The Fiscal Timeline of CRFB's Fiscal Roadmap Project keeps track of key economic, financial and policy developments affecting the nation's fiscal future.
March 17: Vanguard Group, one of the world's biggest asset-management firms, is betting that US securities' prices will fall.
March 16: Portugal has its debt rating cut by two "notches".
March 16: Jan Schakowsky (D-IL) introduced a proposal to raise federal taxes for very high-earners - The Fairness in Taxation Act. The proposed legislation enacts new tax brackets for income starting at $1 million and ends with a $1 billion bracket. The legislation also taxes capital gains as ordinary income for individuals with an annual income of over $1 million which raise $78 billion if enacted this year. (CRFB Commentary)
March 11: Sen. Bernie Sanders (I-VT) introduced a bill yesterday called The Emergency Deficit Reduction Act as an effort to reduce the growing budget gap. Sanders' proposal would place a surtax of 5.4 percent on income above $1 million, bringing in an estimated $50 billion per year, and also end tax expenditures directed at oil and gas companies, bringing in around $3.5 billion per year. (CRFB Commentary)
March 10:CBO released an updated version of its giant compilation of potential savings from various spending and tax options.
March 8: The Senate Budget Committee heard testimony from Erskine Bowles and Senator Alan Simpson, co-chairs of the President's Fiscal Commission. They will speak about the final report of the commission, The Moment of Truth. Additionally, Bowles and Senator Simpson will remain on Capitol Hill for an event at 2pm to launch the Moment of Truth Project.
March 7: Congresswoman Cynthia Lummis (R-WY) introduced a bill to gradually raise both the Social Security full retirement age (FRA) and early retirement age (ERA) to help shore up the program's finances for future generations. (CRFB Commentary)
March 3: Vice President Joe Biden will meet with Congressional leaders this afternoon in an effort to move forward with budget negotiations. Accompanying Vice President Biden from the White House are OMB Director Jacob Lew and Chief of Staff Bill Daley, who will meet with House Minority Leader Nancy Pelosi (D-CA), Speaker of the House John Boehner (R-OH), Senate Minority Leader Mitch McConnell (R-KY), and Senate Majority Leader Harry Reid (D-NV). (CRFB Commentary)
Feburary 25: CBO analyis of HR 1 is released, which is the bill that would fund FY 2011 for the remainder of the year which cuts the budget by $100 billion compared to Presdient Obama's request.
Feburary 17: Two year anniversary of the passage of ARRA.
Feburary 11: The President of the Atlanta Fed, Lockhart, remarked that the U.S. must "come to grips" with our fiscally unsustainable path, and called for a "bipartisan, credible long-term plan to stabilize the deficit." (CRFB Commentary)
Feburary 10: Representatives Jim Cooper (D-TN), Aaron Schock (R-IL), Mike Quigley (D-IL), and Joe Walsh (R-IL) introduced the "Federal Program Sunset Commission Act" (H.R. 606) in an effort to abolish "duplicative, unnecessary, or inefficient programs." (CRFB Commentary)
Feburary 9: House Appropriations Committee Chairman Harold Rogers (R-KY) released a preliminary proposal for cuts to the President's FY2011 budget, totaling $74 billion in savings. (CRFB Commentary)
Feburary 2: The Senate Budget Committee held a hearing on tax reform this morning.
Feburary 1: The Senate Budget Committee, led by chairman Kent Conrad (D-ND) and ranking member Jeff Sessions (R-AL), held a hearing on The Budget and Economic Outlook: Fiscal Years 2011-2021.
January 10: Concern over Belgian debt levels continues to grow, sending its bond prices tumbling.
January 10: Amid growing confidence in the US economy, Wall Street banks cut their holdings of Treasuries at the fastest rate since 2004.
January 6: Secretary of Defense Robert Gates tells Congress that over the next five years, the administration is seeking $78 billion worth of cuts to the Defense budget, on top of $100 billion in efficiencies.
January 5: The House of Representatives passes a new set of budgetary rules proposed by House Republicans. Among the changes is a transition from the PAYGO spending rule to the CUTGO rule, which differs from PAYGO in that it prohibits revenue increases from being used to offset new spending and exempts any reductions in revenue from the provision. Other changes include elimination of the "Gephardt rule", which allowed the debt ceiling to be raised automatically with the adoption of a final budget resolution, and different spending rules regarding the highway trust fund. (CRFB Commentary)
January 5: Bill Gross, Managing Director of PIMCO, warns investors about the serious potential consequences of 'mindless' U.S. deficit spending, saying that "politicians and citizens alike have no clear vision of the costs of a seemingly perpetual trillion dollar annual deficit".
December 17: The International Monetary Fund released a report saying that Ireland will need to further cut spending or raise revenue to meet its budget goals. This is partly because the IMF projects slower economic growth than Ireland is projecting.
December 17: The House of Represenatives passed the $857 billion tax deal, sending the bill to the President for his assumed signature.
December 14: S&P lowers its ratings outlook on Belgium from "stable" to "negative", warning the country that without improvement in its fiscal and political situations it could face a one-notch downgrade, possibly within 6 months.
December 8: The House of Represenatives passed a hybrid CR and Ombnibus for FY 2011. The bill included over $1 Trillion in federal funding, which was a freeze at 2010 levels.
December 6: President Obama and Congressional Republicans anounce a deal on the 2001/2003 tax cuts, the AMT, the Estate Tax, Unemployment Insuance, a Payroll Tax Holiday and various individual and business tax credits. The plan would cost between 600-800 billion. (CRFB Commentary)
December 3: The President's Fiscal Commission holds its final vote. 11 of the 18 members voted for the proposal, giving the plan a majority, but failed to recieve the needed 14 votes to make the commission officially adopt the plan.
December 1: The Federal Reserve releases documents on its action during the Fiscal Crisis.
November 29: President Obama anounces his plan for a two year freeze of all civilian federal workers, including those who work under alternative pay scales (such as those not in the G-S scale) and includes civilian workers in the Defense Department. This plan would save $60 billion over the next ten years. (CRFB Commentary)
November 24: S&P has downgraded Irish debt over fears of over-borrowing.
November 22: Ireland accepts the EU's relief package. The plan is rougly $110 billion over 3 years.
November 10: A Chinese ratings agencies downgraded US sovereign debt, from AA to A+ with a “negative outlook”. In contrast, the major global ratings agencies have not downgraded US debt from the highest credit ratings. (CRFB Commentary)
November 10 - The National Commission on Fiscal Responsibility and Reform released a draft proposal from the Co-Chairs, Erskine Bowles and Alan Simpson, for how to get control of medium and long-term deficits. (CRFB Press Release)
November 10- The Peterson-Pew Commission on Budget Reform issue their report on budget rule reform.
November 3: Fed announces second round of Quantitative Easing (QE2) saying it will purchase $600 billion in Treasury Bonds by mid 2011.
October 28: GM announced its intent to repurchase $2.1 billion in preferred stock from the Treasury Department. This would make $9.5 billion that the Treasury has received back from the company, including dividends and interest, repurchases, and repayments.
October 26: The United States is selling negative rate bonds for the first time, reflecting the strange credit atmosphere in play today,
October 22: The French Senate passed a pension reform measure. Their Senate and National Assembly must now reconcile their versions and pass identical bills before sending it to President Sarkozy.
October 21: Protests continue in France, moving into the second week over proposed pension reform and moving their retirement age from 62 from 60.
October 20: UK Chancellor of the Exchequer George Osborne unveils a proposal to cut UK government spending by £83 billion (about $130 billion) in reductions and savings over the next four years (although some of these savings had already been identified in previous weeks). They amount to an average of a 19 percent cut across all departments.
October 18: Treasury and OMB released the final deficit number for FY 2010 of $1.294 trillion. This represents 8.9 percent of GDP, a percentage point lower than last year's deficit. Much of the decrease in the 2010 deficit compared to 2009 is due to lower spending on emergency programs, mainly TARP, Fannie Mae and Freddie Mac, and deposit insurance. (CRFB Commentary)
October 15: The Social Security Trustees announced that for a second year in a row, there would be no Cost of Living Adjustment for Social Security Beneficiaries. Speaker of the House, Pelosi and President Obama came out in favor of a one-time payment of $250 to seniors. (CRFB Commentary and CRFB Press Release)
September 29: The President’s Fiscal Commission had its 5th public meeting. The meeting featured expert testimony from Dr. Paul Posner (a consultant to the Peterson-Pew Commission!) from George Mason University, Janet St. Laurent from GAO, and Patricia Dalton also from GAO on performance budgeting and eliminating wasteful spending. (CRFB Commentary)
September 28: Congressional Budget Office Director Elmendorf gave testimony to the Senate Budget Committee detailing the economic effect of various policies. He testified that extending the 2001/2003 tax cuts would have the least stimulative effect out of the various proposals CBO scored. He also points out that a full, permanent extension is more harmful fiscally and economically than a temporary one. (CRFB Commentary)
September 24: The House of Representatives passed H.R. 5297 which $30 billion lending fund that will buy equity in community banks and have them pay varying dividends based on how much they increase lending and allows the Small Business Administration to increase loans from $2 million to $5 million, fund a State Small Business Credit Initiative, and allow the exclusion of 100 percent of the sale of small business stock from capital gains taxation. The bill, as scored by CBO, will reduce the deficit by $500 million over ten years. (CRFB Commentary)
September 23: House Republicans unveiled their “Pledge to America”, that appears to, on net value, increase the deficit by extending all of the 2001/2003 tax cuts while reducing spending in other smaller ways (although not insignificant, such as reducing to pre-2008 levels for most programs.) (CRFB Commentary)
September 16: CBO sends a letter to Representative Barney Frank (D-MA) on the budgetary impact of the activities of Fannie Mae and Freddie Mac. CBO explains why it decided on a fair-value estimate of Fannie Mae and Freddie Mac and why they found it had a budgetary impact of $53 billion.
September 16: The Senate Budget Committee held a hearing on the confirmation of OMB Director Jacob Lew, who was former President Clinton’s OMB Director until 2001. He argued d that “there is no doubt that we are in an unsustainable fiscal situation right now. ” (CRFB Commentary)
September 8: Secretary of State Clinton says that our national debt “poses a national security threat in two ways: it undermines our capacity to act in our own interest, and it does constrain us where constraint may be undesirable.” (CRFB Commentary)
September 6: President Obama announces two plans that would plan to spend $50 billion next year on transportation and infrastructure—from roads to railways to airports. The proposal also includes plans for the creation of a national ‘infrastructure bank’ to attract private funding for further infrastructure improvement projects. (CRFB Commentary)
September 2: The International Monetary Fund released a paper on fiscal outlook for the G7 nations. Now is the time, they argue, to tackle the public debt problem that has been growing around the world for decades—and even though it will be difficult to do, if we don’t, we run the risk of a far worse financial crisis than what we’ve recently witnessed. (CRFB Commentary)
August 27: European Central Bank Chairmen Jean-Claude Trichet, at Jackson Hole, Wyoming, highlighted the need for “ambitious” fiscal consolidation in promoting the global economic recovery. (CRFB Commentary)
August 25: The Chairman of the Standard and Poor’s that the U.S. government will need to take steps to protect its cherished AAA credit rating. He specifically referenced the White House fiscal commission and indicated that the agency would closely watch how lawmakers deal with its recommendations due to be issued after the November elections. (CRFB Commentary)
August 24: CBO releases an updated report on how the American Recovery and Reinvestment Act impacted unemployment and job growth for the second quarter of 2010. They found that in the second quarter of 2010, ARRA funded 750,000 jobs, raised GDP between 1.7 and 4.5 percent, lowered the unemployment rate between 0.7 and 1.8 percentage points, and increased the number of employed persons between 1.4 million and 3.3 millio. (CRFB Commentary)
August 19: CBO releases its Economic and Budget Update for the fiscal year where it projected that debt will have increased to $16.1 trillion by 2020, up a trillion dollars from the previously projected $15 trillion amount. (CRFB Commentary)
August 5: The Social Security and Medicare Trustees released their annual reports on the financial status of the two programs. The Trustees’ Report shows the projected cost outlook for both Social Security and Medicare as worse than prior estimates. (CRFB Commentary and on Medicare)
July 29: Representatives Gabrielle Giffords (D-AZ) and Charles Djou (R-HI) yesterday introduced the Truth in Spending Act (H.R. 5954). The bill requires the Office of Management and Budget to review cost estimates of legislation five and ten years after it has been enacted. If the costs are higher or savings lower than initially projected, Congress must rectify the discrepancy through a fast-track legislative process. (CRFB Commentary)
July 28: The President’s Fiscal Commission held its 4th public meeting. The meeting featured testimony from Maya MacGuines, President of CRFB, and Barry Anderson, former Head of the Budget and Public Expenditures Division of OECD. (CRFB Commentary)
July 27: Senator Jon Thune (R-ND) introduced the Deficit Reduction and Budget Reform Act of 2010. The bill sets (non-security) discretionary spending limits and makes numerous changes to the budget process. The bill specifies that for every year there is a budget deficit, non-security discretionary spending is limited to the FY 2008 level adjusted for inflation. (CRFB Commentary)
July 27: CBO releases a report entitled “Federal Debt and the Risk of a Fiscal Crisis.” They found that a “growing level of federal debt would also increase the probability of a sudden fiscal crisis, during which investors would lose confidence in the government’s ability to manage its budget, and the government would thereby lose its ability to borrow at affordable rates” and “If the United States encountered a fiscal crisis, the abrupt rise in interest rates would reflect investors’ fears that the government would renege on the terms of its existing debt or that it would increase the supply of money to finance its activities or pay creditors and thereby boost inflation.” (CRFB Commentary)
July 23: OMB released its Mid-Session Review showing slightly improved deficit numbers for this year, but still an alarming outlook over the next decade. They estimate that deficits will total about $8.47 trillion over the next ten years, about a $100 billion improvement over their projections in the President's budget in February. Debt held by the public is projected to reach $18.5 trillion or 77.4 percent of GDP. (CRFB Commentary)
July 21: The OECD released a report on several fiscal scenarios and they found that if the advanced countries of the world want to return to a sustainable growth path, they must combine medium-term fiscal consolidation with long-term structural reform. (CRFB Commentary)
July 21: Fed Chairmen Bernanke testified in front of the Senate on the Fed’s Monetary Policy Report.
July 20: Representatives Gary Peters, John Adler, Jim Himes, and Peter Welch—introduced four-pronged legislation, called the REDUCE Acts, meant to reduce the national deficit by more than $70 billion over the next decade. This series of bills proposes to achieve this goal through a combination of reduced spending and the elimination of “inefficient programs and costly industry subsidies.” (CRFB Commentary)
July 19 - Moody downgrades Irish debt on fears of a weak banking system and rising debt
July 13 – Portuguese debt was downgraded by Moody’s due to high debt-to-GDP ratios and declining confidence in growth potential.
July 9 – Greece undertook major reform of its pension system in order to confront growing debt issues.
July 9 – The yield curve on US debt inverted for the first time since 2000, when it presaged a significant recession. Officials explained this movement as a flight to quality in the face of uncertain European assets.
July 8 – The IMF released a report on the fiscal situation of the United States, forecasting a slightly more pessimistic short-term future than government-released figures. However, the IMF heavily stressed the need for fiscal consolidation if the US is to restore long-term economic stability.
July 1 – The CBO released a comprehensive report on options for Social Security reform, showing that there is surely a path to sustainability somewhere in our entitlement programs, even if lawmakers must come to difficult conclusions to get there.
July 1 – The House of Representatives passed a “deeming resolution” in place of a budget. Rather than lay down how the government will spend its money, this resolution simply created a cap on the amount that the government can spend in FY2011.
June 30 – The White House Fiscal Commission held a public comment meeting for all who wished to testify. Many ideas on how to reduce the debt were presented.
June 30 - CBO released their Long-Term Budget Forecast, which shows the debt-to-GDP ratio quickly rising to unsustainable levels if bold action is not taken.
June 30 – The Dow Jones Industrial Average droped 9.97% in 2Q, its worst performance since 1Q 2009.
June 27 – The member nations of the G-20 collectively pledged to halve their deficits by 2013, despite US President Barack Obama’s encouragement to continue fiscal stimulus lest member countries risk a double-dip recession.
June 23 – Federal Open Market Committee released their most recent meeting report and declined to change the Federal Funds Rate. Through its statement, it expressed reservations about the strength of the economic recovery.
June 23 – Steny Hoyer, the majority leader of the House of Representative, gave a speech in which he made it clear that the current budget is unsustainable. Furthermore, he stressed that the only option was to put everything on the table, creating a package of both tax increases and spending cuts.
June 22 – The United Kingdom has unveiled a drastically reduced budget with billions of dollars in spending cuts and tax increases. This follows the trend of European leaders invoking austerity measures to please a bond market which is quite willing to punish irresponsible borrowers.
June 22 – Peter Orszag, the director of the Office of Management and Budget, announced that he is leaving his position.
June 17 – France and Spain announced heavy spending cuts in the face of market uncertainty over their debts. On this news, coupled with successful Spanish bond auction, the Euro gained strength against the dollar, rising from its four-year low.
June 9 – Ben Bernanke testified before Congress and devoted significant time toward the imperative need for the US to develop a sustainable fiscal course.
May 21 - The European Central Bank announced a net ouflow of investments from the eurozone of €38 billion in the month of March, the largest outflow in nearly five years. The outflow in March coincided with increased concerns in that month over the possibility of Greek default on their sovereign debt.
May 21 - Following the lead of Portugal, Spain passed cuts in public sector wages and lowered its growth outlook to more accurately reflect the economic conditions of the country. They also were looking to prove their commitment to fiscal austerity in light of the massive emergency fund that was announced a few weeks ago.
May 13 - Portugal announces a package of spending cuts and tax increases in order to prove its commitment to fiscal austerity. Included in the measure is a "crisis tax", which raises corporate, income, and value-added tax rates. (CRFB Commentary)
May 9 - The European Union surprises everyone and announces a huge €750 billion fund to protect the euro--and vulnerable eurozone countries--from collapse. About 2/3 of the cost of the fund will be provided by eurozone and EU countries, with the remaining third being picked up by the IMF.
May 9 - The Federal Reserve restarts currency swap facilities with the Bank of Canada, the Bank of England, and the Swiss National Bank. The move is a response to the recent turmoil in the European financial markets. (CRFB Commentary)
May - Congress continues to not move to pass a budget resolution, making it extremely likely that one will not be passed at all this year. Not producing any sort of budget resolution would be unpredecented since the 1974 Budget Act.
April 27 - Standard and Poor's credit rating agency downgrades Greece's short-term and long-term debt to junk status, warning investors of falling odds for getting money back from Greek bonds. S&P also further downgrades Portugal's debt (CRFB Commentary)
April 21 - The IMF releases its latest World Economic Outlook, forecasting global growth of around 4.2 percent in 2010. However, IMF economists say that government debt levels in developed economies could throw the recovery off track and advocate for fiscal consolidation in ther U.S., Europe, and Japan to stabilize and reduce debt (CRFB Commentary)
April 21 - Chairman of the Senate Budget Committee Kent Conrad (D-ND) released his Chiarman's Mark of a FY2011 budget resolution, reducing the deficit to 3 percent of GDP by 2015, below the 4.3 percent 2015 deficit under policies in the President's FY2011 budget (CRFB Analysis)
April 21 - Fitch credit rating agency warns Japan that its sovereign debt rating would be at risk unless the country experiences a sustained economic recovery and adopts fiscal consolidation measures. Fitch current rates Japan as AA-, the fourth highest level
April 20 - With debt levels nearing 200 percent of GDP in Japan, lawmakers in the country begin to consider debt targets in response to concerns that markets sentiments over Japan's debt could worsen, thereby causing interest rates to rise and economic output to fall. Options on the table include reaching primary budget surpluses by 2021 or cut overall deficit to 3 percent by 2021 (CRFB Commentary)
April 15 - Greece, responding to market pressures, sends a letter to the European Commission, expressing that Athens wants to discuss a multi-year $40 billion program with the ECB and IMF. The actions ends weeks of speculation that the IMF would be involved in a Greek rescue package and sets in motion the first bailout for the country
March 26 - The President signs into law H.R. 4938, which targets small business loan problems. The new law would extend temporary authority in the administration's first stimulus bill (the American Recovery and Reinvestment Act or ARRA) through April 30, 2010. The government can continue to guarantee up to 90 percent of loans in the section 7(a) Loan Program of the Small Business Administration (SBA). Previously appropriated funds can cover costs of temporary fee reductions and eliminations and increased guarantees authorized under ARRA for specific SBA loan programs.
March 25 - In the last step before the legislative activity on major health care reform is finished, Congress uses the budget reconciliation process to adopt final changes to the bill previously enacted by both chambers (March 21) and signed by the President (March 23). These changes plus the previously enacted legislation constitute the final health care reform package.
March 24 - Fitch, a leading credit ratings agency, downgrades Portugal's long-term debt from AA to AA- and puts the long-term outlook as negative. While Fitch received Portugal's recently announced fiscal consolidation plans relatively positively (it called them "broadly credible"), it is concerned is that because its deficit reduction is back-loaded, the fiscal outcome might be weaker than expected if economic recovery is slower than forecast. Portugal is considered to be in a weaker position (referred to as less "debt tolerant") than other high grade sovereigns in the AA class because of its lower GDP per capital and trend growth, limited by structural problems in the economy and widespread indebtedness. In public finance, the general government deficit last year was 9.3 percent of GDP, well above Fitch's forecast, and well above the 3 percent deficit/GDP target required for EU countries. Fitch estimates that if Portugal achieves the budget target of 3 percent of GDP in 2013, its debt/GDP will peak at 90 percent that year.
March 23 - President Obama signs the Health Care Reform bill ("The Patient Protection and Affordable Care Act", or P.L. 111-148). A few days later (March 25), final changes are passed in the form of a reconciliation bill. According to the CBO, the new health care reform law will reduce fiscal deficits by $143 billion over its first decade and by over $1 trillion in the second, when compared to the fiscal path that would have occurred without health care reform. (Useful CRFB Charts)
March 22 - Bloomberg News reports that in February, interest rates on two-year U.S. Treasury bonds were higher than yields on bonds issued by several companies, including Berkshire Hathaway, Procter & Gamble, Johnson & Johnson, and Lowe's Cos, in what was called an "exceedingly rare" event in the history of bond markets. Analysts are concerned that investors may be increasingly nervous about U.S. sovereign debt risk, including the markets' interest in and ability to digest huge government funding needs as the global economy picks up and other large sovereign desbors go to market. It is difficult now to distinguish between a return to normal market conditions and an uptick in risk with the massive sovereign debt supply. (Blog)
March 21 - Speaking at the China Development Forum, First Deputy Managing Director of the IMF, John Lipsky, warned that advanced economies face "acute" challenges in addressing high levels of public debt, and that unwinding existing stimulus measures will "not come close to bringing deficits and debt ratios back to prudent levels, considering the projected increases in health care and other entitlement spending"
March 18 - President Obama signs the Hiring Incentives to Restore Enmployment Act, creating a temporary tax break for employers who hire previously unemployed workers, among other smaller provisions. Overall, the bill reduced the deficit by $1 billion (Stimulus Tracker)
March 11 - Standard and Poor's lowers its ratings on many residential mortgage-backed securities issued in 2005 and 2006
March 11 - Standard and Poor's warns in a report that the U.S. faces a potential credit downgrade unless the country adopts a medium-term fiscal consolidation plan, citing risks that "external creditors could reduce their U.S. dollar holdings, especially if they conclude that eurozone members are adopting stronger macroeconomic policies." The reports states that this could ultimately reduce the dollar's role as the world's reserve currency and affect the triple A rating of the U.S.
March 8 - Yi Gang, Director of the State Administration of Foreign Exchange who is in charge of managing China's $2.4 trillion foreign exchange reserves, says that China will continue to purchase U.S. Treasury Bonds, stating that the U.S. bond market is the largest in the world and that given the size of China's foreign reserves it is an important market. Yi also maintains that "it is market investor behavior, and I don't want it to be politicized. We are a responsible investor, and we can surely acheive a win-win result in the process of investing."
March 4 - Moody's downgrades the credit ratings of seven state-linked entities in Abu Dhabi by between one and three notches.
March 2 - President Obama signs the Temporary Extensions Act of 2010, extending unemployment insurance benefits, COBRA health subsidies, and other policies for another month, at a total cost of about $10 billion. (Stimulus Tracker)
February 23 - The Treasury Department announces that it will return the Supplementary Financing Program (SFP) to its level between February and September 2009, which will mean increasing it from its current level of $5 billion to $200 billion through a series of additional Treasury auctions. The SFP is the temporary funding program created September 17, 2008, at the request of the Federal Reserve to provide it with additional resources for funding and balance sheet management. (SFP chart)
February 23 - The FDIC releases its Quarterly Banking Profile, reporting that in December 2009 the deposit insurance fund (DIF) balance fell to -$20.85 billion while DIF-insured deposits rose to $5.39 trillion. The profile also reported that total assets of the 8,012 FDIC-insured institutions decreased by $132.2 billion in the fourth quarter of 2009, but that total deposits increased by $125.7 billion. The report also notes that the number of "problem banks" increased from 552 at the end of September to 702.
February 23 - CBO Director Douglas Elmendorf testifies on Policies for Increasing Economic Growth and Employment in the Short-Term before the Joint Economic Committee, citing increased aid for the unemployed and payroll tax credits for employers as providing the largest short-term potential bang-for-the-buck
February 22 - The White House releases the President's health care reform proposals two days before the President holds a summit on the health care reform bill with Congressional leaders.
February 19 - The Fed's increase in its primary credit rate (the discount window) from 0.5% to 0.75% takes effect.
February 18 - The President signs an Executive Order establishing the National Commission on Fiscal Responsibility and Reform. According to the Executive Order, the task of the Commission is to come up with recommendations to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run. More specifically, the Commission is asked to come up with recommendations to balance the budget excluding interest payments on the debt (the primary fiscal balance) by 2015. With these steps, the White states that the debt-to-GDP ratio is expected to be stabilized at an "acceptable level" once the economy recovers. The Commission is also charged with recommending steps to improve the long-run fiscal outlook, including changes to address entitlement spending growth and other factors resulting in our large fiscal deficits. The Commission is scheduled to vote on its recommendations no later than December 1, 2010. Former Senator Alan Simpson (R-Wyoming) and Erskine Bowles, former chief of staff for President Clinton, were named co-chair. (CRFB Position)
February 18 - Fed announces an increase in the primary credit rate, known the "discount rate," from 0.5% to 0.75%, effective February 19. According to the Fed, the purpose of the increase was to start normalizing the spread with the federal funds target rate (traditionally, its main monetary policy tool) as the Fed continues its exit strategy from its extraordinary activities to stabilize the economy and financial sector.
February 16 - European Union finance ministers and other leaders announced that Greece is "asked" to report by March 16 on its timetable for implementing budget measures in 2010. Greece was asked to adjust its budget by at least 4% of GDP this year. Greece's stability program commits it to fiscal deficit reduction below 3% (the Maastricht Treaty value) by 2010. Greece's current fiscal position is considered unsustainable.
February 16 - Thomas Hoenig, President of the Federal Reserve Bank of Kansas City, discussed concerns about our large fiscal deficits and debt and potential problems for monetary policy in a talk ("Knocking at the Central Bank's Door") at the event "Avoiding a Government Debt Crisis" held by the Peterson-Pew Commission on Budget Reform.
February 12 - IMF floats the idea of a 4 percent inflation target, instead of 2 percent, in a Staff Position note entitled "Rethinking Macroeconomic Policy."
February 5 - The Bureau of Labor Statistics announces that the unemployment rate fell from 10% in December to 9.7 percent in January.
February 4 - The IMF releases a report, Exiting from Crisis Intervention Policies, arguing that as the crisis winds down, it is more important than ever for policymakers around the world to develop and implement exit strategies for policies enacted to combat the crisis. According to the report, the strategic goal should now be to reverse the rise in debt, not just stabilize it at pre-crisis levels.
February 1 - The Commerical Paper Funding Facility, Money Market Mutual Fund Liquidity Facility, Primary Dealer Credit Facility, and Term-Securities Lending Facility all expire, as previously indicated by the Fed. These facilities were among the extraordinary liquidity instruments created by the Fed to stabilize the economy and financial sector. Together, these four facilities added roughly $850 billion in liquidity during their peak lending levels in the fall of 2008. According to the Fed, the expiration of the facilities is part of the Fed's exit strategy, to gradually return Fed policy to normal and withdraw crisis-related liquidity. (Blog)
Janauary - Represenative Paul Ryan (R-WI) releases an updated version of his Roadmap which reforms Social Security, Medicare, Medicaid and eventually balances the budget.
January 28 - The Senate reconfirms Ben Bernanke for a second term as Chairman of the Fed.
January 27 - Douglas Elmendorf, Director of the Congressional Budget Office (CBO), testifies before the House Budget Committee on the CBO's annual "Budget and Economic Outlook" publication, released January 27.
January 26 - The Senate rejects a bipartisan proposal from Senators to establish a budget commission to address the nation's mounting long-term debt.
January 26 - The Congressional Budget Office releases its annual "Budget and Economic Outlook: Fiscal Years 2010 - 2020", which provides (along with the Office of Management and Budget) one of the two official baselines used by Congress to evaluate changes from "current policy" in the President's new budget proposals. The CBO projects that if current policies are not changed, the budget deficit for this fiscal year (FY 2010) would be $1.3 trillion (9.2% of GDP), only slightly smaller than last year's ($1.4 trillion or 9.9% of GDP). Beyond FY 2010, projected deficits would be over $600 billion as far as the eye can see. As a percentage of GDP, deficits would be smaller but remain above 4% in the next few years. Once the economy recovered, deficits would range between 2.6 and 3.2% of GDP. The large deficits would push federal debt held by the public from 53% at the end of 2009 to 67% by the end of 2020. Until the economic and financial crisis hit, debt held by the public had averaged around 40% for many years. CBO also produces an alternative baseline (called its "current policy" baseline), which shows its judgment of a more likely fiscal future related to the expiration of "current law". (Its central "current law baseline" is required by law, but requires assumptions that may not be the most plausible, particularly related to the extention of current law.) CBO estimates if key current laws are extended as expected, the fiscal picture will be far worse. (CRFB Overview Paper)
January 26 - To warn the Japanese government that it should get its fiscal house in order, the ratings agency Standard & Poor's revises downward its long-term debt outlook for Japan from "stable" to "negative". (At the same time, it reaffirms Japan's associated credit rating at AA because of the country's economic strengths - including its huge net external assets.) The outlook downgrade reflects S&P's concern that the Japanese government will undertake slower fiscal consolidation over the medium-run than expected, even though Japan has one of the highest debt burdens among industrialized countries. (Net general government debt is forecast to be around 100% of GDP at the end of the fiscal year March 31.) For U.S. taxpayers, the Japanese situation illustrates the importance of solid fiscal management by the government. Deterioration in a country's credit rating can increase the cost to taxpayers of raising funds on capital markets.
January 21 - President Obama proposes new limits on commercial bank funding and restrictions on certain investment and trading activites by commercial banks, including hedge and equity fund ownership and proprietary trading unrelated to customer needs. The President dubbed his proposals the "Volcker rule" after former Fed Chairman Paul Volcker, who has been pushing for reforms along this line since heading up recommendations published by the Group of Thirty. His proposals attempt to address concerns about limiting future taxpayer exposure to risky bank activities in the aftermath of the economic and financial crisis. These proposals are expected to be fleshed out in Congressional legislation and/or bank regulatory proposals.
January 13 and 14 - The Financial Crisis and Inquiry Commission (FCIC) holds its first hearings on Capitol Hill. The bipartisan group, comprised of 10 prominent experts and political leaders, was established by Congress in 2009 legislation to explore the causes of the economic and financial crisis, which has cost taxpayers massive resources to address. Its public report is due December 15, 2010.
January 8 - According to the Department of Labor's Bureau of Labor Statistics, the unemployment rate for December was unchanged at 10% and the number of jobs continued to fall, although at a slower pace. The number of unemployed was 15.3 million, more than double the number at the start of the recession in December 2007. If discouraged workers and people involuntarily working part-time are included, one out of every five Americans in the working population is underemployed. The duration of unemployment has risen. Taken together, these elements suggest that there is a structural problem that cannot be addressed easily by fiscal stimulus.
December 30 - FDIC collects $46 billion from depository member banks from 13 quarters of advanced collection of deposit insurance fees
December 28 - The national debt ceiling increases by $290 billion, from a record $12.104 trillion to a record $12.394 trillion, as a result of legislation approved by Congress and approved by the President (HR 4314). The increase is expected to allow federal government operations to be funded until a larger and longer lasting increase in the ceiling is adopted, anticipated in late January or early February 2010. (Background Paper)
December 22 - Real GDP rose by 2.2% in the 3rd quarter (final estimate), the first positive growth since the 2nd quarter of 2008.
December 22 - Moody's downgrades Greece from A2 to A1.
December 16 - The House passes a Jobs for Main Street Bill, including additional unemployment assistance, COBRA funding, infrastructure spending, and a $150 billion recission in TARP's buget authority, for a total increase in 10-year deficits of $64.9 billion. (Blog)
December 8 - Moody's warns that the U.K. and U.S. may face a downgrading of their Aaa soverign credit ratings because of their national debt loads, and distinguishes them from other industrialized countries rated Aaa which are in stronger fiscal positions. (Canada, France and German are called "resistant" but the US and UK are "resilient".) According to Moody's. the U.S. should adopt a credible fiscal consolidation strategy to prevent a downgrading.
December 4 - According to the Labor Department's Bureau of Labor Statistics, the unemployment rate edged down from 10.2% in October to 10% in November. While the rate showed improvement, it remained at a high level and may have reflected discouraged workers leaving the workforce. Job creation remained weak. (Blog)
November 12 - FDIC adopts a rule to require banks to pay at the end of 2009 the amount they would owe the FDIC for insurance premiums over the next three years. This rule change will collect $45 billion from banks to help shore-up the severely depleted deposit insurance fund (CRFB Blog)
November 8 - Chinese premier Wen Jiabao again expresses concern over U.S. debt, stating: "Most importantly, we hope the U.S. will keep its deficit at an appropriate size so that there will be basic stability in the exchange rate and that it is conducive to the stability and recovery of the world economy."
November 6 - President Obama signs "The Worker, Homeownership, and Business Assistance Act of 2009", extending unemployment benefits, the homebuyer tax credit, and net carryback loss from the broad-based stimulus bill adopted earlier in the year ("HR 1, The American Reinvestment and Recovery Act"). (CRFB Stimulus Tracker)
November 6 - The Labor Department's Bureau of Labor Statistics reports that unemployment for October 2009 jumped from 9.8% to 10.2%. This is the first time the unemployment rate passed 10% since June 1983. (CRFB Blog)
October 15 - Social Security Administration announces, for the first time since automatic cost-of-living-adjustments (COLAs) began in 1975, there will be no COLA for 2009, given an overall decrease in prices throughout the economy (CRFB Press Release)
October 14 - The Dow Jones Industrial Average closes above 10,000 for the first-time since October 2008.
October 12 - Treasury and Office of Management and Budget (OMB) release final budget results for FY 2009 (which ended September 30, 2009). In FY 2009, the US hit a record $1.417 trillion deficit (10% of GDP), over triple the previous year ($455 billion in FY 2008), which had been the previous record high; and debt held by the public reaching 47.2% of GDP, excluding financial assets. (Note: In the later annual "Budget and Economic Outlook", published on January 26, 2010, the Congressional Budget Office estimates the actual FY 2009 deficit at 9.9% of GDP and debt held by the public - including financial assets - at 53% of GDP.) (CRFB Review of Final Monthly Statement)
October 13 - The EU issues a warning to nine countries (Austria, Belgium, the Czech Republic, Germany, Italy, the Netherlands, Portugal, Slovakia, and Slovenia) about excessive budget deficits. Under European Union rules, member countries must keep budget deficits to under 3% of GDP
October 6 - Australia becomes the first country G-20 country to raise interest rates in over a year, increasing the cash rate by 25 basis points to 3.25%
September 22 - The IMF releases a staff position note, A Strategy for Renormalizing Fiscal and Monetary Policies in Advanced Eocnomies (written by Carlo Cottarelli and Jose Vinals), discussing issues surrounding inflation and large debt accumulation after the crisis subsides
August 25 - OMB releases Mid-Session Review, predicting a $1.55 trillion deficit and debt held by the public to reach 55.4% of GDP for FY 2009. Deficits of $9.1 trillion over the next ten years were also projected. (CRFB Comparison)
August 25 - President Obama nominates Ben Bernanke for a second term as Federal Reserve Chairman.
August 14 - BLS reports that the CPI declines by 2.1% from July 2008 to July 2009, the largest twelve month decrease since January 1950
July 28 – At the U.S.-China Strategic and Economic Dialogue, Chinese officials continue to express concerns over U.S.’s increasing debt while the Obama Administration conveyed its intent to lower the debt after the economic crisis.
July 23 - Fed proposes regulatory changes that would require lenders to provide information to consumers about interest rates in closed-end and adjustable rate mortgages.
June 25 - The Federal Reserve extends the expiration date of many of its liquidity programs to February 1, 2010.
June 24 – U.S. adds $75 billion in SDR’s at the IMF to buffer existing reserves.
May 28 – Debt held by the public reaches $7 trillion.
May 13 - The EU issues a warning to four countries (Lithuania, Malta, Poland, and Romania) about excessive budget deficits. Under European Union rules, member countries must keep budget deficits to under 3% of GDP.
May 7 - The ECB cuts the main policy rate by 25 basis points, from 1.25% to 1.0%.
April 2 - The ECB cuts the main policy rate by 25 basis points, from 1.5% to 1.25%.
March 26 – The Treasury outlines a framework for comprehensive regulatory reform that focuses on containing systemic risks in the financial system
March 16 – Total public debt reaches $11 trillion
March 13 – Chinese premier Wen Jiabao says he is “worried” about China’s $1 trillion in U.S. Treasury bonds and other debt
March 5 - The ECB cuts the main policy rate by another 50 basis points, from 2.0% to 1.5%
February 27 - BEA reports that GDP growth was -6.2% in the 4th quarter of 2008, the largest decline since the first quarter of 1982
February 26 - FDIC reports that there were twenty-five bank failures in 2008, the largest annual total since 1993
February 18 - The EU issues a warning to six countries (Ireland, Greece, Spain, France, Latvia, and Malta) about excessive budget deficits. Under European Union rules, member countries must keep budget deficits to under 3% of GDP.
February 17 – President Obama signs the $787 billion American Recovery and Reinvestment Act, which, among many other things, increases the debt ceiling by $789 billion to $12.1 trillion (CRFB Analysis and February 2010 Update)
January 15 - The European Central Bank (ECB) cuts the policy rate by 50 basis points, from 2.5% to 2.0%
December 16 – Fed reduces interest rate from 1% to a target range of 0-0.25%
December 4 - The ECB cuts the main policy rate by 75 basis points, from 3.25% to 2.5%
December 3 - The SEC approves measures to “increase transparency and accountability” at credit rating agencies.
December 1 – NBER announces that the official beginning of the recession was December 2007, ending an expansion that lasted 73 months
November 23 - The Fed, Treasury, and the FDIC extend government assistance to Citigroup in the form of a guarantee of $301 billion in assets
November 10 – TARP purchases $40 billion in AIG stock. (CRFB Stimulus Tracker)
November 10 - China enacts $586 billion stimulus package to help spur growth
November 6 - The ECB cuts the main policy rate by 50 basis points, from 3.75% to 3.25%
October 29 – Fed reduces interest rate from 1.5% to 1%
October 28 - Consumer confidence hits an all-time low
October 12 - Purchase of Wachovia by Wells Fargo is approved
October 10 – Debt held by the public reaches $6 trillion
October 10 – Treasury and OMB release final budget results for FY 2008, showing a $455 billion deficit (3.2% of GDP) and debt held by the public reaching 40.8% of GDP
October 8 - Fed reduces interest rate from 2% to 1.5%
October 6 – Fed begins paying interest on required and excess bank reserves
October 3 - FDIC increases its deposit insurance coverage from $100,000 to $250,000
October 3 – President Bush signs the Emergency Economic Stabilization Act of 2008, which creates the TARP. The Act also increases the debt ceiling by $700 billion to 11.3 trillion (CRFB Analysis of TARP)
October 7-21 - Fed creates several additional new lending facilities
September 30 – Total public debt reaches $10 trillion.
September 25 – Washington Mutual fails, at a total estimated cost to the FDIC of $9 billion. (CRFB Stimulus Tracker)
September 17 – At the request of the Federal Reserve, the Treasury Department creates the "temporary" Supplemental Financing Program (SFP) to help fund the Fed’s crisis-related lending and liquidity actions and to help the Fed manage the balance sheet impact of its actions. SFP funds will be raised by a series of Treasury auctions.
September 16 - Fed creates individual line of credit for AIG.
September 15-19 - Fed creates first wave of new lending facilities to add liquidity in financial markets.
September 15 – Bank of America announces intent to purchase Merrill Lynch for $50 billion.
September 15 – Lehman Brothers files for Chapter 11 bankruptcy protection.
September 15 - AIG debt downgraded by all three major credit rating agencies.
September 7 – FHFA and Treasury announce that Fannie Mae and Freddie Mac will be place into a conservatorship and that the Treasury will begin purchasing preferred stock in and mortgage-backed securities from the GSE’s.
July 30 – President Bush signs the Housing and Economic Recovery Act of 2008, authorizing the Treasury to purchase GSE obligations and creates the FHFA. The Act also increases the debt ceiling by $800 billion to $10.6 trillion (CRFB Paper on the Debt Ceiling)
July 13 - The Fed authorizes lending to Fannie Mae and Freddie Mac at the primary credit rate
July 11 – IndyMac Bank fails at an estimated cost to the FDIC of $10.7 billion
June 5 - The Fed approves the acquisition of Countrywide by Bank of America.
April 30 – Fed reduces interest rate from 2.25% to 2%
March 18 – Fed reduces interest rate from 3% to 2.25%
March 14 - The Fed approves the JP Morgan acquisition of Bear Stearns.
March 11 - The Fed creates the Term Securities Lending Facility to lend up to $200 billion in Treasury securities.
February 13 – President Bush signs $114 billion Economic Stimulus Act of 2008
January 30 – Fed reduces interest rate from 3.5% to 3%
January 22 – Fed reduces interest rate from 4.25% to 3.5%
January 11 - Bank of America announces that it will buy Countrywide.
December 11 - The FOMC reduces the federal funds rate to 4.25%
October 31 - The FOMC reduces the federal funds rate to 4.5%
October 11 - Treasury and OMB release final Budget results for FY 2007, showing a $163 billion deficit (1.2% of GDP) and debt held by thepublic falling to 36.9% of GDP
September 18 - The FOMC reduces the federal funds rate to 4.75%
August 31 - Total public debt reaches $9 trillion
August 6 - American Home Mortgage Investment Corporation files for bankruptcy
March 1 - Debt held by the public reaches $5 trillion
February 27 - Freddie Mac announces it will no longer buy the most risky subprime mortgages and mortgage-related securities
December 8 - President Bush signs the Medicare Prescription Drug, Improvement and Modernization Act, creating Medicare Part D benefits for prescription drugs
May 28 - President Bush signs the Jobs and Growth Tax Relief Reconciliation Act of 2003, accelerating many tax changes under EGTRRA and also lowering taxes on income from dividends and capital gains
June 6 - President Bush signs the Economic Growth and Tax Relief Reconciliation Act (EGTRRA), significantly lowering many tax rates over a roughly decade-long period. The tax cuts was originally estimated to cost $1.35 trillion over 10 years. The bill represented the first major tax cut in 20 years, cutting tax rates across the board. The lowest rates were reduced from 15 to 10% and the highest rates were slashed from 39.6 to 35%
Other Recommended Timelines of the Economic and Financial Crisis