Federal Relations

January 31, 2012

Budget Season Begins

President Obama will delay the release of his FY13 budget request by a week, until February 13th, but lawmakers will still get a start on budget season today when the Congressional Budget Office (CBO) releases its annual budget and economic outlook. This report will certainly re-energize the debate around the issue of the automatic spending cuts that are set to take effect next January as required in the Budget Control Act of 2011 (PL 112-25).  Those cuts, officially referred to as a sequester, were required when the Joint Select Committee on Deficit Reduction failed to produce $1.2 trillion in savings over a decade.  The cuts are expected to reduce appropriations for FY13 by roughly 9 percent across the board.

The CBO’s report, to be released momentarily, serves as the unofficial kickoff of budget season.  Congressional budget committees in both chambers will hold hearings over the next few weeks on spending, taxes, and entitlements. The pace will pick up further when President Obama presents his FY13 budget request to Capitol Hill on February 13th. Committee leaders say they plan to hold hearings on the request and want to write congressional budget resolutions this spring. Those resolutions will serve as non-binding blueprints for appropriators as they draft the annual spending bills.

The President is expected to include an alternative to the automatic cuts in his budget request, which will likely include a number of familiar policies that have been recommended previously but not enacted.  House Republicans will present their recommendations in their FY13 budget resolution in a few months. The GOP budget is expected to limit the automatic cuts, especially for defense programs, by making further reductions in discretionary and maybe even mandatory programs.

However, none of this is likely to lead to any serious deficit reduction action.  As you might recall, lawmakers debated and negotiated this issue for much of 2011 and still failed to come to any consensus on deficit reduction recommendations.  This will probably end up in a chaotic post-election lame-duck session to deal with the sequester – and a whole lot of expiring tax cuts – which will kick in on January 2, 2013 unless Congress takes action. 

Read more about the traditional calendar of congressional budget activities.