July 30, 2014

Washington Budget Report: July 17, 2012

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The Committee for Economic Development and The Concord Coalition will present a July 26 forum in Washington on the Euro Zone crisis and its consequences for the United States. The keynote speaker will be Senate Budget Committee Chairman Kent Conrad. See details here.

 

Concord Honors 38 in House for Reform Plan

Although intense partisanship has repeatedly sidetracked Congress this year, some lawmakers have risen above it in trying to address the country’s fiscal and economic challenges.

The Concord Coalition is honoring 38 of these lawmakers for their support of a far-reaching deficit-reduction plan based on recommendations from a bipartisan majority of the National Commission on Fiscal Responsibility and Reform (Simpson-Bowles).

The honorees will receive the 2012 Paul E. Tsongas Economic Patriot Award at a Sept. 20 dinner in Washington that will mark Concord’s 20th anniversary. Rep. Jim Cooper (D-Tenn.) and Steven LaTourette (R-Ohio), who introduced the legislation, will accept the award on behalf of the entire group.

Cooper-LaTourette was the only budget plan to receive bipartisan support in the House this year. Although a House majority later approved a less balanced plan that has no chance of Senate passage, Cooper-LaTourette remains a model for the sort of political compromise that will eventually be required.

“We are honoring Republican and Democratic House members who this year put the national interest above political partisanship,” says Robert L. Bixby, Concord’s executive director. “Instead of pursuing narrow agendas, they put everything on the table, made tough choices and called for shared sacrifice.”

He also praised the 38 honorees for their courage in voting for the plan despite strong opposition from many colleagues and powerful special interests.

 

More of the Same

Election-year politics were on full display last week as Democrats and Republicans pushed familiar positions on taxes and health care rather than moving in more constructive directions on fiscal reform.

President Obama repeatedly called on Congress to approve his proposal for an extension of the Bush-era tax cuts for families that earn less than $250,000 a year. He said the extension would be for one year; otherwise this is the same basic policy he has advocated many times in the past.

The Bush tax cuts as well as a number of other fiscal policies are set to expire at the end of this year. Obama’s proposal would mean that taxes would be higher after this year on incomes above $250,000, an idea that continued to draw heavy Republican criticism on Capitol Hill. Democratic leaders in Congress said they were united behind the President’s plan.

On Wednesday the House called once again for repeal of the 2010 Affordable Care Act on a 244-185 vote that mostly followed party lines. Universally expected to die in the Senate, the measure came after more than 30 other House votes to repeal all or parts of the legislation.

With time running short for elected officials to make a number of critical policy decisions this year, The Concord Coalition has urged them to focus on plans that would spread the burden of deficit reduction throughout the budget and would have some chance of drawing the bipartisan support necessary for passage.

 

CBO Projects High Defense Spending

The Congressional Budget Office (CBO) has warned that the Pentagon’s base budgetary plans would exceed the spending caps in last year’s Budget Control Act by $14 billion in Fiscal Year 2013 and by $508 billion through 2021, even before taking into account the spending limits set by sequestration under the law.

With the sequestration limits that are scheduled to start in January, CBO said in a report last week, the gaps would grow to $66 billion in FY 2013 and $978 billion through 2021. The base budgetary plans do not include overseas contingency operations such as the war in Afghanistan.

The CBO also projects that the Defense Department’s plans will cost $123 billion -- or 5 percent -- more to execute through 2017 than the department estimates. The budget office notes the historical trend of defense spending that has exceeded the department’s planning estimates, notably for pay, health care and weapons.  
           
In response, Pentagon officials have questioned some of CBO’s assumptions, saying they did not take into account many of the department’s proposals to control costs.  

The CBO’s report comes amid mounting concern in Congress over the possible effects that the automatic cuts could have on the defense industry and national security if they are allowed to take effect. This week the full House is expected to consider the defense appropriations bill.

 

International Groups Urge U.S. Action

The International Monetary Fund (IMF) has urged Washington to both provide short-term support for the U.S. economic recovery and start to “decisively tackle” its larger fiscal challenges over the next few years.

The Concord Coalition has offered similar advice to U.S. policymakers, as has organizations such as the Congressional Budget Office, the Federal Reserve and the Organization for Economic Cooperation and Development (OECD).

The IMF, in recently releasing its annual assessment of the American economy, said the recovery “remains tepid” and subject to “downside risks” -- notably those connected to uncertainty over Washington’s fiscal plans and Europe’s financial difficulties.

“The recession significantly worsened the state of U.S. public finances, which were already on an unsustainable path, and exposed vast gaps in the financial regulatory and supervisory frameworks, which reforms are gradually addressing,” the IMF said.

The OECD offered similar advice in its recent survey of the American economy: “Current legislation should be amended to avoid a sharp fiscal contraction in 2013, which would derail the recovery. Rather, fiscal consolidation should occur at a gradual pace, and should be implemented as part of a commitment to a medium-term framework to restore fiscal sustainability.”

 

New Campaign Aims to 'Fix the Debt'

“Campaign to Fix the Debt,” a new initiative to push for comprehensive fiscal reform, is being launched in Washington today. The campaign calls the unsustainable long-term path of the federal debt “a grave challenge to our future.”

The goal is “to galvanize national support for a comprehensive debt reduction plan that Congress can pass and the President will sign by July 4, 2013 at the very latest.”

With support from a bipartisan coalition of budget experts, former lawmakers, and business and civic leaders, the campaign promises to  “make clear the consequences of not enacting such a plan, and create an environment where voting ‘yes’ on a comprehensive debt reduction plan is good policy and good politics.”

The official “Fix the Debt” launch was scheduled for this afternoon at the National Press Club.

Concord Coalition Co-Chairman Sam Nunn, a former U.S. senator from Georgia, serves on the campaign’s steering committee. One of the campaign’s chairmen is Judd Gregg, a former U.S. senator from New Hampshire and a member of Concord’s board of directors.