Category: Budget

Update:  The House this afternoon passed their bill that would suspend the debt ceiling until the middle of May. The vote was 285-144. Senate Majority Leader Harry Reid (D-NV) said Wednesday that the Senate will pass the House’s bill; the White House has indicated it will not block the measure. 

The House will consider legislation today would provide for a short-term suspension of the nation’s borrowing limit, which likely removes the threat of a government default for at least four months. House Speaker John Boehner (R-OH) has promised his members that he will work with House Budget Chair Paul Ryan (R-WI) to advance a budget that will balance the federal budget in 10 years and said the automatic spending cuts due to hit March 2^nd (sequestration) will remain in place unless other reductions are made. Democrats appear to be mildly supporting the House GOP’s efforts. The White House issued a Statement of Administration Policy on Tuesday saying President Obama “would not oppose a short-term solution to the debt limit.” The House is expected to pass the bill today.

The Senate has acknowledged that the four-month suspension could buy Congress time to work out a broader bipartisan budget deal.  But, as always, the devil will be in the details.  It does seem all but certain that large budget cuts are coming for FY2013 – even though this fiscal year is nearly half over.

The big questions remain: will cuts come through sequestration or a more targeted approach directed by Congress, will cuts be evenly applied to defense and non-defense discretionary programs, and will cuts to discretionary spending be tempered by savings found through entitlement reform?

Amid all the pomp and circumstance yesterday, House Republicans released their proposal to postpone a fight over increasing the nation’s debt limit by suspending it until May 19^th. The measure, which is expected to be considered on the House floor tomorrow, would suspend the debt limit through May 18^th and then provide for an automatic increase in the current $16.4 trillion limit to match the amount of the government’s outstanding debt plus new obligations “to fund a commitment incurred by the federal government that required payment before May 19.” The proposed legislation also would suspend salaries to lawmakers in either chamber that does not adopt a FY2014 budget resolution by April 15^th, as required by the 1974 budget law.

If this legislation is approved by both chambers, it could take one of the three big “fiscal cliff part two” issues off the table and give lawmakers time to focus on two other fiscal issues confronting Congress: the sequester and the continuing resolution (CR) funding the government, both due to hit in March. Many Washington insiders believe the GOP plan might help take the pressure off spending battles on Capitol Hill by allowing Congress to return to creating budget resolutions in each chamber that could be debated in conference and passed through reconciliation. Many might recall this as “regular order” – something we haven’t seen in several years. According to CQ, a Senate budget resolution also could offer a path to greater deficit reduction over time because lawmakers could address specific programs and policies, a difficult proposition under continuing resolutions. Moreover, if the House and the Senate budget committees can work together in conference, it would make it possible to achieve deficit reduction through the reconciliation process, which forbids Senate filibusters.

However, it is not yet unclear if the Senate Democrats will go along with this strategy. We should know more in by next week as the clock is ticking down to the next fiscal crisis.

Earlier today, Barack H. Obama was sworn in for his second term as the 44^th President of the United States.  During his inaugural speech, the President called for action on climate change, gay rights, immigration, and the nation’s partisan divide. The President also made the case that the nation needs to come together to do things people cannot do on their own — from training teachers to building roads to providing for the nation’s defense. On the deficit fights that have consumed much of the public debate in DC the past two years, Obama called for reform that still preserves entitlement programs.

Meanwhile, House Republicans unveiled their proposal today to temporarily increase the nation’s debt ceiling. The measure scheduled for House floor action this week would suspend the debt limit through May 18^th, and then provide for an automatic increase in the current $16.4 trillion limit to match the amount of the government’s outstanding debt plus new obligations “to fund a commitment incurred by the federal government that required payment before May 19.” The legislation would also suspend the payment of salaries to lawmakers in either chamber that does not adopt a FY2014 budget resolution by April 15^th, as required by the 1974 budget law. The measure is expected to be on the floor Wednesday.