December 19, 2014

Washington Budget Report: Nov. 15, 2011

« Back to WBR Issue List

Sign Up to receive the Washington Budget Report »


Time for Action from Supercommittee Co-Chairs

Time is running short for members of the congressional “super committee,” which has until a week from tomorrow to recommend a plan to reduce projected federal deficits by at least $1.2 trillion over the next decade.

In recent days Democratic and Republican lawmakers offered proposals that showed greater flexibility than in the past – Republicans on the idea of new tax revenue and Democrats on possible cuts in entitlement spending.

But the two sides continued to criticize each other’s suggestions and argue that more concessions were needed.

The Concord Coalition, which has urged the super committee to look for more than $4 trillion in deficit reduction, called Monday on the panel’s co-chairs – Sen. Patty Murray (D-Wash.) and Rep. Jeb Hensarling (R-Tex.) -- to submit a ‘chairmen’s mark’ – a plan to serve as a framework for final negotiations.

“Now that each side has staked out its positions, it’s up to the co-chairs to forge consensus,” said Robert L. Bixby, executive director of The Concord Coalition.

A joint public  proposal from the co-chairs, he said, would “would set a very positive example by demonstrating that agreement is possible. It could jump-start efforts to achieve an even grander bargain if other committee members follow their lead.”

If the committee and Congress fall short of the $1.2 trillion deficit-reduction goal, legislation approved last summer calls for sharp automatic spending cuts in both defense and domestic spending.

Some lawmakers, anticipating failure, are talking about ways to prevent this “trigger” mechanism from taking effect, with Republicans particularly concerned about possible defense cuts. President Obama warned Murray and Hensarling on Friday, however, that he would oppose such efforts. Concord also opposes the idea of shutting off the trigger.

Supreme Court Agrees to Take Health Care Reform Case

The Supreme Court agreed on Monday to consider the constitutionality of the legislation approved last year to revamp the U.S. health care system. The court indicated that it would examine not just whether the government can require people to buy health insurance but several other key issues as well.

Federal appeals courts have issued conflicting rulings on the Patient Protection and Affordable Care Act, which was designed to dramatically expand the number of Americans with insurance coverage while promising to rein in some cost increases in the health care system. More than two dozen states have challenged the law.

The high court will likely hear arguments on the legislation in March and issue a decision in June. In a reflection of the case’s importance, the court scheduled an unusually large amount of time – five and a half hours – for oral arguments.

The Concord Coalition has long emphasized the importance of curbing the rapid increases in health care spending in the United States, where health care consumes a much larger share of the Gross Domestic Product than in other countries with comparable or better health results. The cost containment measures in the legislation, while welcome, could have been stronger.

If the Supreme Court were to invalidate the law, Congress would need to quickly pass new cost-control measures that are at least as strong as those approved last year. If key financing provisions were rejected, elected officials would have to resist the temptation to keep the most popular elements of the legislation without ensuring that they would be financed in a responsible way.

Even if the law were upheld, elected officials would still need to continue to work on ways to restrain the rapid rise in health care costs, which is one of the key drivers of the country’s large projected budget deficits.

Congress Considers Minibus Bills and Continuing Resolution

House and Senate negotiators reached an agreement yesterday on the first conference report of the appropriations process for Fiscal Year 2012. Referred to as a “mini-bus,” the agreement combines three of the twelve appropriations bills: Agriculture, Commerce/ Justice/ Science, and Transportation/ Housing and Urban Development.

According to the House Appropriations Committee, the funding level in the agreement  “upholds the overall regular base discretionary level of $1.043 trillion as agreed to in the Budget Control Act (BCA).” The agreement includes $2.3 billion in disaster relief funding.

The conference agreement also includes a continuing resolution (CR) to fund all agencies not included in the “mini-bus” through Dec. 16, 2011. Federal agencies are currently being funded with a continuing resolution set to expire this Friday.

The new CR would prevent a government shutdown and provide Congress with additional time to complete the nine appropriations bills that will remain if the conference report is enacted. Both the House and Senate are expected to act on the conference report  this week.

Also this week, the Senate began considering a second minibus bill which may combine the Energy/Water, Financial Services/ General Government, and State/ Foreign Operations bills. On the other side of the Capitol, the House is expected to vote on a constitutional amendment to require a balanced budget.

Iowans Weigh Deficit-Reduction Options

Nearly 200 Iowa residents slipped into the role of congressional deficit-cutters on Monday night, and in many cases were able to reach agreement on the sort of sweeping fiscal reforms that have so far eluded Congress.

Working in groups of six to eight people, the participants reviewed, debated and voted on dozens of different tax and spending options in “Principles and Priorities,” an exercise developed and recently updated by The Concord Coalition.

The program was co-hosted by the Des Moines Register and Drake University’s College of Business and Public Administration. Rick Green, vice president and editor of the Des Moines Register, opened the program Monday night at Drake, expressing deep concern over a federal debt that now totals about $15 trillion.

With many groups including a mix of college students, workers and retirees, the discussions ranged over questions such as how heavily older Americans should rely on younger ones, whether the benefits of a 25-cents-a-gallon gas tax increase outweighed the negatives, and how much the defense budget could be reduced without jeopardizing national security.

Towards the end of the evening, many of the groups reported that they had developed plans that would reduce projected deficits over the next decade by $3 trillion, $4 trillion or even more. Those levels compare favorably to the goal of $1.2 trillion to $1.5 trillion that Congress assigned to its super committee on deficit reduction.

A number of groups Monday night approved plans to raise the eligibility ages for Social Security and Medicare, a result that Concord Executive Director Robert L. Bixby said was surprising. “That tends to be a real bone of contention,” he said.

Noting Iowa’s early role in the presidential nominating process, Bixby encouraged participants in the exercise to question candidates about fiscal reform and to express their views to their members of Congress as well.

Assuming the role of a worried member of Congress, one man noted that after his group had made so many tough budget decisions, “we’re probably not going to get re-elected.”

Debt, Deficits and Dysfunction

While there are many places in the federal budget where taxpayer dollars could be saved, simply “cutting waste” is not a panacea. Harry Zeeve, national field director for The Concord Coalition, emphasizes that point in a new blog post on the El Pomar Foundation website.

“For one thing,” Zeeve says, “government projections already assume an optimistic amount of waste reduction in the future.” He added that political consensus on what constitutes waste “is often lacking,” with what seems like waste to one person or organization often striking others as an important government program.

He noted that the two key factors driving projections of large federal deficits in coming decades are the aging of the population and rising health care costs. “It will simply cost the government far more money in the future to provide Social Security and Medicare benefits for millions of baby boomers as they leave the workforce,” Zeeve said.

He encouraged American voters to carefully consider their own demands on government, including the services they expect, the direct or indirect financial assistance they receive from Washington, the taxes they are willing to accept, and the role they want the U.S. to play in world affairs.

Why Candidates Must Be Held Accountable

The federal debt  is hitting the $15 trillion mark this month, and it is projected to continue growing rapidly in the years ahead – even assuming the economy fully recovers and U.S. military commitments abroad are reduced.

“Absent reform, we will leave our children and future generations with enormous debt,  a weaker  economy, higher taxes , lower living standards and a diminished international role,” wrote Robert L. Bixby and Sara Imhof of The Concord Coalition in a guest column Sunday in the Des Moines Register. Bixby is Concord’s executive director and Imhof is its Midwest regional director.

“Short-term thinking, excessive partisanship and political cowardice have contributed to the failure of elected officials in Washington to put the country on a more sustainable  path,” they added. Last summer Congress created the special committee on deficit reduction in hopes it could improve on that record.