‘Line’ Items: (Fiscal) New Year’s (Lack of) Resolutions Edition
Should Old Performance be Forgot, and Never Brought to Mind? – The new fiscal year (2011) began on Friday. Instead of imbibing in champagne, CRFB presented some sobering statistics on fiscal year 2010 (see here). There is a lot that needs to be resolved; here’s hoping that solutions can be achieved for a better FY 2011.
Lew Still Waiting for the Ball to Drop – Jacob Lew’s nomination to be the next director of OMB hit a snag when Senator May Landrieu (D-LA) put a “hold” on his nomination in order to protest the administrations’ temporary ban on deepwater drilling. The FY 2012 budget process is gearing up within the administration, and they could use a leader to shepherd the process along.
CBO Warns on Tax Cuts – Last week Congressional Budget Office Director Douglas Elmendorf testified before the Senate Budget Committee that extending the 2001/2003 tax cuts either fully or partially will reduce economic growth in the longer run because it will add to the debt.
New Fiscal Year, No Budget – The new fiscal year began without Congress approving of any of the appropriations bills to finance federal operations. A government shutdown was avoided with legislators approving of a stopgap continuing resolution to fund federal agencies through December 3. Congress opted for a relatively clean CR without much of the additional spending that the White House asked for. An amendment from Senator John Thune (R-SD) to reduce non-security spending in the CR by 5% was defeated in a 48-51 vote. Congress must either enact another CR or approve of the appropriations bills when it returns from recess.
No Lame Excuses – Congress adjourned right after approving of the continuing resolution. Lawmakers must return after the election in a “lame duck” session to complete unfinished business. Topics that will be addressed in the session beginning November 15 include FY 2011 appropriations (most likely through an “omnibus” package); the 2001/2003 tax cuts; patching the Alternative Minimum Tax (AMT) so that it does not affect the middle class; the estate tax (which under current law will return at its 2001 level after expiring in 2010); extending items like the “doc fix” and the research and development tax credit; and any recommendations from the White House fiscal commission, which are due by December 1.
Fiscal Commission Looks at Government Performance – The President’s National Commission on Fiscal Responsibility and Reform held its fifth public meeting on Wednesday. It heard testimony on performance budgeting and eliminating government waste. CRFB live-tweeted the proceedings.
Resolution for Policymakers: Be Specific – CRFB convened a policy forum on Thursday in Washington, DC to highlight specific ideas that have been offered to confront our fiscal challenges and called upon lawmakers to move from sound bites to solutions. Participants included Senator Ron Wyden (D-OR), Congressman Paul Ryan (R-WI), Congressman Jim Himes (D-CT), Harvard University economist Martin Feldstein, former Congressmen Bill Frenzel and Jim Kolbe, and former Comptroller General of the U.S. General Accounting Office Chuck Bowsher. CRFB heeded its own advice and released specific proposals on health care and Social Security, and CRFB President Maya MacGuineas, along with Brookings Institution Senior Fellow Bill Galston, unveiled a detailed fiscal plan.
New Report Says “No Silver Bullet” – A report released by the Fiscal Analysis Initiative of The Pew Charitable Trusts illustrates how difficult it will be to put the U.S. on a sustainable fiscal course by relying exclusively on any single approach. The report uses the Peterson-Pew Commission on Budget Reform goal of stabilizing the debt at 60 percent of GDP and assumes that action towards the goal will begin in 2015, when the economy should be stronger. The report’s findings suggest that everything should be on the table and concludes that “the challenge becomes more surmountable if more policies are included in the long-term solution.”
Boehner Calls for Reforms – In a speech last week, House GOP Leader John Boehner (R-OH) called for structural reforms in Congress, specifically the budget process. He suggested that Congress consider spending bills for agencies and departments separately, as opposed to the 12 appropriations bills Congress currently is responsible for. He also proposed a new “Cutgo” regime in which any new spending proposal would have to specify what in the budget would be cut to pay for it. The budget process definitely needs reforms that attract bipartisan support and deal with all parts of the budget. The Peterson-Pew Commission on Budget Reform will soon issue recommendations for reforming the process.