August 27, 2014

Congress Finally Clears Low Bar It Set For 2014 Budget

  • The federal budget is an expression of our country's values. Where we choose to spend and at what levels, how and who we tax, and the borrowing we...

The $1.1 trillion spending bill for Fiscal 2014, signed into law late last week by President Obama, demonstrates that compromise and bipartisan cooperation are still possible in Washington -- so long as the two parties set a very low bar for success.

A budget deal in December set the total amount of “discretionary spending” -- which Congress approves on an annual basis -- for Fiscal 2014 and 2015. The legislation approved last week for 2014 fills in the details in all 12 discretionary areas that are supposed to be covered by regular appropriations bills.

This “omnibus” is roughly split between defense and non-defense spending. It covers nearly a third of the federal budget through Sept. 30. It does not include entitlement programs like Social Security and Medicare, nor does it cover subsidies embedded in the tax code.

The legislation received strong bipartisan approval with votes of 359-67 in the House and 72-26 in the Senate last week.

This legislation means there will be no government shut-down for the remainder of Fiscal 2014. Moreover, in a welcome change from the first third of the fiscal year, federal agencies and departments now know what their final budgets look like.

These are rather small accomplishments. Washington is still just focusing on the short term. Once again elected officials have postponed action on the nation’s larger fiscal sustainability challenge, which is rooted in an aging population, growing health care costs and a grossly inefficient tax system.

Nor is it certain that the overwhelming support for the omnibus bill signals any real change in the recent pattern of budgeting by crisis. In fact, storm clouds are again building over the need to increase the federal debt limit within the coming weeks.

Treasury Secretary Jack Lew last week said the latest data indicates that Treasury’s borrowing authority, including the usual “extraordinary measures” approved by law, would more likely expire “at the end of February than anytime in March.”

Republicans say they plan to seek Democratic concessions in return for an increase in the debt limit. The Obama administration has reiterated that it will not negotiate over the debt limit. It is an all-too-familiar scenario and threatens to derail Fiscal 2015 budget negotiations under “regular order” before they begin.

Given that Congress has already approved the policy choices that will require additional borrowing, a protracted debate over whether to pay the bill is not warranted. The creditworthiness of the United States should never be subject to doubt.