‘Line’ Items: Brackets and Budgets Edition
Brackets – As many busy themselves today going over the brackets for the big tourney, picking the next Cinderella and who will win it all, the real challenge for prognosticators remains predicting how the budget impasse will pan out. The budget process has gotten uglier than the 68 team bracket and all the moving parts – FY 2011 spending, the FY 2012 budget and the debt limit – make the road to Houston look like an easy jaunt. House Budget Committee Chairman Paul Ryan (R-WI) will soon unveil a FY 2012 budget resolution that is expected to include entitlement reform. Senate Minority Leader Mitch McConnell (R-KY) says Republicans won't support raising the debt limit unless there is "credible" action to reduce the national debt. Will the debt limit debate be bracketed by the 2011 and 2012 budgets, or will they all come together into one grand bargain?
CR, C U Soon – Congress faces yet another budget deadline this week as the continuing resolution (CR) currently funding the federal government expires on Friday. With talks over spending for the rest of the fiscal year progressing slowly, last Friday House Appropriations Committee Chairman Harold Rogers (R-KY) introduced another CR that would finance government operations for another three weeks and cut $6 billion from present spending levels, which is in line with the goal of House leaders to reduce spending by $2 billion per week for the rest of the year towards a total of $61 billion in savings. The House may vote on the CR as early as Tuesday.
Running Up the Deficit Score – Last week the Treasury Department announced that the federal budget deficit for the month of February was $222.5 billion, the largest monthly deficit on record, putting the annual deficit on pace to hit a new record of over $1.5 trillion.
CBO Referees the Action – One of the interesting tidbits from the most recent Monthly Budget Review from the Congressional Budget Office (CBO) is that net interest on the public debt rose by $11 billion (13 percent) in the first five months of the fiscal year “as a result of substantial growth in the national debt over the past year.” The CBO wasn’t all the bearer of bad news, however; it also produced a Budget Options document with lots of ideas to reduce the deficit, on both the spending and revenue sides.
Bowles and Simpson Take to the Court – The co-chairs of the President’s Fiscal Commission, Erskine Bowles and Alan Simpson, launched the Moment of Truth Project last week to build upon the momentum created by their commission and to promote bipartisan action for tackling deficits and debt. The two testified before a Senate Budget Committee hearing on Tuesday and then participated in a forum on Capitol Hill later that day. The new initiative will help efforts like the bipartisan group of senators that is negotiating a comprehensive fiscal plan based on the commission’s report.
House Hearing Looks for Debt Game Plan – A hearing of the House Budget Committee on Thursday examined ideas for “Lifting the Crushing Burden of Debt”. Witnesses included CRFB’s Maya MacGuineas, who stressed the need for a comprehensive, multi-year fiscal plan. Carmen Reinhart of the Peterson Institute for International Economics warned that time is running out for addressing the debt before it severely impacts our economy, indicating that we have less than five years.
Tax Expenditure Reform Gets a High Seed – The witnesses in the House Budget Committee hearing agreed that reforming tax expenditures should be a priority in addressing the debt. A Senate Budget Committee hearing also examined the topic. Eliminating or reducing these tax breaks is gaining support on both sides of the aisle. See our ideas for reforming tax expenditures here.
Senators Set Up Full Court Press – A group of senators announced last week that they will block quick consideration of legislation except bills that cut spending, threatening to further delay proceedings in the usually deliberate chamber. Meanwhile, Senate Appropriations Committee Chair Daniel Inouye (D-HI) called for a return to regular order in budgeting; arguing that failure to do so will cause the FY 2012 budget to follow the same tortuously winding path of the FY 2011 budget. Have we mentioned the need for serious budget process reform lately?
Giving the Budget-Cutting Ball to the President – Speaking of fixing the budget process, momentum appears to be building for giving the president enhanced ability to rescind spending. House Budget Committee Ranking Member Chris Van Hollen (D-MD) last week introduced legislation giving the president 45 days after spending bills have been signed into law to offer a package of rescissions for Congress to consider. The bill is similar to bipartisan Senate legislation sponsored by Senators Tom Carper (D-DE) and John McCain (R-AZ). On Tuesday, the Subcommittee on Federal Financial Management, Government Information, Federal Services, and International Security of the Senate Homeland Security and Governmental Affairs Committee will conduct a hearing on “Enhancing the President's Authority to Eliminate Wasteful Spending and Reduce the Budget Deficit”. CRFB President Maya MacGuineas will testify.
House not Friendly to Housing Relief – Last week the House of Representatives continued their weekly effort to reduce spending, targeting housing programs. The House passed legislation to terminate the Federal Housing Authority (FHA) Refinance Program that allows struggling homeowners to refinance into cheaper loans insured by the agency and also agreed to cancel the Emergency Mortgage Relief Program, which helps jobless homeowners. The housing raid continues this week as the House will vote on legislation to terminate the Neighborhood Stabilization Program, which provides federal assistance to state and local authorities to redevelop foreclosed and abandoned homes. The chamber will also vote on canceling the Home Affordable Modification Program, which helps to lower monthly mortgage payments to some homeowners.
Behind the Numbers – The debate over deficits and debt often centers on numbers, but it really comes down to people. A CRFB event on Thursday – “The Human Side of the Fiscal Crisis” – looked at the human dimension from a wide array of perspectives. The forum featured the release of a new CRFB paper, “America’s Fiscal Choices at a Crossroad”. The paper explores how the fiscal choices we make will affect different generations.
Key Upcoming Dates
• Meeting of the Federal Reserve’s Federal Open Market Committee at 9 am. It will release its monetary policy decisions at 2:15 pm.
• Senate Budget Committee hearing on the report of the Bipartisan Policy Center's Debt Reduction Task Force (Domenici-Rivlin) at 10 am.
• House of Representatives scheduled to vote on three-week continuing resolution.
• House Ways and Means Health Subcommittee hearing on the Medicare Payment Advisory Commission’s Annual Report to Congress, 1 pm.
• House Oversight and Government Reform Subcommittee on TARP and Financial Services hearing on “State And Municipal Debt: The Coming Crisis? Part II” at 1:30 pm.
• Senate Homeland Security and Governmental Affairs Subcommittee on Federal Financial Management hearing on “Enhancing the President's Authority to Eliminate Wasteful Spending and Reduce the Budget Deficit” at 2:30 pm.
• Department of Labor Bureau of Labor Statistics (BLS) releases the Producer Price Index for February at 8:30 am.
• Department of Labor Bureau of Labor Statistics (BLS) releases the Consumer Price Index for February at 8:30 am.
• Weekly unemployment claims data released by the Department of Labor BLS.