Source: Senay Agca, Deniz Igan, Fuhong Li, Prachi Mishra, International Monetary Fund (IMF), IMF Working Paper No. 19/172, August 2019
From the abstract:
Why do firms lobby? This paper exploits the unanticipated sequestration of federal budget accounts in March 2013 that reduced the availability of government funds disbursed through procurement contracts to shed light on this question. Following this event, firms with little or no prior exposure to the federal accounts that experienced cuts reduced their lobbying spending. In contrast, firms with a high degree of exposure to the cuts maintained and even increased their lobbying spending. This suggests that, when the same number of contractors competed for a piece of a reduced pie, the more affected firms likely intensified their lobbying efforts to distinguish themselves from the others and improve their chances of procuring a larger share of the smaller overall. These findings are stronger in government-dependent sectors and when there is intense competition. The evidence is more consistent with a rent-seeking explanation for lobbying.
Source: Boards Of Trustees Of The Federal Hospital Insurance And Federal Supplementary Medical Insurance Trust Funds, April 22, 2019
From the press release:
Today, the Medicare Board of Trustees released their annual report for Medicare’s two separate trust funds — the Hospital Insurance (HI) Trust Fund, which funds Medicare Part A, and the Supplementary Medical Insurance (SMI) Trust Fund, which funds Medicare Part B and D. The report found that the HI Trust Fund will be able to pay full benefits until 2026, the same as last year’s report. For the 75-year projection period, the HI actuarial deficit has increased to 0.91 percent of taxable payroll from 0.82 percent in last year’s report. The change in the actuarial deficit is due to several factors, most notably lower assumed productivity growth, as well as effects from slower projected growth in the utilization of skilled nursing facility services, higher costs and lower income in 2018 than expected, lower real discount rates, and a shift in the valuation period.
Medicare’s fiscal outlook deteriorates as 2026 funding cliff looms, Trump administration says
Source: Jeff Stein, Washington Post, April 22, 2019
Medicare, Social Security face shaky fiscal futures
Source: Andrew Taylor, Associated Press, April 22, 2019
Source: U.S. Government Accountability Office, GAO-19-314SP, April 2019
From the summary:
This report provides an update on the nation’s fiscal health as of the end of FY 2018, and describes its likely fiscal future if policies don’t change.
Among its findings:
– The federal government’s current fiscal path is unsustainable
– The federal deficit increased to $779 billion—and will reach $1 trillion in the next few years for the first time since 2012
– Publicly held debt was 78% of GDP at the end of FY 2018 and will surpass its historical high of 106% within 13 to 20 years—sooner than projected last year
– Other agencies join GAO in saying that the longer action is delayed, the greater and more drastic the changes will have to be
– The 2018 Financial Report, the Congressional Budget Office, and GAO all project that federal debt held by the public will continue to grow unsustainably into the future.
Source: Dmitriy Plit, Florence Zeman, Kendra M. Smith, Moody’s, Sector Comment, February 27, 2019
Legislation signed by President Donald Trump this month includes a spending increase for the Public Housing Capital Fund, which provides public housing authorities (PHAs) with funds topay debt used to finance new developments and improvements. The capital fund program, run by the Department of Housing and Urban Development (HUD), will receive $2.78 billion, approximately a 1% increase compared to $2.75 billion in fiscal year 2018. The funding bump is credit positive for the PHA sector, coming on top of an approximately 42% increase last year after mostly flat funding from fiscal 2013-17.
Source: U.S. Government Accountability Office (GAO), GAO-19-178: Published: Jan 17, 2019. Publicly Released: Feb 5, 2019.
From the summary:
We were asked to examine the cost of 4 trips to the Mar-a-Lago resort by the President and 3 international trips by Donald Trump Jr. and Eric Trump between January and March 2017.
– that federal agencies spent about $13.6 million for the Mar-a-Lago trips. The Departments of Defense and Homeland Security incurred most of the costs—about $8.5 million and $5.1 million, respectively. This excludes certain classified cost information.
– the Secret Service spent about $396,000 protecting the President’s sons and their spouses on 3 international trips.
We recommended that agencies comply with reporting requirements for protection costs.
Source: Rebecca Karnovitz, Atsi Sheth, Madhavi Bokil, William Foster, Nicholas Samuels, Bruce Herskovics, Anne Van Praagh, Moody’s, Sector In-Depth, January 28, 2019
On January 25, US President Donald Trump signed a short-term spending bill to reopen the federal government of the United States (Aaa stable) until Feb. 15 while negotiations continue on his proposal to build a wall along the country’s southern border. If the impasse is not resolved in the next three weeks, the president said the government will either shut down again or he will use emergency powers under the US Constitution to move forward with his border security proposal. In this report, we answer some of the key questions about the credit effects of the 35-day partial government shutdown – the longest such closure in US history – and the potential ramifications of another shutdown…..
Source: Congressional Budget Office, January 2019
From the summary:
CBO estimates that the partial shutdown delayed $18 billion in federal spending and suspended some federal services, thus lowering the projected level of real GDP in the first quarter of 2019 by $8 billion (in 2019 dollars), or 0.2 percent.
Source: Congressional Budget Office, pub. no. 54918, January 2019
From the summary:
In CBO’s projections, the federal budget deficit is about $900 billion in 2019 and exceeds $1 trillion each year beginning in 2022. Because of persistently large deficits, federal debt held by the public is projected to grow steadily, reaching 93 percent of GDP in 2029.
Real GDP is projected to grow by 2.3 percent in 2019—down from 3.1 percent in 2018—as the effects of the 2017 tax act on the growth of business investment wane and federal purchases decline sharply in the fourth quarter of 2019. Economic growth is projected to slow to an average of 1.7 percent through 2023 and to average 1.8 percent from 2024 to 2029.
Source: Nicholas Samuels,Timothy Blake, Matthew Butler, Pisei Chea, Marcia Van Wagner, Maria Matesanz, Moody’s, Sector Comment, January 24, 2019
The federal government usually benefits the national capital region’s economy, driving high education and wealth levels, knowledge-based employment and providing a buffer during an economic downturn. But the partial federal shutdown, already the longest ever at five weeks, illustrates the drawbacks of the concentrated federal presence in the District of Columbia (DC) metro area, a significant contributor to the larger US economy. The DC area is absorbing the worst of the federal shutdown with missed pay for employees and private sector contractors reducing personal spending and tempering tax revenue for area governments. Federal workers will miss another payday January 25. In addition, public transit ridership has slowed, and operations at other government enterprises are experiencing disruption
Source: Saurav Sarkar, Labor Notes, January 18, 2019
What would you do if management could force you to work without pay, lock you out with no consequences, and fire you for going on strike?
That’s the situation facing 800,000 federal workers—and their unions—during the longest government shutdown in U.S. history.
Forty percent of the government’s civilian workforce besides postal workers are being deprived of money to pay for rent, gas, groceries, and car and student loan payments.
They include 420,000 workers who are being forced to work without pay and 380,000 who are locked out…..