Line Items: Botched Snap Edition

Washington Drops the Ball – To many federal budget watchers, the tax cut debate has been more frustrating than watching the Redskins play. The expiring 2001/2003 tax cuts presented an opportunity not only to remake the tax code, but to transform the fiscal discussion in Washington. Yet our leaders botched the snap and the compromise reached between the White House and Congress to extend the tax cuts for two years, continue expanded unemployment benefits for a year, impose a one-year payroll tax reduction, and reduce the estate tax represented the same type of political calculation and disregard for budget math that got us the mounting debt we currently face. The “deal” was especially exasperating to us in light of the just completed report of the president’s Fiscal Commission, which gave us hope that policymakers would face up to fiscal realities. It is ironic that the Fiscal Commission toiled for months to produce a solid blueprint for getting our fiscal house in order while it took politicians a few days to hammer out a deal that will severely set us back in our fiscal efforts. It is clearer than ever that the culture of Washington has to change in order to alter our unsustainable fiscal course. Our elected leaders will have to focus on the longer term, not the next election. As CRFB President Maya MacGuineas notes today at, we need a responsible budget framework

Tax Cut Bill Up for Votes – Legislation implementing the tax cut agreement will come up for votes this week. The Senate will vote Monday afternoon to proceed with debate on the measure with the vote on final passage expected Tuesday. The Senate is expected to produce the 60 votes necessary to approve of the package. Meanwhile, a bipartisan group of 20 senators, led by Mark Warner (D-VA) and Saxby Chambliss (R-GA), is attempting to attach [subscription required] to the legislation a non-binding resolution calling for a deficit reduction plan to be considered and approved next year. The House will consider the tax cut legislation after the Senate, where its fate is less clear.

Yes, We’re Still Talking About Appropriations – The slow-moving train wreck that is the Fiscal 2011 appropriations process continues to chug along. The House last week barely approved a measure that will fund government operations through September of next year at the Fiscal 2010 level of $1.09 trillion. Although technically a continuing resolution (CR), it goes beyond a traditional CR by moving around funding between agencies and programs. The Senate this week will try to substitute a $1.108 trillion omnibus spending package that will include earmarks. Neither measure may garner 60 votes in the Senate, which may result in the passage of another short-term CR, probably lasting until early next year. The current CR expires on December 18. Like the Metrodome’s roof, the budget process is sagging and tearing under a blizzard of problems. We need budget process reforms like those recommended in the report, Getting Back in the Black.

Ad Hoc COLA Fizzles in Congress – Last week both the House and Senate failed to achieve the supermajorities needed to provide Social Security beneficiaries with a $250 check in lieu of a cost-of-living adjustment (COLA). CRFB had denounced the ad hoc COLA as a fiscally irresponsible political ploy.

Tax Reform May See Action Next Year – Last week President Obama said that he is seriously considering an overhaul of the tax code early next year.  Senator Ron Wyden (D-OR) asked the president to put it front and center in his upcoming State of the Union Address. The senator is also building a bipartisan coalition for fundamental tax reform in 2011. 

Lineup of New House Committee Leaders Set – The chairs and ranking members of House committees were finalized last week. The leaders of House committees relevant to fiscal policy next year will be: Budget Committee Chair – Rep. Paul Ryan (R-WI); Budget Committee Ranking Member – Rep. Chris Van Hollen (D-MD); Appropriations Committee Chair – Rep. Hal Rogers (R-KY); Appropriations Committee Ranking Member – Rep. Norm Dicks (D-WA); Ways and Means Committee Chair – Rep. Dave Camp (R-MI); and Ways and Means Committee Ranking Member – Rep. Sander Levin (D-MI)

House Republicans Change the Rules – Some of the new policies being adopted by the House Republican caucus, which will control the chamber next year, will affect fiscal policy. House Republicans approved of a new rule, known as “cut-as-you-go”, requiring that any bill brought up under suspension of the rules – an expedited process for considering legislation – that creates a new program must specify a spending cut of equal value to offset the program’s cost. They also agreed to prohibit bringing up a suspension bill that increases authorizations, appropriations, or direct spending in any given year unless it is fully offset. House Speaker-in-waiting John Boehner (R-OH) also says that allowances for all members, and budgets for all committees and leadership positions will each be cut by 5 percent as a symbol that Congress will cut its own spending as it seeks much larger federal budget cuts.

Fiscal Commission Huddles with Administration – Members of the Fiscal Commission, including co-chairs Erksine Bowles and Alan Simpson, met with OMB Director Jack Lew and Treasury Secretary Tim Geithner. After the meeting the co-chairs issued a statement calling on President Obama to set out his ideas for reducing the deficit in his State of the Union address and to start negotiating with Congress early next year on a fiscal plan. Such a plan will be even more essential in light of the tax cut deal that will blow an even bigger hole in our debt.

“Doc Fix” Is In – Last week Congress approved of legislation that will delay steep cuts in Medicare reimbursement payments to doctors for a year. The issue has been a political football all year, with several short-term patches required because lawmakers could not agree on how to pay for the costly fix. This patch will be paid for by increasing the amounts that lower-income individuals and families will be required to pay back to the government if the federal subsidy they receive to purchase health care in the exchanges created by the new law turns out to be too generous. This is still only a short-term fix. Under the Sustainable Growth Rate (SGR) formula, the scheduled cut to physicians will only grow unless Congress finds a permanent fix.

New Poll Finds the Goal Post Moved Far Back – A recent poll from the Pew Research Center for the People & the Press finds that while Americans recognize in the abstract that the deficit must be addressed now and that doing so will require changes to spending and taxes, support for most specific solutions is low. Although respondents across all parties (including a slim majority of Tea Partiers) say that reducing the deficit will require a combination of cutting spending and increasing taxes, most of the proposals mentioned did not get majority support. The poll underscores that the knowledge gap on this issue must be closed before we can seriously can close the fiscal gap. A good tool for helping people understand the fiscal situation and the changes required is CRFB’s “Stabilize the Debt” online budget simulator.