Line Items: Golden Globes Edition
Golden Moment – The Golden Globe Awards were held over the weekend. Many view the awards as a prelude to the Academy Awards, although the Golden Globes provides dinner, so that puts them a leg up in our book. Similarly, the fiscal cliff can be seen as the run-up to the debt ceiling drama now beginning to unfold. The economic stakes are definitely higher with the debt limit. Failing to raise the limit would cause the U.S. to default on some of its obligations. The debt ceiling is yet another decision point for our leaders to consider how to deal with the mounting national debt. Will the fiscal cliff be a predictor of the winners and losers in the debt ceiling? Will policymakers pass up another opportunity to craft a comprehensive plan to address the national debt and prevent more such episodes?
No Amour for Debt Ceiling – In the final press conference of his first term, President Obama set the tone for the upcoming debate over the debt ceiling. The statutory debt limit was reached at the end of last year and the Treasury Department has undertaken “extraordinary measures” to prevent exceeding the limit. Those measures are expected to be exhausted sometime between mid-February and early March, at which time the limit has to be raised or the U.S. will no longer be able to borrow money to meet its obligations. President Obama says he will not negotiate over the debt ceiling, demanding a clean increase while Republicans vow to fight for spending cuts in exchange for increasing the limit. Several Democrats in the House are introducing legislation to repeal the debt limit while Clive Crook argues for replacing it with a smarter fiscal rule. Some ideas for fiscal rules can be found here. The Fix the Debt Campaign in a statement said the limit must be raised, but that policymakers should also agree on a comprehensive deficit reduction plan. CRFB’s Maya MacGuineas had a similar message in the New York Times. Meanwhile, credit rating agencies are raising new concerns about our ability to get the debt under control. Read more about the debt ceiling here and keep track of developments here.
House Follows Silver Linings Playbook and Approves Sandy Aid – The House passed $50.5 billion in aid to victims of Hurricane Sandy, to go along with $10 billion for flood insurance payments that was earlier approved. The Senate will vote next week. None of the funding was paid for. The episode underscores that Washington needs to figure out a better way to budget for disasters, since the funding well exceeded the adjustments to spending caps that lawmakers are allowed to make for disasters.
White House Budget Will Not Arrive at Zero Dark Thirty – The White House will very likely miss the statutory deadline of February 4 to produce its Fiscal Year 2014 budget proposal because of the fiscal cliff drama.
Tax Code is Les Miserables – The National Taxpayer Advocate called the complexity of the tax code the top issue for taxpayers in her annual report and called for reform that simplifies the tax code. Many advocate for fundamental tax reform that simplifies the tax code and broadens the tax base by eliminating or limiting tax credits, deductions and other loopholes known as tax expenditures, along the lines of what the Simpson-Bowles plan proposes. While the chairs of the tax committees in Congress said that tax reform will be a priority in 2013, some are saying it may take a back seat to other matters.
What Game Change Will Obama Call for In State of the Union? – President Obama will deliver the first State of the Union address of his second term on February 12. Along with his inauguration speech Monday, the State of the Union will be an opportunity to set his agenda. One question is how much attention will he devote to deficits and debt.
How Much More Deficit Reduction Do We Need? – Perhaps we should call on the wisdom of Lincoln. President Obama said this week that $1.5 trillion more in deficit reduction would stabilize the debt as a share of the economy for the next decade. While that may be true, CRFB notes that such a goal is not ambitious enough for a variety of reasons. For one, it doesn’t take into account the budgetary pressure in the decades to come caused by the aging of the population. It also doesn’t give any breathing room to deal with any further economic challenges.
Key Upcoming Dates (all times are ET)
- Dept. of Labor's Bureau of Labor Statistics releases December 2012 Consumer Price Index data.
- President Obama publicly sworn in for his second term (a private swearing in will occur on Sunday the 20th, the technical inauguration date).
- The House Ways and Means Committee will hold a hearing on the debt limit starting at 1:30 PM Eastern time.
- Bureau of Economic Analysis releases advance estimate of 2012 4th quarter and annual GDP.
- Dept. of Labor's Bureau of Labor Statistics releases January 2013 employment data.
- By law, the President's budget must be submitted by the first Monday in February, occurring February 4 this year. The deadline will likely be missed this year because of the fiscal cliff.
- President Obama delivers the State of the Union address to a joint session of Congress.
- Dept. of Labor's Bureau of Labor Statistics releases January 2013 Consumer Price Index data.
- Bureau of Economic Analysis releases second estimate of 2012 4th quarter and annual GDP.
- Across-the-board cuts to defense and non-defense discretionary spending prescribed in the Budget Control Act, known as "sequestration," will take effect.
- Dept. of Labor's Bureau of Labor Statistics releases February 2013 employment data.
- Current continuing resolution (CR) funding the federal government expires.
- Bureau of Economic Analysis releases third estimate of 2012 4th quarter and annual GDP.