And so it goes, another 11th-hour “deal” to avoid a fiscal catastrophe that should have been avoided by Congress simply doing its job. The negotiated agreement on opening the government and raising the federal debt ceiling is little more than deciding how far down the road Congress would kick those fiscal cans, and as expected they were punted into 2014.
Little attention was paid to what I think is the biggest achievement that grand exercise, namely the agreement of both chambers to convene a conference committee to try and reconcile the House and Senate FY2014 budget resolutions. These resolutions are nonbinding legal documents which are supposed to set an annual spending path for the federal government. Up until this latest mess, it was generally considered the two resolutions – the Senate last summer passed its first budget resolution since 2009 – are pretty much irreconcilable. This is because of the conservative frugality of the House resolution and the general preservation of the status quo – plus a lot of truly bizarre and unrelated amendments – of the Senate version.
An FY2014 budget resolution blessed by both chambers makes future spending decisions a lot easier. It makes decisions about the continuing resolution that expires in mid-January a whole lot more obvious, and sets up both House and Senate Appropriations Committees to actually do their jobs in 2014, namely pass a dozen individual appropriations bills.
All of that rosy rhetoric is predicated upon the conference committee actually reaching agreement, and right now, I’d say the odds are less than 80-20 that will happen. You’ll recall a few years back we were supposed to avoid going over the fiscal cliff because a bicameral, bipartisan “super committee” could surely come to agreement on spending cuts. That committee failed, and we were introduced to “sequestration,” across-the-board federal program spending cuts that were never supposed to happen, which nobody likes and which kick in post-December 13, the deadline for this new conference committee to report back to Congress.
The conference will be chaired by House Budget Committee Chair Paul Ryan (R, WI), widely respected on both sides of the aisle for his budget and finance acumen, though not all agree with his take-no-prisoners approach to federal spending cuts. Broadly, Ryan approaches the budget as the conservative tool with which he intends to reduce spending across the board and reinvent entitlement programs, like Social Security and Medicare. His recommendations over time have been conservative albeit apolitical and agnostic when it comes to so-called any of sacred cow programs, such as Medicare.
Across the table from Ryan will be the Senate Budget Committee Chair Patty Murray (D, WA), essentially Ryan’s opposite when it comes to the underlying philosophy of setting a federal budget. Murray, who co-chaired the failed fiscal cliff super committee back in 2011, learned from that experience, but will fight to retain social programs and ensure funding continues to flow to programs her party holds in high regard, particularly those providing medical and social services, including food stamps, nutrition programs, medical assistance and the like.
The first order of business for the conference will be to agree on the baseline discretionary spending number. Currently that figure is about $987 billion based on the 2011 budget agreement, and there are senior Republicans who believe that number is “austere.” Ryan will tell you holding to that number is what has contributed to reducing the deficit.
The GOP is generally fine with holding the line at that level, while Democrats have argued for the pre-2011 cap on discretionary dollars of $1.51 billion or so. However, leaders have signaled from both sides of the aisle they’re willing to negotiate on the discretionary number.
Both political parties agree – though Ryan’s party leadership is less outspoken – that spending reductions will come at a price. That price is the inclusion in the final agreement – if it ever gets to that point – of “revenue items,” and both personal and corporate tax codes are on the table. These include tax breaks which have outlived their usefulness or are too parochial to a single industry or group, and the list includes sweetheart deals in the tax code, such as those provisions allowing multinational corporations headquartered in the U.S. to stash cash overseas. The prospective deal may also include tax increases, new taxes or user fees in certain parts of the government.
Like I said, the odd rights now of this whole exercise falling apart are about 80-20. However, there are a lot of smart people going to be sitting on that conference committee, including Budget Committee member Sen. Debbie Stabenow (D, MI), chair of the Senate Agriculture Committee, who could bring to the table about $20 billion in savings from the Senate Farm Bill if she prevails in Farm Bill conference committee action.
No one wants to go through the last 16 days again. No one wants to listen to the political rhetoric, least of all the voters.
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