Cash for Clunkers: Did It Work?

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NPR reported a study that tried to assess the impact of the Cash for Clunkers program, an incentive program offered by the federal government to stimulate car sales. The study concluded that: “The program didn’t bring new buyers into the market. But it encouraged people who would have bought a car anyway to make their purchase a few months sooner.” From a research perspective, the challenge is to determine what impact the program had. The reporter noted, “The only way to answer the question definitively would be to find a parallel universe exactly like ours, except for one thing: no cash for clunkers program. Continue reading »

Calculating Budget Trade-Offs

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The National Priorities Project has constructed an interactive site where you can calculate budget trade-offs in terms of what money spent for a specific federal program would buy in a state or locality if the decision was to spend that money there.

For example:

Taxpayers in Washington will pay $5.7 billion for proposed Net Interest in FY2011. For the same amount of money, the following could have been provided:
725,211 Military Veterans Receiving VA Medical Care for One Year
Or:
Taxpayers in Washington will pay $5.7 billion for proposed Net Interest in FY2011. For the same amount of money, the following could have been provided:
1,025,785 Students receiving Pell Grants of $5550
It gives you a sense of how much money we are talking about.
You can this for cities too.
Taxpayers in Olympia, Washington will pay $36.6 million for proposed Net Interest in FY2011. For the same amount of money, the following could have been provided:
6,602 Students receiving Pell Grants of $5550
Check it out:

http://www.nationalpriorities.org/tradeoffs?location_type=1&state=53&program=708&tradeoff_item_item=278&submit_tradeoffs=Get+Trade+Off

Federal Revenues and Outlays: The Big Picture

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This data is standardized to what money is worth in 2010.  We can see from the past that the federal government collected enough in revenue to cover the outlays for much of the 1950s-1970s.  It is after the 1980s where the federal government began its habit of not collecting enough revenue to meets its spending obligations–and clearly, the  gap reaches ridiculous in 2008 and 2009.

The estimates for 2010 and beyond are estimates–and they look very optimistic to me given the economic outlook and the desire by some to continue cutting taxes.

But the data from the past suggest that returning to the tax rates of the 1950s and 1960s might help raise enough money to meet obligations. Alternatively, it might be helpful to cut spending so that the big ticket items are more in line with spending in the 1950s and 1960s.  Or perhaps, both increasing taxes and cutting spending are needed if the federal government is to get the budget close to balanced?

Social Security: In Trouble?

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The current media hype is that Social Security is on the brink of bankruptcy.  Why? Because the economic recession has resulted in reduced revenue for social security this year and more people than expected opted to collect social security.

“CBO projects that revenues from payroll taxes credited to the trust funds will be $12 billion lower in 2010 than in 2009, while benefit payments will be $37 billion higher. This year, for the first time since the Social Security reforms of the early 1980s, benefit payments from the trust funds will exceed the trust funds’ receipts from the public (which consist mostly of revenues from payroll taxes and exclude interest on Treasury securities held by the trust funds).”

However, more money has been collected for social security than spent over time and CBO states that Social Security –also known as the Old Age and Survivors Insurance (OASI) trust fund– had “a balance of $2.3 trillion at the end of fiscal year 2009; CBO estimates that the OASI trust fund will continue to maintain a positive balance for more than 30 years.”  This means that that there will be enough money to meet obligations until at least 2040. Continue reading »

Budget Deficit–Are Tax Increases Needed?

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Common Dreams had an interesting article as the budget deficit as crisis story picks up traction. “Who Ate the Dessert? Deficit Mania Ignores Growth of Income Gap by Neil DeMause.

(note: when reading this material, one has to be be clear whether they are talking about the average budget deficit–which in 2010 is over  a historic $1 trillion– or whether they are talking about the national debt , which is the cumulative total that is now $12 trillion.

http://www.commondreams.org/view/2010/06/14-3 Continue reading »