August 1, 2014

Washington Budget Report: June 24, 2014

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Congress Sounds Retreat on Difficult Choices

After lawmakers last year reached a bipartisan budget agreement, this was supposed to be the year of a harmless fiscal ceasefire on Capitol Hill. Unfortunately, the ceasefire is becoming a retreat on fiscal responsibility.

“On issues ranging from tax and entitlement reform to highways and veterans health, Congress has backtracked, ducked and gimmicked its way around hard choices,” Concord Coalition Executive Director Robert L. Bixby writes in a blog post today. “This pattern does not bode well for any attempt to put the budget on a sustainable track after the fall elections.”

Trouble started in February when the House and Senate repealed a reasonable provision that limited cost-of-living adjustments for working-age military retirees -- something lawmakers had embraced only a month earlier. After that, Bixby notes, efforts to permanently fix the unworkable Medicare formula for paying doctors collapsed over the cost, and Congress resorted to yet another short-term patch.

Lawmakers this year have also failed to follow up on their rhetoric about tax reform, shown a reluctance to pay for sharp proposed increases in VA health care funding, and have so far failed to deal with problems with the highway trust fund, which will otherwise run out of money later this summer.

Even the process for making hard choices would be made more difficult by a proposal by Sen. Mark Pryor (D-Ark.) to add procedural hurdles for certain Medicare changes.

The status quo is unsustainable. Consequently, Bixby says, lawmakers should ask themselves “how they will ever get out of the straightjacket they are now drawing tighter and tighter around themselves.”

House OKs Defense Bill But Rejects Proposed Savings

The House passed its Fiscal 2015 defense spending bill last week without key reforms that the Pentagon had proposed.

The legislation, opposed by the administration, appropriates $490.7 billion for the base military budget. The legislation includes weapons systems the Pentagon has requested to retire, including the A-10 Warthog close-air support plane and the U-2 high-altitude spy plane.

The House also rejected reasonable compensation reforms that the Pentagon had requested.

In testimony before a Senate panel last week, top defense officials urged lawmakers to accept their plans to modify weapons systems, compensation, and troop levels to ensure a modern force and appropriate military preparedness.

The House bill also included $79.4 billion for the Overseas Contingency Operations account, a placeholder number that will be finalized once the administration submits its final request. President Obama recently announced he would send about 300 military advisors to Iraq, an assignment that will be funded by the overseas account.

The situation in Iraq underscores the need for the military to be able to quickly respond to unexpected developments. But this readiness and flexibility can be undermined if elected officials hamper needed reforms -- particularly if they do so while further tightening the Pentagon budget in coming years.

Gregg, Rendell Call for Bipartisan Cooperation on Reform

Former U.S. Senator Judd Gregg of New Hampshire and former Pennsylvania Governor Ed Rendell called for bipartisan action to rein in the federal debt at a forum last week in New Hampshire.

Gregg, a member of The Concord Coalition’s Board of Directors as well as a co-chair of Fix the Debt, stressed that despite recent short-term improvements in the deficit, the country's fiscal problems continue to grow. He said the country's growing debt is the result of “a function of government that’s not functioning appropriately.”

Rendell, also a Fix the Debt co-chair, said Democrats should engage in fiscal reform partly to ensure that federal retirement and health care programs remain solvent. Republicans, he said, must realize that “we’re not going to solve this problem without raising revenue.” He suggested eliminating tax expenditures.

The program at the New Hampshire Institute of Politics at Saint Anselm College was presented by the institute, Concord, Fix the Debt, the New Hampshire Forum on the Future and the Warren B. Rudman Center at the University of New Hampshire School of Law.

Durbin, Coburn to Receive Economic Patriot Award

The Concord Coalition is honoring Senators Dick Durbin and Tom Coburn with the 2014 Paul E. Tsongas Economic Patriot Award for their deep commitment to fiscal responsibility.

“Senators Coburn and Durbin have tirelessly encouraged their colleagues in both parties to focus on the need for sweeping budget changes to curb the growth of federal debt, meet the challenges of an aging population and build a stronger economic future for ourselves and future generations,” said Robert L. Bixby, Concord’s executive director.

Both senators were in the bipartisan ‘Gang of Six’ that showed far-sighted fiscal leadership in the Senate. Durbin and Coburn also served on the Simpson-Bowles commission and supported its constructive, bipartisan recommendations.

Coburn, an Oklahoma Republican, was elected to the Senate in 2004 and is retiring from it when the current congressional session ends. Durbin, an Illinois Democrat, is in his third term in the Senate, where he is the Democratic Whip.

The award presentation in Washington will be livetweeted tomorrow night from Concord’s twitter account @ConcordC using the hashtag #EconPatriots.

Thousands Play Updated Federal Budget Challenge

More than 7,000 students, retirees, political leaders and other citizens have played The Concord Coalition’s updated Federal Budget Challenge since we put the latest version online a month ago.

The exercise lets players decide for themselves how they would reduce the nation’s projected deficits over the next 10 years by choosing among 40 different policy options, each with its own price tag or savings.

The updated version, built with our partners from the California-based non-profit Next Ten, takes into account actions that policymakers have taken over the last two years and includes several new options that are available for further deficit reduction.