November 26, 2014

Washington Budget Report: Oct. 4, 2011

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Congress Continues to Struggle With Budget as New Fiscal Year Begins

This afternoon the House is scheduled to consider a continuing resolution (CR) to fund the government through Nov. 18 at the $1.043 trillion level included in the debt limit law. The government is currently operating under a short-term continuing resolution that is set to expire today. The Senate approved both continuing resolutions last week.  

An earlier controversy over offsets for disaster funding was resolved when the Federal Emergency Management Agency (FEMA) released new estimates projecting that funding would remain available through the end of FY 2011.

Enacting the new CR will end the immediate threat of a government shutdown and allow policymakers a few more weeks to reach an agreement on the FY 2012 appropriations bills. While the new fiscal year began last week, Congress has yet to enact a single one of the 12 appropriations bills necessary to fund the government.

Pulling Key Items Off the Super Committee’s Table

The new congressional committee on deficit reduction continues its work this week amid concerns that some elected officials have tried to narrow its options.

In a recent guest column in the Ames Tribune in Iowa, Concord Coalition officials lament that both President Obama and House Speaker John Boehner have “turned their attention to clearing the table of key elements they once recognized had to be there.” The article was written by Robert L. Bixby, Concord’s executive director, and Sara Imhof, the organization’s Midwest regional director.

Boehner said last month that tax increases should be off the super committee’s table, with spending cuts “the only option.” Even if tax reforms eliminated many loopholes, the Republican leader insisted, all of the resulting revenue should go not to deficit reduction but to lowering rates.

Obama’s latest long-term deficit reduction plan then pointedly left out Social Security, and its proposals for additional Medicare cuts were a small part of the overall plan.

“The positions Obama and Boehner have retreated to are familiar territory,” Bixby and Imhof write. “You might even call it politics as usual.”

They add: “The politics of deficit reduction are hard enough without our political leaders building walls around favored items. The more they take off the table, the more difficult it becomes to reach consensus on what is left. If one program or tax benefit is protected, why not others?”

Concord and many other organizations have urged the super committee to exceed its assigned goal of $1.5 trillion in deficit reduction over the next 10 years. Last week 155 business groups added their voice to the calls for the congressional panel to “go big.”

Iowans Urged to Focus on Reform in 2012 Campaign

Iowa residents were urged last week to help focus the 2012 election on fixing the federal government’s long-term budget problems. Two prominent experts on the federal budget emphasized that point to college students, business and civic leaders, journalists and others as The Concord Coalition’s “Fiscal Solutions Tour” visited Des Moines and Ames.

David M. Walker, CEO of the Comeback America Initiative, and Robert L. Bixby, Concord’s executive director, both noted the importance of Iowa’s early position in the presidential nomination process in their remarks to hundreds of people. Iowa’s prominence makes it particularly important for its voters to make clear that they want elected leaders who will push for reforms in health care, tax policy, entitlements and spending.

The longer we wait to make these reforms, Bixby warned, the more likely the solutions will be “crisis-driven” and “draconian” rather than gradually put into place in a way that will allow people to adjust and adapt to them.

“Whether you’re a Democrat, a Republican, a liberal or a conservative, current policy is simply unsustainable as a matter of math, and not ideology,” Bixby said. “Everybody can see that there are going to have to be changes.”

Walker warned of a debt crisis by the middle of the decade if corrective steps were not taken. “You have a disproportionate opportunity and a disproportionate obligation,” he told Iowa residents, “to be informed on issues of importance to the country and to press current and prospective elected officials on what they are going to do about it.”

Since it began a year ago, the Fiscal Solutions Tour has visited cities across the country to stimulate public discussion of the options available to put the country on a more responsible course.

Earlier last week, Bixby presented his analysis of the government’s fiscal challenges to an economic conference put on by the San Antonio Chamber of Commerce. On the program with him was Robert N. Campbell III, vice-chairman with Deloitte LLP. Both Bixby and Campbell served on the Bipartisan Policy Center’s Debt Reduction Task Force.

Two Goals, Two Strategies

President Obama continues to campaign for a package of tax cuts and additional spending that he says will provide the U.S. economy with needed short-term support. At the same time, the congressional super committee is looking for ways to cut spending and increase government revenue over the next 10 years and beyond.

Many analysts characterize this situation as long-term policy versus short-term policy and argue that the short term should take priority right now. But Washington can pursue both policy challenges at the same time, as Diane Lim Rogers, The Concord Coalition’s chief economist, explains in a guest column in The Christian Science Monitor.

The key, she says, is that elected officials must put policies in place that have been proven to work, and get rid of less effective ones.

That means short-term measures should “put more money in the hands of the households most likely to immediately spend the money on goods and services, and the businesses most likely to hire more workers,” Rogers says.

For the longer term, the government should focus on deficit reduction policies that will boost national savings, encourage economic growth and free up resources to flow to the most productive areas of the economy.