Line Items: Power Failure Edition
The Night the Lights Went Out – The football gods intervened at Super Bowl XLVII on Sunday, turning a rout into a tight contest that went down to the wire by sending a power outage through the Superdome that suspended play, as well as the momentum for the Baltimore Ravens. The Ravens escaped in the end with a defensive stand in the red zone. Washington is suffering from its own power failure caused by a surge of partisanship running through the system. But in this case, getting defensive will only make things worse. Lawmakers need to show some offense and huddle together in order to move the budget ball. Democrats in the House and Senate will hold retreats this week to formulate strategy for the year. No doubt budget strategy will be a key topic of discussion.
Debt Limit Extension Powers Through – The Senate last week followed the House in passing legislation suspending the statutory debt limit until May 18. With “extraordinary measures” once again at the disposal of the Treasury Department, a government default could be put off until the summer. But Washington still has fiscal deadlines fast approaching. The across-the-board spending cuts of the sequester are set to begin March 1 and the stopgap continuing resolution funding the federal government expires on March 27. Without a spending agreement before then, the government will shut down. These deadlines will keep on coming unless Washington comes up with a comprehensive fiscal plan. The bill also contains “No Budget, No Pay” language withholding the pay of lawmakers after April 15 until their respective chamber passes a budget resolution.
Budget Switch Not Flipped Yet – Monday was the statutory deadline for the White House to produce its federal budget request for fiscal year 2014, but the fiscal cliff drama delayed the process. The White House won’t commit to when the budget will be unveiled; it could be another month. Meanwhile, Republicans in Congress are not letting the deadline pass without notice. This week, the House of Representatives will vote on a bill requiring the President to state in his budget the year the budget will balance under his plan. House Republicans have promised to produce a budget resolution this year that balances in ten years. The Senate is not likely to take up the House bill.
Lights Back on for Simpson-Bowles – As a part of the House consideration of the bill this week to require the president to detail when his budget will balance, members will also consider a bipartisan amendment calling on the White House to use the Simpson-Bowles deficit reduction plan. Reps. Jim Cooper (D-TN), Frank Wolf (R-VA), Kurt Schrader (D-OR) and Chris Gibson (R-NY) are sponsoring the amendment.
CBO Turns Up the Juice – In lieu of a budget, fiscal wonks will have the 2013 Budget and Economic Outlook from the nonpartisan Congressional Budget Office (CBO) to pour over on Tuesday. The annual report provides the latest economic and budget forecasts and this year’s version will be the first look at a post-fiscal cliff world. These projections form the baseline for measuring the budgetary impact of proposed legislation. The Washington Post explains why the baseline is more than a matter of budget wonkery and affects all of us.
How Far Do We Have to Go? – A lot of electricity has been generated by a debate over how much more, if any, deficit reduction is required. The White House and the Center on Budget and Policy Priorities contend that about $1.4-1.5 trillion over the next decade will stabilize the growth of the debt as a share of the economy over that period, though it will likely start to grow again outside that window. On the other hand, Nobel Laureate Paul Krugman argues that deficit reduction should be put off. CRFB stepped into the debate last week with a new paper making the case for about $2 trillion more in deficit reduction over the next ten years, which should not just stabilize the debt, but put it on a sustained downward path over the long term. CRFB further argues that the choice between short-term economic stimulus and long-term deficit reduction is a false one and that a smart, comprehensive deficit reduction plan can complement efforts to support the recovery.
Tax Reform Gains Steam – CQ (subscription required) reports that efforts to rewrite the tax code are picking up as leaders of the House and Senate committees responsible for tax policy work together to lay the foundation for fundamental tax reform this year. Senate Finance Committee Chair Max Baucus (D-MT) hopes to release a discussion draft or options paper this spring for lawmakers and stakeholders to review. Meanwhile, President Obama weighed in on taxes over the weekend. In his weekly radio address on Saturday, he said that spending cuts in areas like health care generally and Medicare specifically must be accompanied by additional revenue through reforming tax expenditures, the deductions, credits, and other breaks that are essentially spending through the tax code. He said, "we need to lower the cost of health care in programs like Medicare that are the biggest drivers of our deficit, without just passing the burden off to seniors. And these reforms must go hand-in-hand with eliminating excess spending in our tax code, so that the wealthiest individuals and biggest corporations can’t take advantage of loopholes and deductions that aren’t available to most Americans." He reaffirmed the call the next day in a pre-Super Bowl interview. The Simpson-Bowles deficit reduction plan offered a tax reform proposal centered on limiting tax expenditures, which would simplify the tax code and raise revenue that could be used to both lower tax rates for all Americans and reduce the deficit in a way that makes the code more progressive. There are plenty of options for achieving savings in health care and revenue. See a menu here.
Sequester Surges to the Forefront – With less than a month before the across-the-board spending cuts of the sequester are set to take effect, lawmakers are grappling with how to replace the abrupt cuts to defense and non-defense discretionary programs. President Obama and Senate Majority Leader Harry Reid (D-NV) want the cuts to be replaced with an even mix of spending cuts and new revenue. Outgoing Defense Secretary Leon Panetta warned that the sequester threatens military readiness.
Key Upcoming Dates (all times are ET)
- The Congressional Budget Office (CBO) will release its 2013 Budget and Economic Outlook at 1 PM.
- House Committee on Government Oversight and Reform hearing on federal spending at 1 pm.
- Congressional Budge office (CBO) press conference on its 2013 Budget and Economic Outlook with CBO Director Douglas Elmendorf at 2 pm.
- Senate Budget Committee hearing on the Congressional Budget Office (CBO) 2013 Budget & Economic Outlook with CBO Director Douglas Elmendorf at 10:30 am.
- President Obama delivers the State of the Union address to a joint session of Congress.
- Senate Budget Committee hearing on the "Impact of Budget Decisions on Families and Communities" at 10:30 am.
- Dept. of Labor's Bureau of Labor Statistics releases January 2013 Consumer Price Index data.
- Bureau of Economic Analysis releases second estimate of 2012 4th quarter and annual GDP.
- Across-the-board cuts to defense and non-defense discretionary spending prescribed in the Budget Control Act, known as "sequestration," will take effect.
- Dept. of Labor's Bureau of Labor Statistics releases February 2013 employment data.
- Dept. of Labor's Bureau of Labor Statistics releases February 2013 Consumer Price Index data.
- Current continuing resolution (CR) funding the federal government expires.
- Bureau of Economic Analysis releases third estimate of 2012 4th quarter and annual GDP.
- Dept. of Labor's Bureau of Labor Statistics releases March 2013 employment data.
- Congress must pass a budget resolution as specified in the Congressional Budget Act. Also, due to the debt ceiling suspension bill, lawmakers will have their pay withheld after this date until their respective chamber passes a resolution.
- Dept. of Labor's Bureau of Labor Statistics releases March 2013 Consumer Price Index data.
- Bureau of Economic Analysis releases advance estimate of 2013 1st quarter GDP.