May 25, 2017

Washington Budget Report: Oct. 5, 2010

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The Washington Budget Report will only publish periodically with Congress in recess.

No Champagne, Please; Uncle Sam Has a Headache Already

The government wrapped up Fiscal Year 2010 last week but let’s skip the champagne. The likely 2010 deficit of approximately $1.3 trillion and the previous year’s deficit of $1.4 trillion were the two largest federal deficits since World War II.

But much of the recent red ink can be traced to the recession. The big problem is that even as the economy recovers, projections indicate that the government will start running more huge deficits because of rising health care costs, the aging population and structural problems in the federal budget that predated the recession.

So in a blog post, Concord Coalition Executive Director Robert Bixby suggests some resolutions for the new fiscal year for the President, his fiscal commission, Congress, the media and the public. They include overcoming partisan differences, phasing in deficit reduction as the economy recovers, following appropriate budget procedures in Congress, avoiding "fuzzy math" and accepting that sacrifices will be required for a more prosperous future.

Read more with Happy New Year

No Budget in Sight, Congress Moves to Avoid a Government Shutdown

Before leaving Washington last week until after the election, Congress passed a continuing resolution (CR) to prevent a government shutdown. This was necessary because Congress failed to pass any of the 12 appropriations bills needed to fund the government in the new fiscal year. For the first time since the modern budget process was created in 1974, neither the House nor the Senate passed a budget resolution.

Under the CR, most agencies will be funded through Dec. 3 at FY 2010 enacted levels. This will enable Congress to delay further action on appropriations bills until after the election.  When Congress returns, the next step will likely be debate over an omnibus bill combining several appropriations bills.

With few exceptions, Congress resisted pressure to fund specific programs above FY 2010 levels.  When offsets are taken into account, the Appropriations Committees estimated that total funding in the continuing resolution is $8.2 billion below the FY 2010 level.

The fiscally responsible course of action would have been for Congress to pass a budget resolution and consider appropriations bills using the regular process.  However, given that a CR was necessary, Congress at least passed a relatively clean resolution that excluded many requested add-ons.

Unfortunate Delay on Budget Director Nominee

Prominent on the long list of unfinished business in Congress was confirmation of the President's nomination of Jack Lew to head the Office of Management and Budget. Two Senate committees with jurisdiction over the nomination held public hearings and promptly approved it with decisive bipartisan votes.

However, Sen. Mary Landrieu (D-LA) said she would block the nomination until a moratorium on deepwater oil and gas drilling is lifted or modified. The administration imposed the moratorium to allow time to implement new safety measures after this year's oil spill in the Gulf of Mexico.

The Senate should still have found some way to move forward to a vote on Lew. It was fiscally irresponsible for senators to leave for the recess without doing so. Federal agencies have already begun preparing next year's budget, and many difficult decisions will be required in the weeks ahead. They will be even more difficult if no one is in place at OMB to make them.

Presidential Hopefuls, Take Note: Iowans Care About Fiscal Responsibility

Residents of a state accustomed to vetting presidential candidates demonstrated a strong interest last week in more responsible federal budget policies, showing up in force for programs focused on possible solutions to the nation's fiscal challenges.

The programs in Des Moines, Iowa were tied to the Fiscal Solutions Tour visiting six cities this fall. The tour, conducted by The Concord Coalition and supported by The Peter G. Peterson Foundation, is designed to stimulate informed discussion of the options available to reduce large projected deficits that would threaten the economy.

Sara Imhof, Concord’s Midwest field director, said people who attended the Des Moines events “demonstrated the interest and personal involvement that can help our nation move onto a better, more responsible course.” In a blog post, she praises the lively discussions: “The civic engagement was fantastic; we had questions and comments from people of all ages and backgrounds.”

Attendance at the events was estimated at 1,200, including 700 students and others at the evening program at Drake. Featured speakers were David M. Walker, president and CEO of the Peterson Foundation; Robert Bixby, Concord’s executive director; Douglas Holtz-Eakin, president of The American Action Forum, and Timothy Penny, president and CEO of the Southern Minnesota Initiative Foundation.

Political Rhetoric on Fiscal Solutions Often Misses the Mark

Political candidates talk a lot about cutting waste and questionable spending on programs that make up only a small part of the federal budget.

But Concord Executive Director Robert Bixby points out in a new op-ed article that the growing costs of three popular programs — Social Security, Medicare and Medicaid — are central to the large deficits projected for the future.

Writing in the Portsmouth Herald in New Hampshire on Sunday, Bixby noted that two main factors drive the projected cost growth: demographics and health care costs. There will be more Social Security, Medicare and Medicaid beneficiaries in the future, and they will inevitably consume more health care services – even as health care inflation continues.

“Put simply: It will cost the government a lot more simply to maintain the same level of services it has provided in the past,” Bixby writes. “No amount of political finger-pointing will change that.”

The article appeared in advance of a visit to the Portsmouth area on Thursday by the Fiscal Solutions Tour.