‘Line’ Items: Post-Fourth Edition

After the Fireworks – The Independence Day celebrations have concluded. The fireworks have fizzled and most of us are back to work. Capitol Hill is quiet after its own pyrotechnics last week as lawmakers tried to finish work on some contentious issues before its recess this week. It failed to get many of its tasks fully completed as disagreements on how to fund legislation continued to bog down the agenda.

War Supplemental Still Smoking on the Grill – Congress had hoped to adopt a supplemental spending bill to fund operations in Afghanistan and Iraq before the Fourth of July, as requested by the Pentagon. But the debate over stimulating the economy in the short term and addressing the long term debt problem that is stalling much action in Washington has affected this bill as well. The House finally approved a bill late last week that in addition to the war funding adds some $21 billion in domestic spending. Although the additional money is offset, the bulk of the bill is not paid for. It is unclear if the Senate will approve of the House version next week amid concerns around some of the offsets in the House bill and growing debate over whether such spending should be undertaken at this time.

No Long Term Budget This Year – Like the adventurous father who prefers to load up the family car and take off for vacation without making reservations or mapping out a route, Congress has decided to forgo the customary multi-year budget blueprint for a one-year spending cap. Legislators could not agree on how to address medium term deficits and did not want to highlight the bleak long term outlook in an election year. The one-year discretionary limit was narrowly deemed by the House without any debate as part of the rule for considering the war supplemental. The Senate could conceivably choose a different limit, setting up an even more dysfunctional appropriations process than normal. This episode provides further proof that significant budget process reform will be required to deal with our longer term budget issues. The Peterson-Pew Commission on Budget Reform is working on a set of recommendations to release later this year.

Financial Overhaul Sees Finish Line – Financial regulatory reform needs at least one more dip in the pool to become law. Lawmakers thought they could get a bill before the president before the Fourth, but Senator Scott Brown (R-MA) and a few others raised questions about the bank tax used to offset the cost of the legislation. So negotiators axed the tax and replaced it with a combination of ending TARP early and using the savings towards financial reform along with increasing the fees larger banks pay to the FDIC Deposit Insurance Fund. CRFB has previously raised concerns about effectively double-counting TARP money.

White House Deficit Commission Listens to Public Comments – The President’s National Commission on Fiscal Responsibility and Reform held a wonky picnic and invited everyone to bring a dish last week. At its monthly public hearing commissioners heard comments from Americans on what to do to improve the fiscal picture. CRFB president Maya MacGuineas was one of those to testify.

CBO Rains on the Festivities – The nonpartisan Congressional Budget Office presented some gloomy numbers last week in its Long Term Budget Outlook. While it found that health care reform will help improve the long run budget picture, much more still needs to be done to put the country on a sustainable fiscal course. CRFB offered an analysis of the report here. CBO also released last week a report on options to improve the fiscal situation for Social Security as reform is being increasingly viewed as not only essential for its own long term sustainability, but for that of the federal budget as a whole.