from Renewing America

Morning Brief: White House to Detail Automatic Budget Cuts

An employee at the federal government’s printing office stacks copies of the 2013 budget (Joshua Roberts/Courtesy Reuters).

August 8, 2012

An employee at the federal government’s printing office stacks copies of the 2013 budget (Joshua Roberts/Courtesy Reuters).
Blog Post
Blog posts represent the views of CFR fellows and staff and not those of CFR, which takes no institutional positions.

More on:


President Obama signed a new law requiring his budget office to provide details on how it will implement $109 billion in automatic budget cuts for January 2013 (TheHill). The law was passed unanimously by the Senate, and by a 414-2 vote in the House, giving the Obama administration thirty days to issue its report to Congress. The budget sequestration will require $1 trillion in cuts over 10 years, and is one element of the "fiscal cliff."

The United States is set to undergo a dramatic series of spending cuts and tax increases that will slash the federal deficit by $607 billion next year and could derail the economic recovery. This CFR Backgrounder by Jonathan Masters examines the domestic and global implications of the coming fiscal showdown.

The Special Treatment of Defense Appropriations

When a military spending program is cancelled, funds are still spent, but they are "reprogrammed" to fund other pet projects of the Pentagon or congressional committeemen (WashPost). Walter Pincus argues that while other federal departments are not allowed to shield and redirect funds from cancelled programs, spending in the name of national security is always preserved, even when it is redirected far away from defensive priorities.

Debt and deficits. Read more from experts on the challenges in reducing U.S. debt.

Education and Human Capital

Some Schools Extend Academic Year

Students at some schools headed back to class in July; about 170 schools nationwide have added at least ten school days (NYT). Most institutions with extended schedules are charter schools, but some public schools are trying out the practice, particularly those that are failing. While research is unclear as to the benefit, many experts believe that disadvantaged students are the most likely to benefit, as students from low-income families are most likely to regress over the summer.

Education and human capital. Read more from experts discussing ways to improve U.S. education and immigration policies.


The Economics of Business Ownership

In Bloomberg Businessweek, economist Scott Shane argues the Small Business Administration (SBA) should limit eligibility for Small Business Innovation Research (SBIR) grants to majority American-owned small businesses. He argues this despite pointing out that economically, where a business is located is more important than who owns it. SBIR grants support early stage technologies that investors often are unwilling to gamble on, and they benefit entrepreneurs because they do not dilute ownership like equity financing, and do not have to be paid back.

In the face of persistently high unemployment, policymakers and workers look to innovation and entrepreneurship, the primary engine of U.S. job growth over the past thirty years. This CFR Backgrounder by Steven J. Markovich discusses how entrepreneurs create and finance startups and the ramifications of policies such as the JOBS Act.

How to Adapt to New Patent Rules

Beginning on March 16, 2013, the United States will award patents based upon who files first, departing from past laws that awards patents to the first person who creates the invention. provides tips on how firms can adapt to this switch from a "file-to-invent" to "first-inventor-to-file" system by accelerating patent applications to secure their rights.

Should the United States adopt a "patent box" tax incentive as several European countries have done in recent years in order to spur innovation? This Policy Initiative Spotlight by Jonathan Masters examines the issue alongside a more conventional policy, the research, and development tax credit.

Innovation. Read more on how the U.S. capacity to innovate could play a chief role in economic growth.

The Morning Brief is compiled by Renewing America contributor Steven J. Markovich.

More on: