Defense Budgeting and Resource Allocation

This chapter dissects the US defense budget, as well as various matters in the broader field of defense economics. It provides methodologies for understanding how different defense strategies and military force postures affect that budget. The chapter also explores various ways the defense budget can be categorized, broken down, and defined. It examines issues like military readiness — how the Department of Defense ensures that its forces are ready-to-go for crises that may emerge quickly. The chapter then looks into the economics of military bases, at home and abroad. It discusses military acquisition, modernization, and innovation. The chapter then shifts to the Congressional Budget Office (CBO) figures, and analyses how they provide the backbone of the cost estimates. It highlights the core of this section — understanding the costs of US Department of Defense's (DoD) force structure by type of unit. This is probably the core of defense budgeting methodology for those seeking to understand the fiscal implications of a given defense strategy and force structure. Ultimately, the chapter investigates how two different concepts of grand strategy and/or military policy might be translated into force structure, weapons acquisition, and budget plans.

Time-varying uncertainty of the Federal Reserve's output gap estimate

A factor stochastic volatility model estimates the common component to estimates of the output gap produced by the staff of the Federal Reserve, its time-varying volatility, and time-varying, horizon-specific forecast uncertainty. Output gap estimates are very uncertain, even well after the fact, especially at business cycle turning points. However, the common component of the output gap estimates is clearly procyclical, and innovations to the common factor produce persistent positive effects on economic activity. Output gaps estimated by the Congressional Budget Office have very similar properties. Increased macroeconomic uncertainty, as measured by the common factor's volatility, leads to persistent negative responses in economic variables.

A INSTITUIÇÃO FISCAL INDEPENDENTE DO BRASIL EM PERSPECTIVA COMPARADA: EM BUSCA DE VIRTUDES E FRAGILIDADES

O presente artigo tem por objetivo investigar as virtudes e as fragilidades da Instituição Fiscal Independente (IFI) do Brasil, tendo por base a literatura internacional, as boas práticas recomendadas por organizações internacionais, a exemplo da Organização para a Cooperação e Desenvolvimento Econômico (OCDE), bem como a experiência do Congressional Budget Office (CBO), a exitosa IFI dos Estados Unidos da América. Ao final, conclui-se que a IFI brasileira possui virtudes evidentes, a exemplo da excelência técnica e da destreza gerencial. Nota-se, contudo, que a instituição pode vir a enfrentar dificuldades em razão da fragilidade jurídica de seu estatuto à luz da Constituição e da Lei de Responsabilidade Fiscal.

Biden’s Budget Plans at the First Year of Presidency

President Biden’s 2022 budget is providing a starting step for increasing non-defense appropriations. Budget plans of the presidential administration, being under the needs of continuing struggle against pandemic, show the necessity of financing social programs after previous budget cuts, wide range measures for meeting climate changing challenges; modernizing infrastructure. Besides medical services, education, job training, assistance for needy families, the budget plans tend to support roads all over the country, traffic control, rural development, protecting environment. The Budget statement puts special attention to the American Rescue Plan, calling it turning the corner on the pandemic, economic recovery, and having in mind the priorities of this Plan. At the same time the proposed expenditures lead to facing fiscal challenges and may worsen budget deficit outlook. The costs of budget proposals may be partly offset by the growing economy; but due to Congressional Budget Office projections the budget deficit and the public debt remain huge.

U.S. Tax Progressivity and Redistribution

U.S. federal taxes have become more progressive since 1979, largely due to more generous tax credits for lower income individuals. Though top statutory rates fell substantially, this affected few taxpayers and was offset by decreased use of tax shelters, such that high-income average tax rates have been relatively stable. Redistribution, which accounts for both taxes and transfers, has also increased according to Congressional Budget Office data. Measures of progressivity and redistribution, however, capture different aspects of policy. Over the longer run, earlier decreases suggest a U-shaped tax progressivity curve since WWII, with the minimum occurring in 1986.

Does partisanship explain spending patterns in congressional bill proposals?

We investigate the motivations driving members of the US Congress to introduce bills that require new federal spending, testing a classic “party matters” hypothesis that spending is motivated by partisanship with Democrats spending more on social programs and Republicans more on defense and social order. To test this hypothesis, we introduce a new dataset that codes Congressional Budget Office reports, allowing us to link cost estimates to over 7,000 congressional bills. Overall, we find very little evidence that partisanship or ideology can reliably predict the cost of bills. Bills introduced by Democrats call for similar levels of new spending as those introduced by Republicans, even on policy topics where partisan divisions are thought to be pronounced. These results raise the possibility that when it comes to spending rank-and-file members are less motivated by abstract partisan commitments than traditionally thought.

Improving Quality as a Solution to the Health Care Cost Problem? Health Policy Experts and the Promotion of a Controversial Idea

Context: In the late 2000s, the contention that quality improvements achieved by reforms in the delivery of care would slow the growth of costs throughout the US health care system became the predominant strategy for cost containment in the discourses and programs of all the 2008 presidential candidates. The question that this paper addresses is why, despite all of the critiques of this idea (especially those of the Congressional Budget Office), what the author terms the quality solution has remained credible enough to be a possible argument in policy makers' discourses and programs. To answer this question, the article explores the role of health policy experts—who are expected to provide credibility and legitimacy to proposals defended by policy makers—in supporting and diffusing this quality solution. Methods: The empirical research combines written sources with evidence from 78 interviews. Findings: This article highlights the political factors that explain the rise and growing prominence of the quality solution in the community of policy analysts: the political support for delivery reform–oriented research since the 1980s and also the importance of political calculations for prominent health policy experts. Conclusions: This policy history contributes to works that underscore the political dimension of policy analysis.

A PROSPECTIVE STUDY OF THE ABSOLUTE AND RELATIVE SURPLUS VALUE IN THE UNITED STATES BASED ON A MACROECONOMIC MODEL: CONSEQUENCES FOR RUSSIA

This article develops an optimization neoliberal scenario 1 and a socially-oriented scenario 2 of capitalist reproduction based on US statistics for 2020-40. Scenario 1 preserves the socio-economic structure that generated the systemic, structural, and cyclical crisis of capitalism; it assumes a regular repetition of overproduction and paroxysms. The transforming social relations in the direction of tightening the workers’ control over production and the primary distribution of national income take place in scenario 2. Comparison of these pioneer scenarios with the projections by the Congressional Budget Office in the USA for 2020-2030 reveals the underestimation by the latter of the depth and duration of the epoch-making corona-crisis, which owes its name to the Covid-19 pandemic. The necessity for Russia of revival of the ideology of socialism, understood as the first phase of communism, is substantiated.

On the performance of US fiscal forecasts: government vs. private information

PurposeThis paper contributes to shed light on the quality and performance of US fiscal forecasts.Design/methodology/approachThe first part inspects the causes of official fiscal forecasts revisions by Congressional Budget Office (CBO) between 1984 and 2016 that are due to technical, economic or policy reasons.FindingsBoth individual and cumulative means of forecast errors are relatively close to zero, particularly in the case of expenditures. CBO averages indicate net average downward revenue and expenditure revisions and net average upward deficit revisions. Focusing on the causes of the technical component, the authors uncover that its revisions are quite unpredictable, which cast doubts on inferences about fiscal policy sustainability that rely on point estimates. Comparing official with private-sector (consensus) forecasts, despite the informational advantages CBO might have, one cannot unequivocally say that one or the other is more accurate. Evidence also seems to suggest that CBO forecasts are consistently heavily biased toward optimism while this is less the case for consensus forecasts. Not only is the extent of information rigidity is more prevalent in CBO forecasts but also evidence seems to indicate that consensus forecasts dominate CBO in terms of information content.Originality/valueThe authors provide a detailed analysis on US fiscal forecasts both using revenue and expenditure and decomposing forecast errors into several explanatory components. Moreover, the authors compare official with private-sector (consensus) forecasts and assess which one is better or preferred.