cato Institute's Chris Edwards were among the other experts who speculated on whether deficit reduction could be real, the possibility of revenue neutral tax reform, and how much the president's budget dealt with long-run budget pressures.
[We do not have a transcript of this event. The following roundtables include transcripts.]
15th Annual Roundtable on the President's Budget and the Economy
This first look at the president's proposed budget for fiscal 2005 included discussion of deficits, tax cuts, discretionary spending, and the political implications of all of these in an election year.
14th Annual Roundtable on the President's Budget and the Economy
This discussion was on the effects of the fiscal 2004 budget on the economy, proposed spending on defense and homeland security, the deficit outlook, and implications of tax cuts for low- and moderate-income families.
13th Annual Roundtable on the President's Budget and the Economy
At the 13th annual event, key budget and tax analysts, congressional staff, and members of the national press explored questions including: Whatever happened to the surpluses?
12th Annual Roundtable on the President's Budget and the Economy
Economic experts from major research organizations, government agencies, and the media met at the Urban Institute in early March 2001 to discuss the Bush administration's proposal in light of unprecedented surplus forecasts.
Findings
Below are results from some of our recent studies, reports, articles, and books.
As baby boomers start retiring, the day of budget reckoning draws closer.
The Bipartisan Commission on Entitlement and Tax Reform had concluded in 1995, "If we do not plan for the future, entitlement spending promises will exceed financial resources in the next century." Without any action, push will start coming to shove just four years from now, when the oldest baby boomers reach Social Security eligibility age. At the same time, taxes are being cut to their lowest levels since the 1950s.
As baby boomers retire, Social Security, Medicare, and Medicaid will continue to absorb ever-increasing shares of gross domestic product and the federal budget. Although Medicaid services are mostly for the non-elderly population, long-term health care accounts for much of the program's growth. The three programs, as politically popular as they are expensive, will be hard to reform.
One solution might be to have people work longer, thus paying more taxes and receiving fewer benefits. In 1950, the average retirement age for male workers was 68. Today it's 63. Earlier retirement combined with longer life expectancy translates into twice as many years spent in retirement now as was typical in 1950.
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Programs for families and children will bear the brunt of budget shortfalls.
Squeezed between the rising costs of programs for the elderly and a drop in tax revenues, the budget for working families and children too often gets short shrift. Children's programs are not entitlements. So, unlike Social Security and Medicare, they aren't protected from the budget ax. Services for families do not grow automatically. Choices made in the past century would have wiped such discretionary programs out by 2041, according to Urban Institute research. But recent tax cuts and spending increases push that date up to 2012.
The recent tax cuts and spending increases adversely affect children in indirect ways too. Programs that raise productivity and economic growth, pay down the public debt, and clean up the environment can improve children's lifetime prospects. Likewise, expenditures that don't focus on children can have negative consequences. Proposals to make recent tax cuts permanent could, together with the Medicare prescription drug bill, cost more than $34 trillion. These dollars must come from either tax cuts or spending increases in the future, which will hurt economic prospects for today's youth.
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Few actions are being taken to avert a budget crisis.
Budget experts predict a financial crisis if entitlements are not reformed or taxes increased considerably. One UI senior fellow speculated that if federal spending follows its historical pattern of the last 40 years, by 2050, the government would spend almost one-third of our gross domestic product-double what the federal government raised in taxes in 2004. Imagine what that might do to your future tax bills?
Problems with the individual Alternative Minimum Tax (AMT) are also going unchecked. The tax is on track to ensnare 33 million households by 2010—or about one-third of households—in a paperwork nightmare. The president's 2004 budget proposal contains only a temporary fix.
The financial community's lack of concern over the growing deficit is also puzzling. Analysts wonder if it will take a crisis to prompt action. They note that the last major Social Security system reform (in 1983) occurred only when the trust funds emptied. When Congress acted, it did far more than tackle the short-term problem. But a comparable crisis could occur tomorrow or decades from now when it will be too late for reform.
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The Research Team
Many Urban Institute researchers contribute to analyses on the federal budget:
- Leonard Burman, senior fellow, former Treasury Department official, and an expert in federal tax policy and Social Security;
- Adam Carasso, research associate, an analyst in tax, transfer, and retirement policy;
- Edward Gramlich, senior fellow, a former governor on the Federal Reserve Board;
- Rudolph Penner, senior fellow, former head of the Congressional Budget Office, and an expert in federal budgets and finance;
- Robert Reischauer, president, former head of the Congressional Budget Office, and an expert on the federal budget; and,
- Eugene Steuerle, senior fellow, former deputy assistant secretary of the treasury, and an expert in Social Security, tax policy, and income transfer policy.
Publications
The Urban Institute disseminates many budget-related research publications.
