‘Line’ Items: International Sports Edition
Opens and Tours – Americans did not fare well in sporting events across the pond this weekend; leaving us Yanks to rely on past memories of success at the British Open and Tour de France as well as the understanding that our economy is not quite as bad off as those of the countries that are beating us. Meanwhile, lawmakers in Washington continue to negotiate treacherous links and steep climbs in the quest to complete legislation.
Wall Street Reform Finally in the Clubhouse – After months of debate and deliberation, legislation reforming the regulation of the financial sector was cleared for the president’s pen with Senate approval on Thursday. The last sticking point involved offsets for the measure.
Unemployment Insurance Sees Finish Line – The Senate will vote tomorrow on a measure to extend expanded unemployment benefits, right after the replacement to the late Robert Byrd is sworn in, which will provide the 60 votes needed to move forward. The bill will restore assistance beyond the traditional 26 weeks through November that was provided initially by the Recovery Act. The extension has been languishing for months as a part of the extenders bill that senators can not reach agreement on, largely due to disagreement over offsets. Congressional leaders reluctantly decided to break off the enhanced unemployment assistance in order to get it approved. The $34 billion cost of extending the increased benefits is not offset.
Small Business Bill Teeing Up for Vote – The Senate is also looking to finish up work on legislation aiding small businesses this week. While the cost of the Small Business Jobs and Credit Act is technically offset, CRFB has taken issue with one of the offsets. Allowing workers to roll over their individual retirement accounts into Roth IRAs would raise about $5 billion in the short run because the new contributions would be taxable, but since withdrawals from Roth IRAs are not taxable, in the long run the provision is expected to cost $15 billion in lost revenue. CRFB thinks that short-term stimulus should be paid for in the longer run; this gimmick has the opposite effect, adding to the cost in the longer term. Bringing the debt under control will also aid small business, as evidenced by the results of a recent poll of small business owners illustrating that 90 percent are concerned about the effect of national debt on job creation.
Senate Appropriators Sprint to the Front of the Pack – The Senate Appropriations Committee marked-up three spending bills last week and plans to tackle up to four more this week. Meanwhile its House counterpart will begin full committee mark-ups this week. Senate appropriators also set their 302(b) allocations last week, which are the limits that can be appropriated for each discretionary spending category. The total approved by the committee is $1.114 trillion for FY 2011. That amount is $7 billion less than the cap deemed by the House of Representatives in its “budget enforcement resolution” and $14 billion below that requested by the President in his budget proposal. Adding to the confusion, Senate Budget Committee chairman Kent Conrad (D-ND) last week said he may pursue a resolution similar to that passed by the House. It is not clear what spending level he would seek and how that would play out seeing as appropriators have already moved forward. Lawmakers doubt that they will complete all action on the spending bills this year, likely depending on a continuing resolution to fund at least some parts of the government when the fiscal year begins in October and requiring an omnibus spending bill during a lame duck session after the elections. CRFB predicted fiscal chaos this year in the absence of a budget resolution and noted the need for budget process reform. A solid bill was introduced last week in the House to add more transparency and discipline to the budget process.
War Supplemental in the Rough – The Senate may attempt a cloture vote on the version of the supplemental bill to fund operations in Iraq and Afghanistan passed by the House earlier this month, but it is likely to fail. The main source of contention is nearly $23 billion in domestic spending tacked on by the House.
Lew Tapped for Yellow Budget Jersey – Jacob Lew has been nominated by the White House to replace Peter Orszag as Director of the Office of Management and Budget. Meanwhile, OMB will release its Mid-Session Review of the budget and economy this Friday. Fridays are often when administrations release bad news. This update could contain forecasts that are revised downward from what was projected in the President’s budget request earlier this year. Watch out for CRFB’s analysis of the numbers shortly after they are released.
Some Democrats Break Away from the Peloton– A group of nearly 60 House Democrats sent a letter last week to House leaders expressing their desire for more spending discipline. They specifically called for ending the abuse of the “emergency” spending designation to circumvent pay-as-you-go requirements for legislation and long-run offsets for new stimulus spending. House Speaker Nancy Pelosi said that new stimulus spending, such as aid to the states, will be paid for.
Panetta Warns of Uphill Climb for Future Intelligence Funds – The Washington Post’s blockbuster special report on the intelligence community has an interesting nugget from CIA Director Leon Panetta. Panetta, a former OMB Director and CRFB Board Member, says that he is charting a five-year plan for his agency because its post-9/11 budget is unsustainable. He is quoted, “Particularly with these deficits, we're going to hit the wall. I want to be prepared for that.”