‘Line’ Items: French Open Edition

Clay Masterpiece – Rafael Nadal and Roger Federer played yet another classic tennis match yesterday, with Nadal once again emerging victorious for his sixth French Open title. The distinctive red clay of Roland Garros produces slow-moving tennis characterized by long rallies and lots of spin on the ball.

Much the same can be said of the budget debate in Washington. Finding fiscal solutions is a slow, drawn-out process, with lots of back-and-forth. And both sides are using plenty of spin to find the winning shot.

Biden Group Tries to Hold Serve – The Biden talks are set to resume Thursday as the bipartisan, bicameral group of lawmakers convened by Vice President Biden looks to make progress on finding a deal pairing a debt limit increase with substantial deficit reduction. So far, both parties are seemingly content to stay at their respective baselines and pound away at the other. Republicans say they won’t budge on keeping revenues out of play and Democrats are digging in on no Medicare changes. CRFB has offered lots of ideas to bring the opposing sides closer to the net: providing a list of common-ground deficit reduction policies based on recent budget plans and specific ideas for Medicare and taxes that can draw bipartisan support.

Moody’s Blue on Debt Limit – Credit rating agency Moody’s stepped in as the chair umpire in the debt limit debate last week and it called fault on both sides. Stating that "the degree of entrenchment into conflicting positions has exceeded expectations," the agency warned that a default caused by a failure to raise the debt limit would likely result in a downgrade of the U.S. credit rating. Moody’s also cautioned that the lack of a “credible agreement on substantial deficit reduction” could result in a negative outlook on our cherished Aaa credit rating. See here for responsible approaches to raising the debt ceiling that combine a debt limit increase with a deficit reduction strategy.

Appropriations Mostly Keeps Pace in House – The House of Representatives is moving along with its end of the FY 2012 appropriations process. The full House approved of a Homeland Security spending bill on Thursday that appropriates $40.6 billion in regular discretionary spending, 2.6 percent less than current levels. However, the Military Construction-Veterans Affairs spending bill slipped from its schedule and now is expected to be voted on the floor when the House returns next week from recess. On the other hand, the Senate is not keeping pace, having not approved of a budget resolution. Without a top line spending figure to work with, the appropriations process cannot move in that chamber. The Peterson-Pew Commission on Budget Reform has solid recommendations for improving the broken budget process.

Key Upcoming Dates

June 7

• Presidential Candidate Tim Pawlenty gives a speech on his views for boosting the economy, including deficit reduction, in Chicago.

June 8

• Senators Mark Warner (D-VA) and Saxby Chambliss (R-GA) discuss the federal budget and deficit reduction before the Economic Club of Washington at 11:30 am.

June 9

• The Biden group resumes its talks on the debt limit and deficit reduction.
• CIA director, and former OMB director, Leon Panetta, has his confirmation hearing to be the next secretary of defense before the Senate Armed Services Committee at 9:30 am.

June 10

• Federal budget deficit numbers for May released.

August 2

• Treasury Secretary Geithner says that the U.S. will default on its obligations by around August 2 if the statutory debt ceiling is not increased before then.