Federal Relations

January 14, 2013

This Week in DC

Washington, DC is gearing up for the Presidential Inauguration, scheduled to take place on Monday, January 21st (MLK Day). The Senate will remain in recess until then (they were in recess last week as well), while the House is in session today through Wednesday.

The big issues facing this new Congress continue to be fiscal in nature. Last week, the Office of Management and Budget (OMB) confirmed that the administration’s FY2014 budget proposal would be delayed until March. By law, the President’s budget proposal is due to Congress the first Monday in February, which will be February 4th this year, but many now expect it to be about a month late. Preparation of the FY2014 budget has been complicated by greater than usual uncertainty as Congress has yet to settle on final spending levels for the current fiscal year, which is currently under a continuing resolution (CR) until the end of March. And until last week’s fiscal cliff deal was enacted, it was unclear what tax rates would be in effect or whether $109 billion in automatic spending cuts would begin January 2nd (sequestration now delayed until the end of February). It now seems possible that the federal government may have to operate under a yearlong CR and that sequester is a distinct possibility.

But before Congress takes final action on FY2013, or preliminary action on FY2014, they must first deal with raising the debt ceiling. It is predicted that the government will begin defaulting on some of its obligations sometime between February 15th and March 1st. This debate will begin in earnest in the next couple of weeks, but the partisan messaging has already begun. Republican leadership is indicating that they may force a government shutdown if democrats and the President don’t agree to additional spending cuts in exchange for raising the debt ceiling. Democratic leadership has indicated that they would support the President in lifting the debt ceiling without congressional approval if an agreement cannot be reached in Congress.

While nothing seems certain these days, the one thing that is clear is that Congress will continue it’s partisan fight over how best to deal with deficit reduction and other major policy issues like gun control and immigration.