Line Items: Ceremonial Closing Edition
Closing the Ceremony – The Winter Olympics ended in Sochi, Russia on Sunday with the closing ceremony. The eye-catching spectacle put an exclamation point on two weeks of intense drama and competition. Another ceremonial closing occurred back in Washington as it was reported that the president’s forthcoming budget would not include any offers of compromise as last year’s budget did. Not only did the announcement put an end to some two years of jockeying to reach a broad fiscal deal, but it also effectively closed the door on any bipartisan action this year on any matter. The ritual of governing from crisis to crisis has been concluded, as has any pretense of finding agreement on a comprehensive deficit reduction plan. In this election year, there is little hope for substantive action on the critical issues facing the country. As Congress returns from its Presidents Day recess this week, don’t expect any golden moments for a while.
Budget Ends Hopes for Solutions —The president will unveil his Fiscal Year 2015 budget request on March 4, with more detailed numbers coming the following week. In previewing the budget, it was revealed that the proposal that was in last year’s budget submission to switch to a more accurate measure of inflation, the chained CPI, will not be included. The White House did say the offer remains on the table if Republicans agree to close some tax loopholes. Check out our Chained CPI Resource Page for more on chained CPI. The budget proposal will call for increased public investment to boost the economy that will be paid for by some tax and spending changes. But it is likely to be more of an election-year political statement than a feasible fiscal blueprint that can attract broad support in Congress.
Mobilizing Defense Savings – On Monday, Defense Secretary Chuck Hagel unveiled a Pentagon budget proposal that would shrink the armed services to its smallest size since before World War II. The plan also calls for eliminating some costly weapons systems. Defense spending represents a considerable share of the overall federal budget, and there is growing pressure to cut back due to military action in Afghanistan winding down and spending caps.
The Never Ending Tax Reform Debate – Amid skepticism that fundamental reform of the tax code can be achieved this year, House Ways and Means Chairman Dave Camp (R-MI) plans to release a comprehensive tax reform discussion draft on Wednesday. Tax reform is critical to addressing our fiscal challenges. Our partners at the Campaign to Fix the Debt make the case for fundamental tax reform and offer some principles to guide the process. Check out our Tax Break-Down series for a look at areas of the tax code ripe for reform. Meanwhile, the G-20 nations agreed to strengthen international tax rules to clamp down on multinational firms using loopholes to avoid paying taxes.
Still Looking for Closure on Unemployment Insurance Extension – Work continues on extending emergency Unemployment Insurance benefits. Republican senators are reportedly working on an approach that would pay for the extension and could gain bipartisan support. Sticking to PAYGO principles is critical as policymakers consider new policies. We cannot afford to backslide on the deficit reduction achieved so far.
Doc Fix Still Open Ended – Lawmakers still aren’t able to seal the deal on permanently repealing the Sustainable Growth Rate (SGR) formula to prevent a sharp cut in payments to Medicare physicians. The main barrier to the “doc fix” remains finding a way to cover the estimated $150 billion price tag. Last week, a group of health experts offered a potential solution in Health Affairs that would offset the costs with some Medicare reforms.
Budget Gimmicks Still a Concern – Roll Call warns that lawmakers are still eyeing gimmicks as they seek to avoid budget tradeoffs in considering new policies. We identify the key gimmicks to be on the lookout for in our chartbook.
Key Upcoming Dates (all times are ET)
- Bureau of Economic Analysis releases second estimate of 4th quarter GDP growth.
- White House releases topline numbers for Fiscal Year 2015 budget request.
- Bureau of Labor Statistics releases February 2014 employment data.
- Bureau of Labor Statistics releases February 2014 Consumer Price Index data.
- Bureau of Economic Analysis releases third estimate of 4th quarter GDP growth.
- "Doc fix" expires.