‘Line’ Items: March of Madness Edition
Madness in Washington – The down-to-the-wire finishes, Hail Marys and upsets in DC weren’t confined to the Verizon Center. Capitol Hill is experiencing its own madness. On Friday President Obama signed the sixth continuing resolution (CR) to keep the federal government operating just as the previous stopgap measure was about to expire. With the clock now reset to April 8, will the two sides change their strategy of lobbing shots from half court and mix it up in the paint to score an agreement on funding the government for the rest of the year? Meanwhile, Senators Michael Bennet (D-CO) and Mike Johanns (R-NE) pulled off a surprise with a bipartisan letter from over 60 senators asking President Obama to lead on a discussion of a comprehensive deficit reduction package that puts spending cuts, entitlement changes and tax reform in play. Lawmakers are back home this week huddling with constituents.
CBO Blows the Whistle on President’s Budget – The Congressional Budget Office (CBO) on Friday released its analysis of the President’s FY 2012 budget. According to CBO, the White House budget will fall short of balancing the primary (non-interest) budget by 2015 and stabilizing debt as a share of the economy. The Administration claimed success in February on both fronts, but CBO projects larger deficits and rising debt, reaching 87 percent of the economy in 2021. Last month, CRFB argued that the budget likely understated deficit and debt numbers because its projections of economic growth were quite rosy and from unspecified savings in the budget. The new CBO report bears this out, as we highlight in a paper of our own that examined CBO’s analysis.
Fans Don’t Go Wild over the Play on Capitol Hill – The partisan bickering over the budget and lack of action so far to address mounting deficits and debt has contributed to low public approval ratings all around. According to a Washington Post-ABC News poll last week, only 26 percent of respondents were positive about “our system of government and how well it works.” Washington needs to pick up its game.
Small Ball in Small Business Bill – With few games in town when it comes to moving legislation in the closely-divided Senate, a measure reauthorizing the Small Business Innovation Research program and Small Business Technology Transfer program has attracted several riders. Many amendments involve smaller-scale attempts to reduce spending and instill fiscal discipline. The chamber approved on a 98-1 vote a resolution from Sen. Ben Nelson (D-NE) expressing the sense of the Senate that it should cut its own budget by at least 5 percent. It is not clear what measures will get votes, but other amendments include one from Sen. John McCain (R-AZ) to end the printing of hard copies of the federal budget and another from Sen. David Vitter (R-LA) to sell unused federal property. Larger-scale proposals include an amendment from Sen. John Cornyn (R-TX) to establish a U.S. Authorization and Sunset Commission to review agencies and programs and terminate unauthorized and duplicative ones. Sen. Tom Coburn (R-OK) also sponsored an amendment to eliminate duplicative and overlapping federal programs. Sen. Rand Paul (R-KY) went big with an amendment to cut spending by $200 billion this year by reducing most discretionary spending to FY 2008 levels and cutting defense spending by 5 percent.
Senators Ask President to Suit Up – On Friday, a bipartisan group of 64 senators signed a letter asking President Obama to support comprehensive deficit reduction. The letter states that the work of the White House Fiscal Commission “represents an important foundation to achieve meaningful progress on our debt” and cites the work of the bipartisan group of senators developing a plan based on the commission’s recommendations. The letter was organized by Senators Michael Bennet (D-CO) and Mike Johanns (R-NE). In a conference call explaining the letter, Sen. Johanns said “the ball is in the President’s court.”
Social Security Still a Tough Bracket? – More lawmakers are finding the courage to talk about Social Security reform. Senators Joe Lieberman (ID-CT) and John McCain (R-AZ) are working on legislation to strengthen the long-term finances of the vital program that may include a mix of benefit reductions and tax increases and Senator Lindsey Graham (R-SC) is working on a reform proposal of his own. Entitlement reform, including changes to Social Security, is expected to be included in the budget blueprint to be released by House leaders next month and several Senate Republicans last week asked President Obama to lead in addressing entitlements. Meanwhile, Senate Democrats are split; some moved to make it harder to reform Social Security by introducing legislation that would require a 2/3 vote of both houses of Congress to make changes that reduce benefits, while some like Sen. Mark Warner (D-VA) want Social Security reform included in comprehensive debt reduction efforts. White House advisers reportedly are divided in how to handle the issue.
Rand Paul Takes the Point – Senator Rand Paul (R-KY) introduced his own multi-year budget proposal that aims to balance the budget in five years. Hopefully this will encourage more of his colleagues to support comprehensive, multi-year plans.
Momentum Continues to Build for Budget Process Reform – Last week saw more ideas for improving the budget process. Congressmen Gary Peters (D-MI) and Cory Gardner (R-CO) teamed together on a bill that would require Congress to vote on the “Terminations, Reductions, and Savings” recommended in the President’s budget each year. A subcommittee of the Senate Homeland Security and Governmental Affairs Committee held a hearing on Tuesday that addressed ways to enhance presidential authority to eliminate wasteful spending and reduce the deficit. CRFB President Maya MacGuineas was one of the witnesses and discussed making it easier for the President to rescind spending in bills that he signs. Senator John McCain (R-AZ) introduced a bill that will allow taxpayers to designate up to ten percent of their tax liability to be dedicate to paying down the debt. Representative Jeff Flake (R-AZ) introduced the House version of the legislation. (See here for what we said of the same legislation last year.) Republicans are also looking for broader support for a Balanced Budget Amendment that would also cap annual spending at a certain percent of GDP. And House Majority Leader Eric Cantor (R-VA) is working with House Minority Whip Steny Hoyer (D-MD) and their colleagues in the Senate on a bipartisan, bicameral effort to implement recommendations in a recent Government Accountability Office (GAO) report on ways to reduce waste and duplication in government.
Panda-ering on the Deficit – Washington Post columnist Ruth Marcus is calling for “deficit pandas” to take up cuddly arms in addressing our fiscal problems. Marcus argues that the deficit reduction mantle should not be left solely to those who want to limit the responsibilities of government. Those who see an active role for government should also want to address the debt because the consequences of not doing so will primarily affect the most vulnerable. Marcus was inspired by a new CRFB paper, “America’s Fiscal Choices at a Crossroad: The Human Side of the Fiscal Crisis.” The paper examines how various groups will be impacted by two scenarios: addressing the debt head-on or continued gridlock that prevents a change in course.
CRFB Budget Simulator Wins Award – CRFB’s “Stabilize the Debt” online budget simulator won a DC Addy Silver Award on Tuesday in the interactive media/online gaming category. Experience the award-winning simulator at https://crfb.org/stabilizethedebt.
Infrastructure Debate Builds Up – Senator John Kerry (D-MA) introduced the BUILD Act last week, which would create a national infrastructure bank to facilitate investments in infrastructure. This should promote debate on how the nation prioritizes and finances needed investments in infrastructure.
Key Upcoming Dates
• Department of Commerce releases durable goods orders data for February.
• Weekly unemployment claims data released by the Department of Labor BLS.
• Department of Commerce releases final estimate of GDP for the fourth quarter of 2010.
• University of Michigan releases final consumer sentiment index for March.
• The current continuing resolution (CR) funding government operations expires. Congress must adopt spending bills funding the federal government for the rest of FY 2011 by then or pass another stopgap measure.
• Statutory deadline for Congress to enact a Fiscal Year 2012 Budget Resolution.
April 15 - May 31
• Period in which Treasury Secretary Geithner says the U.S. will likely reach the debt ceiling (revised).