Line Items: Play Off Edition
Play On – The NHL playoffs are under way. The Red Wings were clipped, the Sharks sunk, the Canucks cannot, and the Penguins were iced. In Washington, fans are holding their breath. Will the Caps grind out a win over the defending champion Bruins, or will they suffer yet another early exit? Meanwhile, there is plenty of action away from the ice. Both parties continue to play off of each other when it comes to fiscal matters. The same excuses and insults are shot back at one another like a hockey puck, with no one seemingly aiming for the net.
Social Security and Medicare Still Short-Handed – The Trustees minding the net for Social Security and Medicare on Monday yet again issued a warning about the long-term finances of the two essential programs - and now a short term problem as well. The Medicare trust fund is projected to become insolvent by 2024, illustrating how much more needs to be done to rein in the growth of health care costs. The Social Security trust fund, which is running deficits and is forecast to continue to do so (with a $940 billion deficit in the next decade), is now projected to become exhausted in 2033, three years earlier than expected last year. At that point, beneficiaries will see a 25 percent reduction in benefits. Social Security’s disability program is in particularly dire shape, with its trust fund projected to become insolvent just four years from now, when beneficiaries will see a 20 percent reduction in benefits. This will occur in the next presidential term. CRFB commented on how the report shows the need for Social Security reform now. To learn more about the relationship between Social Security and the federal budget, read this.
Budget Power Play – The budget season has become even more drawn out than the NHL postseason. Last week the House "deemed" the FY 2013 budget resolution it passed earlier this month on a party line vote, allowing the House Appropriations Committee to produce spending bills based on the top-line spending number of $1.028 trillion in the bill. Also, six other House committees were given the go-ahead to follow the "reconciliation" instructions in the House bill and find additional savings to replace the defense cuts that will kick in at the beginning of next year because of the sequester resulting from the failure of the Super Committee. This would set off a confrontation with the Senate, which has no plan at this point to replace the sequester and is moving ahead with drafting spending bills based on the $1.047 trillion top-line figure in the Budget Control Act. Even Republicans like Senate Minority Leader Mitch McConnell (R-KY) supported the Senate figure. The White House has threatened to veto any spending bill that follows the lower spending level. However, Roll Call (subscription required) reports that House Republicans may ease away from the lower spending levels, perhaps avoiding another budget showdown alter this year. Either way, it is clear that the budget process needs reform.
Conrad Takes Simpson-Bowles Off the Bench – Senate Budget Committee Chair Kent Conrad (D-ND) surprised many last week when he presented the Simpson-Bowles Fiscal Commission plan as his Chairman’s Mark for the FY 2013 budget resolution in the committee. He said, “It is a plan which I believe represents the best blueprint from which to build a bipartisan deficit reduction agreement.” Conrad served on the Fiscal Commission and supported the plan. CRFB praised Conrad for putting forth the plan in a statement. The proposal was discussed in a meeting of the committee, but no vote was held.
Coburn Slashes Colleagues in New Book – Another Fiscal Commission member, Sen. Tom Coburn (R-OK), also made waves last week. His new book chastises lawmakers of both parties for not doing enough to reduce the national debt, blaming their desire to get reelected for the lack of action. He says the fiscal threat to the U.S. is greater than any foreign threat and that we face a debt crisis within two years unless a long-term deficit plan is enacted.
Sudden Death Lame Duck – Washington is already bracing for the inevitable lame duck session of Congress after the election. That’s because a slew of expiring tax provisions and across-the-board spending cuts are on the horizon. Taken together, Federal Reserve Chair Ben Bernanke refers to this confluence as the “fiscal cliff” because it could result in a significant blow to the economy if allowed to happen all at once. This threat has many hopeful that a deal on a fiscal plan can be reached to avoid such a fate. CRFB recently examined the fiscal cliff and the need to avoid it by enacting a comprehensive plan.
Icing on Taxes - Like a zealous defenseman, plenty of Americans were cross-checking last week…their taxes, that is. Tax Day had many lawmakers with their sticks up as well as they sought the advantage on tax reform. The Senate considered legislation implementing the “Buffett Rule” to ensure that millionaires pay a tax rate of at least 30 percent. The bill failed to overcome a filibuster on a largely party-line vote. The House followed by passing legislation providing a tax cut for small businesses. The $46 billion cost of the bill would not be paid for. CRFB reiterated its position that there should be no tax cuts without offsets. Even better, tax changes should be enacted in the context of fundamental tax reform, as CRFB recommended on Tax Day, that simplifies the tax code, broadens the base and ensures adequate revenue. There are lots of ways to reform taxes. Dealing with tax expenditures is a good place to start.
Scoring Duplication as a Goal – A bipartisan group of legislators introduced a bill last week requiring all legislation to get a “duplication score” from the Congressional Research Service to make sure a proposed program does not duplicate an existing one. The proposal is in response to Government Accountability Office studies detailing $100 billion in savings that could be achieved by eliminating duplicative programs.
National Debt Tour Finds Success on the Road – While teams usually prefer to play on home ice, CRFB is willingly taking a road trip to promote the need for a comprehensive “Go Big” plan this year. The latest stop was last week in Roanoke, Virginia, following earlier visits to Boston and New York City. The Roanoke event featured speakers such as Senator Mark Warner (D-VA) and Reps. Bob Goodlatte (R-VA) and Robert Hurt (R-VA). At each stop, more Americans are joining the cause to Beat the Debt, you can too.
Will Farm Subsidies See the Penalty Box? – The Senate Agriculture Committee marks up a farm bill this week. The farm bill reauthorization this year promises to be a key battle in the deficit reduction fight. Many are calling for steep reductions in farm subsidies that go to many wealthy farmers and agribusinesses and are accused of distorting the market. Changes may also be coming to the Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps.
Making Presidential Contenders Face-Off Over the Debt – With the presidential campaign threatening to literally go to the dogs over which candidate treats canines better, many are looking for more substance from this election. This campaign offers a prime opportunity to conduct the informed discussion this nation needs on the challenge to our future prosperity and global standing presented by the national debt and how to address it in a way that preserves our commitment to broad-based economic growth and opportunity. Our U.S. Budget Watch project is helping to inform voters about the issue. In addition, CRFB is calling for presidential candidates to debate the debt, as did CRFB co-chairman Bill Frenzel in a piece posted at RealClearMarkets. A debate devoted to how each candidate would address the debt, including specific ideas, would improve the campaign discourse and bring us closer to solutions. Stay tuned for ways you can help in this effort.
Key Upcoming Dates (all times ET)
- Presidential contests in Connecticut, Delaware, New York, Pennsylvania, and Rhode Island
- Senate Appropriations subcommittee mark-up of Energy and Water Development spending bill at 10:30 am.
- Senate Agriculture Committee mark-up of the farm bill at 9 am.
- House Budget Committee hearing on "Replacing the Sequester" at 10 am.
- Senate Finance Committee hearing on what tax reform means for state and local tax and fiscal policy at 10 am.
- House Appropriations Committee mark-up of Energy and Water spending bill at 1 pm.
- House Judiciary Committee mark-up of reconciliation language at 1:30 pm.
- Senate Finance Committee hearing on improving the taxpayer tax filing experience at 10 am.
- House Ways and Means Committee hearing on certain expiring tax provisions at 10 am.
- House Appropriations Committee mark-up of the Commerce, Justice and Science spending bill at 10 am.
- House Education and the Workforce Committee hearing on the President's FY 2013 budget request for the Dept. of Health & Human Services at 10 am.
- US Dept. of Commerce's Bureau of Economic Analysis releases its advance estimate of 2012 first quarter GDP growth.
- House Ways and Means Committee hearing on Medicare premium support proposals at 9 am.
- Dept. of Labor's Bureau of Labor Statistics releases April 2012 employment data.
- Presidential contests in Indiana, North Carolina, and West Virginia
- Presidential contests in Nebraska and Oregon
- Dept. of Labor's Bureau of Labor Statistics releases April 2012 Consumer Price Index (CPI) data.
- Presidential contests in Arkansas and Kentucky
- Presidential primary in Texas
- US Dept. of Commerce's Bureau of Economic Analysis releases its second estimate of 2012 first quarter GDP growth.
- Dept. of Labor's Bureau of Labor Statistics releases May 2012 employment data.
- Presidential contests in California, Montana, New Jersey, New Mexico, and South Dakota
- Dept. of Labor's Bureau of Labor Statistics releases May 2012 Consumer Price Index (CPI) data.
- Presidential primary in Utah
- US Dept. of Commerce's Bureau of Economic Analysis releases its third estimate of 2012 first quarter GDP growth.