‘Line’ Items: What Now? Edition

Commission Can’t Quite Commit – The President’s Fiscal Commission was able to produce a fiscal plan last week that garnered a bipartisan majority of votes within the panel (11 out of 18 members), but not the 14 vote supermajority required to compel Congress to act. The question now is: will the Commission’s work go the way of many other commissions and be shelved, or can it still prompt action in Washington. CRFB sees momentum growing for a fiscal plan. On Friday a group of 14 senators called for swift action. Congress definitely has lots of ideas to work with [see our table comparing fiscal plans] and the problem isn’t going away. As we have been saying, it's time to get specific. The President’s budget submission early next year and an expected vote on the debt ceiling by mid-year present opportunities for real action.

End in Sight to Tax Cut Debate? – Democratic and Republican negotiators reportedly are close to a deal that will temporarily extend all the tax cuts along with an extension of unemployment insurance benefits. Over the weekend the Senate failed to overcome a filibuster to permanently extend tax cuts for families earning less than $250,000 or to extend the cuts for income below $1 million. CRFB noted the irony of the fiscal commission's work to reduce the deficit while Congress worked to increase it with the tax cuts. Congress should heed the growing calls for fundamental tax reform. Most of the members of the Fiscal Commission embraced tax reform, particularly reforming tax expenditures.

Appropriations Muddling Along – Congress passed a new continuing resolution (CR) last week to fund government operations at current levels until December 18. The House plans to vote on a year-long CR this week that will adjust some funding levels. If it passes, the Senate next week will probably try to attach an omnibus wrapping all 12 spending bills together that will allow more flexibility to direct spending and slip in earmarks and other riders. The year-long CR would be the fallback option. Senator Tom Harkin (D-IA) said an omnibus could include measures like an extended “doc fix.” CRFB continues to note that the protracted effort to approve of Fiscal Year 2011 spending more than two months after the fiscal year has begun underscores the dysfunction of the process and the need for an overhaul. The Peterson-Pew Commission on Budget Reform last month offered a detailed set of recommendations.

House Mulls Appropriations Reforms – Meanwhile, the incoming Republican leadership in the House is considering significant changes to the appropriations process, notably a mandatory spending cap and breaking up the 12 yearly spending bills into smaller measures in order to perform better oversight of department and agency budgets. Last week Congressman Mike Quigley (D-IL) released a detailed report with recommendations of his own to fix the budget process. His proposals include requiring that the President’s budget and the congressional budget resolutions contain specific long-term deficit and debt sustainability targets and regular reviews of all tax expenditures. The focus on reforming the budget process is welcome. Policymakers should check out Getting Back in the Black for more options.

State Budgets in Even Worse Shape? – The New York Times reports that states and localities face severe shortfalls and the problem won’t go away soon. Even worse, many are hiding the true extent of the problem though budgeting gimmicks.