This was a busy week in Washington as the budget battles continue in this election year. Some key highlights from the U.S. fiscal scene:
- Senator Kent Conrad released his FY 2013 budget resolution. The plan is based on the bipartisan Fiscal Commission plan put forth by Erskine Bowles and Alan Simpson. To view a summary of Conrad’s budget plan and how it differs from the original framework in Simpson-Bowles, click here.
- Senator Pat Toomey released his FY 2013 budget resolution. His plan is more aggressive in generating savings through spending cuts than the House Republican budget put forth by Congressman Paul Ryan. CRFB’s blog, “The Bottom Line,” outlines the key points in Toomey’s proposal.
- CBO released its analysis of the economic impact of the President’s 2013 Budget. Most notably, CBO estimated the macroeconomic effects of the President’s budget proposals in different periods of time. According to CBO, “the President’s budgetary proposals would boost the nation’s output initially but reduce it in later years.”
- Romney’s plan to close loopholes. David Leonhardt wrote in the Economix blog that Mitt Romney was overheard identifying which tax breaks he would consider eliminating as President. The ones named were the deductions for mortgage interest on vacation homes and deductions for state and local taxes. However, he seemed to suggest he would only eliminate these for high-income households.
- States leaning heavily on spending cuts to balance budgets. A new Center on Budget and Policy Priorities analysis finds that states have made $3 in spending cuts for every $1 in new tax revenues to close the budget gaps created by the Great Recession. States primarily used reserves to avoid large spending cuts in 2008 and 2009, then relied heavily on emergency federal aid provided by the Recovery Act. Spending cuts were used throughout these years, but the deepest cuts came in fiscal year 2012, when reserves and federal aid had dried up.