More About Richard Kogan

Richard Kogan

Richard Kogan rejoined the Center in May 2011 after having served as a Senior Adviser at the Office of Management and Budget since January 2009. During his second tour at the Center, from 2001 to 2009, he served as a Senior Fellow specializing in federal budget issues, including aggregate spending, revenues, surpluses and deficits, and debt. Kogan is also an expert in the congressional and executive budget processes and budget accounting concepts.

Full bio and recent public appearances | Research archive at CBPP.org


History Suggests Ryan Block Grant Would Be Susceptible to Cuts

July 28, 2014 at 2:47 pm

At the heart of House Budget Committee Chairman Paul Ryan’s new poverty plan is a block grant — called the “Opportunity Grant” — that would consolidate 11 disparate low-income programs, the largest being SNAP (formerly food stamps).  Ryan says that the block grant would maintain the same overall funding as the current programs.  But even if one thought that current-law funding levels were adequate, they likely wouldn’t be sustained over time under the Ryan proposal:  history shows that block grants that consolidate a number of programs or may be used for a wide array of purposes typically shrink — often very substantially — over time.

The table below shows 11 major block grant programs created in recent decades.  Eight of them have shrunk since their inception, in some cases sharply.  (Our analysis accounts for the effect of inflation.)

Block grants’ very structure makes them vulnerable to cuts.  Block grants generally give state and local governments more flexibility in how to use funds, leading to varied approaches for achieving program goals.  But this variety makes it hard to see how changes in funding levels affect beneficiaries, or even to be sure how the money is being used.  That, in turn, makes it easier for policymakers looking for savings to target block grants rather than other benefit programs for long-term freezes or cuts.  Block grants in general have fared poorly in the competition for resources.

Balanced Budget Amendment Likely to Harm the Economy

July 16, 2014 at 4:21 pm

A number of states may soon call for a convention to amend the U.S. Constitution to require that the federal budget be balanced every year.  But a convention would pose serious risks, and a balanced budget requirement would be a highly ill-advised way to address the nation’s long-term fiscal problems.  It would threaten significant economic harm while raising a host of problems for the operation of Social Security and other vital federal functions, as we explain in a new paper.

By requiring a balanced budget every year, no matter the state of the economy, such an amendment would risk tipping weak economies into recession and making recessions longer and deeper, causing very large job losses.  Rather than allowing the “automatic stabilizers” of lower tax collections and higher unemployment and other benefits to cushion a weak economy, as they now do automatically, it would force policymakers to cut spending, raise taxes, or both when the economy turns down — the exact opposite of what sound economic policy would advise.  Such actions would launch a vicious spiral:  budget cuts or tax increases in a recession would cause the economy to contract further, triggering still higher deficits and thereby forcing policymakers to institute additional austerity measures, which in turn, would cause still-greater economic contraction.

For example, in 2011 one of the nation’s preeminent private economic forecasting firms concluded that if a constitutional balanced budget amendment had been ratified and were being enforced for fiscal year 2012, “[t]he effect on the economy would be catastrophic.”  If the 2012 budget were balanced through spending cuts, the firm found, those cuts would throw about 15 million more people out of work, double the unemployment rate from 9 percent to about 18 percent, and cause the economy to shrink by about 17 percent instead of growing by an expected 2 percent.

The fact that states must balance their budgets every year — no matter how the economy is performing — makes it even more imperative that the federal government not also face such a requirement and thus further impair a faltering economy.

Such a constitutional requirement — which would be notably more restrictive than the behavior of the most prudent states or families — would also cause a host of other problems.  Requiring that federal spending in any year be offset by revenues collected in that same year would undercut the design of Social Security, deposit insurance, and all other government guarantees.  And it would raise troubling questions about enforcement, including the risk that the courts or the President might be empowered to make major, unilateral budget decisions, undermining the checks and balances that have been a hallmark of our nation since its founding.  It is not a course that the nation should follow.

Click here to read the full paper.

Budget Should Show Federal Loan Programs’ Actual Cost

May 27, 2014 at 2:36 pm

A new Congressional Budget Office (CBO) report compared the cost of three federal loan programs under standard accounting rules and a “fair-value” alternative, which imposes an added cost based on the extra amount that private lenders would charge if they issued the loans or loan guarantees.  We view this report as a useful reminder that by making these programs appear to cost more than the government is expected to actually spend on them, fair-value accounting would distort budgeting, putting loan programs at an unfair disadvantage relative to other programs.  (The key loan programs at risk are listed here.)

Fair-value accounting adds a penalty, on top of the regular cost estimate, based on the fact that private-sector investors are loss-averse:  they dislike losses (in this case, the possibility of higher-than-expected loan defaults) more than they like gains (the possibility of lower-than-expected defaults).  For the three programs it examined, CBO estimated that such a loss-aversion penalty would average $22 billion per year for federal student loans, $9 billion per year for single-family mortgages guaranteed by the Federal Housing Administration (FHA), and less than $2 billion per year for the Export-Import Bank’s loans, guarantees, and insurance.

With these loss-aversion penalties, the three programs would appear to lose rather than make money for the federal government.  (CBO’s new estimates of these loss-aversion penalties is somewhat smaller than its estimates of last year.)

CBO currently thinks that adding loss-aversion penalties is a good idea, but former CBO Director Robert Reischauer shares our strong opposition.  (Our short paper and in-depth analysis provide more details on the problems with fair-value accounting.)  Whether one favors or opposes some or all federal credit programs, it is wrong in principle to add non-existent costs to the budget, which — as my colleague Paul Van de Water recently blogged — “would untether the budget from reality.”

Ryan Budget Gets 69 Percent of Its Cuts From Low-Income Programs [Updated]

April 10, 2014 at 5:10 pm

Some 69 percent of the cuts in House Budget Committee Chairman Paul Ryan’s new budget would come from programs that serve people of limited means, our recently released report finds.  These disproportionate cuts — which likely account for at least $3.3 trillion of the budget’s $4.8 trillion in non-defense cuts over the next decade — contrast sharply with the budget’s rhetoric about helping the poor and promoting opportunity.

The low-income cuts fall into five categories:

  • Health coverage.  The Ryan budget has at least $2.7 trillion in cuts to Medicaid and subsidies to help low- and moderate-income people buy private insurance.  Under the Ryan plan, at least 40 million low- and moderate-income people — that’s 1 in 8 Americans — would become uninsured by 2024.
  • Food assistance.  The Ryan budget cuts SNAP (formerly food stamps) by $137 billion over the next decade.  It adopts the harsh SNAP cuts that the House passed last September — which would force 3.8 million people off the program in 2014, according to the Congressional Budget Office — and then converts SNAP to a block grant in 2019 and imposes still-deeper cuts.
  • Help affording college.  The Ryan budget cuts Pell Grants for low- and moderate-income students by up to $125 billion through such means as freezing the maximum grant (which already covers less than a third of college costs) for ten years, cutting eligibility in various ways, and repealing all mandatory funding for Pell Grants.
  • Other mandatory programs serving low-income Americans.  The Ryan budget cuts an additional $385 billion — beyond its SNAP cuts — from the budget category containing many mandatory programs for low- and moderate-income Americans, such as Supplemental Security Income for the elderly and disabled, the school lunch and child nutrition programs, and the Earned Income and Child Tax Credits for lower-income working families.  We estimate that about $150 billion of these cuts would fall on such low-income programs, as explained in the final paragraph of this blog.
  • Low-income discretionary programs.  The Ryan budget cuts these programs by about $160 billion, on top of the cuts already enacted through the 2011 Budget Control Act’s discretionary caps and sequestration.

Our estimates are likely conservative.  In cases where the Ryan budget cuts funding in a budget category but doesn’t distribute that cut among specific programs — such as its cuts in non-defense discretionary programs and its unspecified cuts in mandatory programs — we assume that all programs in that category, including programs not designed to assist low-income households, will be cut by the same percentage.

Ryan Budget Gets 69 Percent of Its Cuts from Low-Income Programs

April 3, 2014 at 3:54 pm

Update, April 10: This blog post has been updatedClick here for the full analysis of the cuts to programs serving people with low or moderate incomes in Chairman Ryan’s budget.

Some 69 percent of the cuts in House Budget Committee Chairman Paul Ryan’s new budget would come from programs that serve people of limited means, our forthcoming report finds.  These disproportionate cuts — which likely account for at least $3.3 trillion of the budget’s $4.8 trillion in non-defense cuts over the next decade — contrast sharply with the budget’s rhetoric about helping the poor and promoting opportunity.

The low-income cuts fall into five categories:

  • Health coverage.  The Ryan budget has at least $2.7 trillion in cuts to Medicaid and subsidies to help low- and moderate-income people buy private insurance.  Under the Ryan plan, at least 40 million low- and moderate-income people — that’s 1 in 8 Americans — would become uninsured by 2024.
  • Food assistance.  The Ryan budget cuts SNAP (formerly food stamps) by $137 billion over the next decade.  It adopts the harsh SNAP cuts that the House passed last September — which would force 3.8 million people off the program in 2014, according to the Congressional Budget Office — and then converts SNAP to a block grant in 2019 and imposes still-deeper cuts.
  • Help affording college.  The Ryan budget cuts Pell Grants for low- and moderate-income students by up to $125 billion through such means as freezing the maximum grant (which already covers less than a third of college costs) for ten years, cutting eligibility in various ways, and repealing all mandatory funding for Pell Grants.
  • Other mandatory programs serving low-income Americans.  The Ryan budget cuts an additional $385 billion — beyond its SNAP cuts —from the budget category containing many mandatory programs for low- and moderate-income Americans, such as Supplemental Security Income for the elderly and disabled, the school lunch and child nutrition programs, and the Earned Income and Child Tax Credits for lower-income working families.  We estimate that at least $250 billion of these cuts would fall on such low-income programs, as explained in the final paragraph of this blog.
  • Low-income discretionary programs.  The Ryan budget cuts these programs by about $250 billion, on top of the cuts already enacted through the 2011 Budget Control Act’s discretionary caps and sequestration.

Our estimates are likely conservative.  In cases where the Ryan budget cuts funding in a budget category but doesn’t distribute that cut among specific programs — such as its cuts in non-defense discretionary programs and its unspecified cuts in mandatory programs — we assume that all programs in that category, including programs not designed to assist low-income households, will be cut by the same percentage.