Line Items: Wrapping Up Edition
That’s a Wrap – The House wrapped up its work for 2013 last week, passing the budget agreement worked out by Sen. Patty Murray (D-WA) and Rep. Paul Ryan (R-WI) and extending the “doc fix” into next year to buy some more time for negotiations on that front. The Senate is trying to finish up this week and also approved of the budget deal, sending it to the president who has promised to sign it. The budget deal is one of the few things Congress was able to leave under the tree after a year marked by partisanship, brinksmanship and general dysfunction. A lot was left undone in a Congress that is on course to be the least productive ever, and many believe that policymakers deserve nothing but coal in their stockings.
Putting A Bow on the Budget Deal – The House overwhelmingly passed the budget deal in the form of the Bipartisan Budget Act of 2013 last week on a 332-94 vote with a majority of both Republicans and Democrats supporting it. It was a rare decisive, bipartisan vote in a congressional session dominated by partisan fighting and lack of accomplishments. The Senate followed suit on Wednesday with a 64-36 vote (every Democrat and 9 Republicans voted for it), and President Obama will sign it. Although the deal does not do nearly enough to address the long-term fiscal challenges facing the country, it moves in the right direction and includes some long-term fiscal benefits. It also shows that bipartisan compromise is possible, effectively splitting the difference between the House and Senate budgets passed earlier this year on discretionary spending. Finally, it returns some order to the budget process by setting topline spending numbers for the next two fiscal years. We took a look at the good, the bad, and the ugly in the agreement. Learn all you need to know about the budget deal with our brief and read all our blog posts about the agreement and budget conference.
Appropriators Get Wrapped Up in Work – The passage of the budget deal means a whirlwind of work is just beginning for appropriators. In order to avoid a government shutdown when the current continuing resolution funding federal operations expires on January 15, 2014, spending bills must still be passed. Appropriators will be busy over the holidays divvying up the $1.012 trillion topline spending figure for fiscal year 2014 in the budget deal between the various federal departments and agencies. An omnibus spending bill wrapping up most, if not all, of the 12 annual spending measures is expected. Senate Appropriations Committee chair Barbara Mikulski (D-MD) said she wants an omnibus FY 2014 spending bill on the Senate floor by Jan. 13.
Nothing Under the Tree for Debt Ceiling – The budget deal does nothing about the statutory debt limit, which is suspended until February 7, 2014. After the suspension expires, the Treasury Department will be able to employ “extraordinary measures” to hold off a national default for an unknown period of time, but the debt ceiling will have to be increased sometime in the first half of 2014. Both sides are already drawing lines. Rep. Ryan indicated that Republicans will demand concessions in exchange for an increase, perhaps approval of the Keystone XL pipeline, while the White House says it will not negotiate. Treasury Secretary Jack Lew on Thursday urged Congress to raise the debt limit "well before" February 7. Refresh your knowledge of the debt ceiling with our primer and keep track of debt limit developments here.
Tax Reform on Layaway – Lawmakers ran out of time in 2013 to reform the tax code and prospects for 2014 are uncertain. Murray and Ryan say that fundamental tax reform could be the next area up for bipartisan collaboration, building on the work done this year by Senate Finance Committee chair Max Baucus (D-MT) and House Ways and Means Committee chair Dave Camp (R-MI). Ryan promised to work closely with Camp in 2014 and Finance Committee ranking member Orrin Hatch (R-UT) indicated he will more actively engage in the debate next year. However, the White House is indicating that it will nominate Baucus to be the next ambassador to China and the loss of his leadership could impede progress on tax reform. Yet Baucus is continuing his work for now, releasing on Wednesday a proposal for reforming energy tax policy. Recommendations on infrastructure are also said to be on the way. These are the latest in a series of discussion drafts based on over a year of work. Renewing some 55 tax breaks known as the “tax extenders” will also wait until the New Year, with reformers preferring to wrap the issue into a comprehensive tax code overhaul, but other lawmakers are hoping for faster stand-alone action. Senate Majority Leader Harry Reid (D-NV) tried to push through an extension without any offsets on Thursday but was rebuffed. Here’s why not paying for an extension is a bad idea.
New Year May Bring New Hope for Unemployment Benefits – Expanded benefits for the unemployed expire on December 28, resulting in some 1.3 million Americans losing unemployment benefits. Democrats promise to revive the issue as soon as Congress returns the week of January 6. It would cost about $25 billion to extend for another year a provision enacted in response to the economic downturn that expands the period of time the unemployed can collect benefits to 73 weeks in states with the highest unemployment rates.
Congress Presents Doc Fix with More Time – Along with the budget deal, Congress also agreed to a three-month patch of the Sustainable Growth Rate (SGR), allowing legislators more time to work out a permanent “doc fix” to avoid a steep decrease in payments to Medicare physicians. Both the House Ways and Means Committee and Senate Finance Committee advanced legislation last week, but more work needs to be done to reconcile the two approaches. Paying for the at least $116.5 billion cost over 10 years is a major remaining issue.
CBO Unwraps Social Security Scenarios – The Congressional Budget Office (CBO) released a report detailing Social Security’s finances, and a variety of scenarios that would impact them. While some argue that projections regarding Social Security’s Trust Fund becoming insolvent years from now are unreliable, the CBO study shows that even when a broad range of outcomes is considered, there is almost no chance of the Trust Fund returning to a surplus. CBO projects the Trust Fund will become exhausted by 2031, with 95 percent confidence of it being exhausted by 2037.
Wasteful Holiday Reading – Senator Tom Coburn (R-OK) doesn’t like it when the government plays Santa Claus. On Tuesday he released his annual “Wastebook” that sheds a light on questionable government spending. Highlights include $914,000 spent by the National Endowment for the Humanities on The Popular Romance Project to “explore the fascinating, often contradictory origins and influences of popular romance as told in novels, films, comics, advice books, songs, and internet fan fiction.” The good news is that there are ideas to reduce waste in government and they are coming from the inside. The finalists for the annual SAVE Award have been announced and you get to vote for the best idea. The competition allows federal employees to propose ideas for the government to save money. The winner gets to present their idea directly to the president.
Federal Reserve Gives the Gift of Taper – On Wednesday the Federal Reserve announced that it would begin the long-awaited tapering of its monetary stimulus. It will reduce the total monthly purchases of longer-term Treasury and mortgage-backed securities from $85 billion to $75 billion. But don’t expect interest rates to start shooting up anytime soon. The Fed also announced that it would keep the federal funds rate near zero for longer than previously anticipated.
Key Upcoming Dates (all times are ET)
December 28, 2013
- Extended unemployment insurance benefits expire.
January 1, 2014
- Temporary tax extenders and the farm bill expire.
January 15, 2014
- The continuing resolution funding the federal government expires.
- 2014 sequester cuts take effect.
- First set of IPAB recommendations expected.
February 7, 2014
- The extension of the statutory debt ceiling expires.