Line Items: NASCAR Edition
Racing to the Cliff – The NASCAR season ended on Sunday with Brad Keselowski claiming his first Sprint Cup championship. But fans of seeing things going around in circles can get their fix by watching the action in Washington. Congress is not in session this week for a Thanksgiving pit stop, but the posturing for position continues regarding the looming fiscal cliff. The thing about this race is that it isn’t clear how many laps it will go. Will we see the checkered flag soon or will lawmakers add more circuits?
Start Your Engines – There may not be any race tracks in DC, but there is an oval that most of the action revolves around. The Oval Office saw a number of preliminary heats last week as the White House got involved in earnest in the race to the fiscal cliff. President Obama hosted meetings with labor, business and civic leaders. The most important of the meetings was with the bipartisan congressional leadership. Everyone involved in the meeting came out optimistic that a deal to avoid the fiscal cliff could be reached, but there will be plenty of opportunities for the talks to run out of gas.
Trying to Avoid a Wreck – If we can’t avoid the fiscal cliff, things could get messy. Businesses reportedly are already cutting back investments due to fear over the cliff. Even a short trip over the cliff could damage the economy significantly and further erode public confidence. And the IRS warns that failure to prevent the Alternative Minimum Tax (AMT) from affecting middle income taxpayers by the end of the year could cause a tax nightmare where not only will 28 million taxpayers pay significantly higher taxes, but some 60 million would have to wait until March to file their taxes, meaning a delay in refunds. CRFB president Maya MacGuineas refutes the notion that a short-term dive off the cliff would have no consequences along with four other fiscal cliff myths. If talks do break down, it won’t be because of a lack of ideas. Five different plans for avoiding the fiscal cliff were presented at a symposium hosted by the Peter G. Peterson Foundation. CRFB’s paper lays out the challenges involved with the fiscal cliff and the need to address it.
Going Big Seen as the Best Course – As talks commence on the fiscal cliff, many are pushing for a comprehensive approach. House Minority Leader Nancy Pelosi (D-CA) said she wants at least $4 trillion in deficit reduction, which is the target of many plans such as the Simpson-Bowles proposal. The New Democrat Coalition sent a letter to President Obama and congressional leaders urging action now to avoid the cliff without punting. They also called for not taking potential solutions off the table. Additionally, another letter is currently being circulated by a bipartisan group of House members that is similar to the “Go Big” letter sent to the Super Committee last year that was signed by 100 representatives.
The View from the Stands – Voters also want lawmakers to come together on a comprehensive package. An election night poll by Mainstreet Advocacy Fund shows that Americans want their elected representatives to compromise and that they support increased revenue as part of a comprehensive deal to address the national debt. Also according to the poll, 50 percent of voters support the Simpson-Bowles plan while only 11 percent oppose it. Another poll conducted just after the election had similar findings with 88 percent agreeing with the statement “We need a bipartisan agreement to reduce the deficit, where everything is on the table, and both Republicans and Democrats compromise on some positions they feel strongly about.” Widespread backing for a comprehensive approach is also evident by the growing support for the Fix the Debt Campaign with over 300,000 people signing the Citizen’s Petition to Fix the Debt. Younger voters are also getting involved with the launch last week of The Can Kicks Back.
Taxes Brings Out the Yellow Flag – As all sides express confidence that a deal can be reached, revenue continues to be the primary source of caution. The White House is adamant that increased taxes on the wealthiest Americans be a part of any deal, while congressional Republicans remain equally resolute that tax rates not be increased on anyone. However, a new CRFB paper illustrates a way forward past the revved up revenue rhetoric. The paper examines ways in which limiting or eliminating tax expenditures for high-earners can raise the same amount of revenue as raising rates on this same group.
Will Appropriations Cross the Finish Line? – Politico reports that appropriators are quietly working on an omnibus package tying up all the Fiscal Year 2013 spending bills. The fiscal year began on October 1 without a federal budget, which has become the norm in Washington. Government operations are being funded by a stopgap continuing resolution that is in effect until March. Appropriators reportedly are aiming to have legislative text ready shortly after Thanksgiving. Producing an omnibus before the end of the year would be fairly impressive by recent standards. We’ll see if it ever gets the checkered flag.
Key Upcoming Dates (all times are ET)
- Second estimate of third quarter GDP figures released
- Unemployment statistics for the month of November released
- Consumer Price Index data for November released
- Third estimate of third quarter GDP figures released
January 1, 2013
- The "fiscal cliff" occurs, including the expiration of the 2001/2003/2010 tax cuts and across the board spending cuts the following day
- 113th Congress will convene
- Unemployment statistics for the month of December released
- Consumer Price Index data for December released
- President Obama publicly sworn in for his second term (a private swearing in will occur on Sunday the 20th, the technical inauguration date)
- Advance estimate of fourth quarter GDP figures released