|Budget Negotiators Reportedly Close to Deal||Misunderstandings, Misperceptions Cloud Reconciliation Debate||Administration Nominates Performance Officer, Calls for Cuts||CBO Director Underscores Unsustainable Budget Path||Low Inflation Means no Social Security COLAs, Medicare hikes for some|
Welcome to the Concord Coalition's weekly Washington Budget Report: a nonpartisan plain English summary of key budget, appropriations, and tax developments.
The Concord Coalition Washington Budget Report is written and edited by Charles Konigsberg, Chief Budget Counsel of The Concord Coalition. If you have questions or comments about the Washington Budget Report, contact us at firstname.lastname@example.org.
The Concord Coalition relies on support from people like you, across the country, who are concerned about our nation's fiscal policy. If you find the Washington Budget Report and our website resources interesting and useful, we invite you to visit http://concordcoalition.org/act/donate and consider making a tax-deductible contribution today in support of The Concord Coalition's work.
You can access Washington Budget Report Archives, going back to January 2007, at http://washingtonbudgetreport.com/archives.php and more recent Reports on the Concord Coalition website at: http://www.concordcoalition.org/publications/budget-report-archive
Track 1- Economic Stimulus:
Track 2 - Completion of '09 Appropriations:
Track 3 - FY 2010 Budget:
Track 4 - Stabilizing the Financial, Housing, and Auto Sectors (Ongoing)
Congressional Quarterly reports that congressional Democratic leaders and the White House are close to an FY 2010 budget deal. According to CQ, the emerging details are:
Central Issue in the FY 2010 Budget Resolution Conference.--Controversy continued to swirl this week around the issue of whether to use the filibuster-proof budget reconciliation process to expedite health care reform legislation.
Facts.--The "regular order" in the Senate is that passage of legislation requires a simple majority (51 votes, if all Senators are voting). However, votes on legislation can be blocked by "filibusters" through which opponents debate at length and prevent a measure from coming to a vote. Filibusters can be ended by "invoking cloture," which requires 60 votes.
The use (and threatened use) of filibusters has skyrocketed during the last decade. The "budget reconciliation" process--which is initiated by a budget resolution--allows budget-related legislation to move through the Senate protected from filibuster.
The Senate's "Byrd Rule" allows non-budgetary provisions to be stricken from a reconciliation bill. Healthcare provisions which have no budget effect (or have a merely incidental budget impact) would have to be moved in a separate bill.
Background.--The President's Budget calls for comprehensive health care reform to rein in skyrocketing health care costs and cover the uninsured. The budget does not include a detailed reform plan but allocates $634 billion as a "downpayment" on health care reform, funded by $316 billion in Medicare and Medicaid reforms, and $318 billion in new revenues from limiting tax deductions for upper income earners.
The House- and Senate-passed budget resolutions call for healthcare reform as a general proposition, and commit to offsetting the full costs of health care reform, but don't address details.
The House-passed budget plan calls for using the reconciliation process to expedite passage of health care reform. The Senate plan does not include reconciliation instructions.
As reported by Congressional Quarterly, House Speaker Nancy Pelosi (D-CA) said, "I believe it is absolutely essential that we come out of this year with substantial health care reform legislation. That is best secured by having reconciliation in the package."
At the same time, Senate Budget Committee Chairman Kent Conrad (D-ND) opposes using reconciliation. In addition, Roll Call has reported Senate Republicans threatening legislative reprisals if the filibuster-proof procedure is used."If they go down that road, I think the fur is going to fly," said Senate Republican Conference Vice Chairman Joh Thune (S.D.)
President Obama announced on April 18 the nomination of Jeffrey Zients to be the White House "Chief Performance Officer" responsible for reviewing the effectiveness of federal programs. Zients would also serve as OMB Deputy Director for Management -- a position requiring Senate confirmation.
On April 20, the President followed up the nomination with a directive to departments and agencies to "cut a collective 100 million dollars in the next 90 days." As examples of the type of cuts the President is looking for, the White House issued a press release that included items such as identifying improper farm payments, consolidating offices, and transitioning to electronic records. The proposed cuts amount to 0.003% of the Federal budget.
While these various management initiatives are important and useful, the Concord Coalition urges the Administration to follow-up on the February Fiscal Responsibility Summit with a focused and concerted effort to address the long-term fiscal crisis facing the nation. Under current projections, by 2030: Medicare, Medicaid, Social Security, and Interest on the Debt will consume all federal revenues. Significant action is needed -- as soon as possible -- to curb the rapid growth in entitlement spending and maintain the federal revenue base. The longer action is delayed, the more difficult the task.
In a lecture earlier this week at Harvard, Congressional Budget Office (CBO) Director Doug Elmendorf underscored the nation's unsustainable budget path due to the rapid growth of Medicare, Medicaid, and Social Security. In a summary of his speech, the CBO Director blogged:"In discussing the next 10 years, I began with the observation that CBO’s baseline projection of the budget deficit for 2010 through 2019 (that is, the deficit we project under current laws and policies) was more than $4 trillion. Then I explained that, compared with current law, President Obama’s budget would both cut taxes and raise outlays considerably over the next 10 years. In rounded figures, we estimate the President’s budget proposals would produce:
"The resulting budget deficit for 2010 through 2019 would be more than $9 trillion according to our projections.
"I also told the students that, while these proposals would require legislation, many would would continue policies already in place (for example, holding steady tax rates set in the 2001-2003 legislation) or maintain historical relationships (for example, preventing nondefense discretionary spending from falling to nearly the smallest share of GDP in my lifetime, as would occur under the baseline projection).
"The aspect of the budget that is anomalous by the standards of the past several decades—under both the baseline and the President’s budget—is outlays for Social Security, Medicare, and Medicaid. Specifically, under CBO’s estimate of the President’s budget for 2019:
"Looking beyond the next 10 years, federal outlays under current law for Medicare and Medicaid, in particular, will substantially outpace GDP growth. CBO is now in the process of updating its long-term budget projections and will release these projections when they are completed. However, the key message of these long-term projections is not in doubt: U.S. fiscal policy is on an unsustainable course." (emphasis added)
CBO Director Doug Elmendorf used his blog on Wednesday to explain why there may be no Social Security COLAs (cost of living adjustments) for several years.
Elmendorf said Social Security checks will likely remain at current levels through 2012 and rise by only 0.8 percent in 2013.
This is because annual Social Security COLAs are linked to an index measuring certain consumer prices which is not projected to rise until 2012.
This is in stark contrast to the 5.8% COLA received this year due to the spike in energy prices in 2008.
The near absence of inflation in 2010, 2011, and 2012 will also mean that the amount of income currently subject to the Payroll tax ($106,800) will not increase until 2013.
On Thursday, Director Elmendorf released an explanation for why the absence of Social Security COLAs in 2010, 2011, and 2012 will mean Medicare premium hikes for some (absent congressional action).