‘Line’ Items: Fair Edition A Weekly Update on Fiscal Policy Developments and a Look Ahead

Fair Time – We are smack in the middle of fair season. Fair goers across the country are getting their fill of fried food and tractor pulls. It is fair time for the economy, too, as every day the markets seem to mimic a carnival ride with large fluctuations signaling uncertainty and volatility, and slow growth fueling fears of another recession. How to spur the economy in the midst of mounting national debt will be a key question for presidential candidates as campaigns rev up and as the new congressional super committee begins its deliberations.

“Super Committee” Members Named – The 12 members of the “Super Committee” tasked with reducing the deficit got their capes last week. The bipartisan, bicameral group was created by the debt ceiling agreement. Its goal is to produce a plan with $1.5 trillion in deficit savings by November 23 that Congress must vote up or down. If such a plan is not agreed to, then automatic spending cuts in defense and domestic spending will be triggered. The members of the Joint Select Committee on Deficit Reduction are Sen. Patty Murray (D-WA, co-chair), Sen. Pat Toomey (R-PA), Sen. John Kerry (D-MA), Sen. Jon Kyl (R-AZ), Sen. Max Baucus (D-MT), Sen. Robert Portman (R-OH), Rep. Jeb Hensarling (R-TX, co-chair), Rep. Chris Van Hollen (D-MD), Rep. Dave Camp (R-MI), Rep. James Clyburn (D-SC), Rep. Fred Upton (R-MI), and Rep. Xavier Becerra (D-CA).

US still Aaa OK with Moody’s, for Now – Credit rating service Moody’s reaffirmed its highest rating (Aaa) for the US last week, choosing not to follow Standard & Poor’s in downgrading the US (read “Understanding the S&P Downgrade”). However, Moody’s did put the US on a “negative outlook” and warned that a downgrade could occur in the next year if additional savings were not found. As reported by Reuters, a Moody’s analyst said in a report, “For the Aaa rating to remain in place, we would look for further measures that would result in the ratio of federal government debt to GDP, for example, peaking not far above the projected 2012 level of near 75 percent by the middle of the decade and then declining over the longer term.”

Presidential Campaign Kicks Off – The 2012 presidential campaign began in earnest last week with a major debate among the GOP candidates in Iowa and the Ames Straw Poll on Saturday. In advance of the debate, CRFB offered some questions the candidates should be expected to answer. No doubt that fiscal policy will be a big issue in the campaign.

Key Upcoming Dates

September 6

  • Senate back in session.

September 7

  • House of Representatives back in session.
  • Debate at the Ronald Reagan Presidential Library in California for 2012 Republican presidential candidates. [Corrected]

September 16

  • The Joint Select Committee on Deficit Reduction must hold its first meeting by this date.

October 1

  • New fiscal year begins. Legislation fully funding the federal government, or a stopgap measure with temporary financing of government operations, must be enacted by then.

October 14

  • Congressional committees must submit any recommendations to the new Joint Select Committee on Deficit Reduction by this time.

November 23

  • The Joint Committee is required to vote on a report and legislative language recommending deficit reduction policies by this date.

December 2

  • The Joint Committee report and legislative language must be transmitted to the president and congressional leaders by this date.

December 9

  • Any congressional committee that gets a referral of the Joint Committee bill must report the bill out with any recommendation, but no amendments, by this date.

December 23

  • Congress must vote on the bill recommended by the Joint Committee by this date. No amendments are allowed.