Line Items: Back in Business Edition
Shutdown Smackdown – The shutdown ended and a default was averted last week, but the fallout continues as voters express their displeasure with lawmakers through record-low approval ratings. A new poll says that 64 percent of Americans are pessimistic about Congress’ ability to deal with issues down the road because of the shutdown and debt ceiling fiasco. That could change if a budget deal can be reached that addresses our fiscal challenges and breaks the cycle of governing from crisis to crisis. However, voters aren’t hopeful that will happen; another poll says 72 percent aren’t optimistic that Washington will be able to avoid another budget crisis when the current agreement expires. There isn’t much time before we find ourselves on the brink of a shutdown and breaching the debt ceiling once again. The cost of the recent drama goes beyond denting the reputation of Congress. The economy took a hit as well, with Standard & Poor’s estimating a loss of $24 billion. With the rest of the government back to work, the Senate is taking this week off, but legislators have a lot of work ahead. Will Washington do the people’s business or will it be business as usual?
Budget Conference Ramping Up – The conference committee formed by the deal ending the shutdown is preparing to get to work. Senate Budget Committee chair Patty Murray (D-WA) and House Budget Committee chair Paul Ryan (R-WI) met over breakfast the day after the deal and their staffs have been laying the groundwork to begin negotiations. They are set to meet, along with the ranking members of their committees, on Wednesday and the full conference committee is planning to conduct its first meeting on October 30. The committee has until December 13 to reach agreement. The Washington Post has some helpful info on the conference committee.
Lots of Work Ahead – The continuing resolution funding the government expires January 15, 2014 and the extension of the debt limit expires February 7, though “extraordinary measures” by the Treasury Department will be able to prolong the date in which action will be required. While short-term deals are not the optimal way to run the country, historically they have often led to bigger budget deals. One of the main goals of the conference committee will be to replace the automatic, across the board cuts of the sequester that are unpopular with just about everyone. We offer some principles to follow in approaching sequestration replacement: at a minimum, don't worsen the deficit; replace mindless cuts with smart reforms; replace temporary savings with permanent deficit reduction; and aim for a permanent sequester solution. Achieving a real solution will require policymakers to work together and make some tough decisions, but as former Defense secretary and Office of Management and Budget director Leon Panetta said at a recent event hosted by our partners at the Campaign to Fix the Debt, “Hopefully, having been through this experience of a shutdown and the implications of not increasing the debt ceiling, that will be a sufficient enough incentive for them to now turn to governing.”
Lots of Ideas and Support to Work With – The budget conference committee won’t be starting from scratch. Plenty of ideas have been put forward, including several budget proposals. As we point out, every budget put forth this year put the debt on a downward path, so any deal from the conference committee should do the same. In addition, Fix the Debt offers some principles through its Citizens’ Plan. And a new poll from Fix the Debt shows that there is broad public support for a comprehensive debt plan. Fiscal Commission co-chairs Erskine Bowles and Alan Simpson also offered ideas earlier this year in “A Bipartisan Path Forward to Securing America’s Future”. Now you can devise your own budget using a new tool based on their approach.
Time for Tax Reform – Tuesday marked the 27th Anniversary of the signing of the Tax Reform Act of 1986, the last major reform of the tax code. It’s definitely time for change and the effort in Congress to modernize the tax code continues. Senate Finance Committee chair Max Baucus (D-MT) says his work with House Ways and Means Committee chair Dave Camp (R-MI) will proceed on a “parallel track” along with the work of the budget conference committee. The conference committee could boost their efforts by crafting budget reconciliation language allowing tax reform to be considered without the threat of a filibuster. There is plenty of room for reform. Follow our ‘Tax Break-Down’ series examining various tax expenditures that are ripe for change.
Key Upcoming Dates (all times are ET)
October 23, 2013
- House Armed Services subcommittee hearing on impact of continuing resolution and sequester on military acquisition and modernization at 3:30 pm.
October 30, 2013
- Bureau of Labor Statistics releases September 2013 Consumer Price Index data.
November 7, 2013
- Senate Armed Services Committee hearing on the impact of sequestration on national defense at 9: 30 am.
- Bureau of Economic Analysis releases advance estimate of 3rd quarter GDP.
November 8, 2013
- Bureau of Labor Statistics releases October 2013 employment data.
November 20, 2013
- Bureau of Labor Statistics releases October 2013 Consumer Price Index data.
December 13, 2013
- Date by which the budget conference committee must report to Congress
January 15, 2014
- The continuing resolution funding the federal government expires
- 2014 sequester cuts take effect
- First set of IPAB recommendations expected
February 7, 2014
- The extension of the statutory debt ceiling expires