Budget Season Ramping Up – Football season may have ended last night, but budget season is just heating up. Lawmakers have introduced a plethora of bills in order to show voters that they are serious about addressing our fiscal problems. Expect that trend to continue, but pressure will increase for real action.
Budget Pre-Game – The White House will release its Fiscal Year 2012 budget request a week from today, on February 14. Office of Management and Budget Director Jacob Lew gave a preview in Sunday’s New York Times. In his op-ed he states that “the president’s budget is a comprehensive and responsible plan that will put us on a path toward fiscal sustainability” and offers a foretaste of some of the “tough choices” the budget makes. Specifically, Lew says that community service block grants will be cut in half, saving $350 million, and the rest will be reformed to make the grant process more competitive. Another cut is $125 million from the Great Lakes Restoration Initiative, about a quarter of the program’s current funding. He also mentions that the Community Development Block Grant program will be cut by $300 million. These cuts are very small, but do have significance given President Obama’s background as a community organizer in the Great Lakes region. We hope that the White House is sending a signal that there will be no sacred cows in reducing the national debt and that there will be plenty more cuts in his budget. Lew also reiterated the president’s State of the Union call for reform of the tax code and Social Security.
House Laces Up – The House of Representatives returns this week from a week-long recess and will get to work with its own budget cutting. On Tuesday the spending targets announced last week by House Budget Committee Chair Paul Ryan (R-WI) will be officially posted in the Congressional Record and the House Appropriations Committee later in the week will release a draft Continuing Resolution (CR) for FY 2011 that reflects the new 302(b) spending allocations set by Committee Chair Harold Rogers (R-KY). The House will vote on the CR next week. The floor debate over the CR promises to be interesting as House leaders have promised an open process allowing for amendments, which will provide members unhappy that Chairman Ryan’s cuts didn’t go far enough an opportunity to propose deeper spending reductions.
No Putting a Lid on Debt Ceiling Debate – The Treasury Department last week said that its timetable for reaching the statutory debt limit has been moved back slightly. Treasury now projects that the ceiling will be reached in the period between April 5 and May 31. Meanwhile, Congress remains divided over increasing the debt limit when the time comes. A vocal group in Congress seems willing to risk the consequences of not raising the ceiling unless steep and immediate spending cuts are enacted. CRFB hopes the debt ceiling debate will result in a comprehensive fiscal plan that puts us on the path to sustainability. Learn more about the debt ceiling here.
Earmark Reformers Leave Their Mark in the Senate – After President Obama threatened to veto any legislation with earmarks in his State of the Union address, Senate Appropriations Chair Daniel Inouye (D-HI) finally relented in his adamant opposition and said that his committee would observe a two-year ban on earmarks. This is a hopeful example of the President showing leadership and resolve and seeing results. We hope to see more of this on fiscal matters. In response to Inouye’s announcement, Senator Ben Nelson (D-NE) introduced a sense of the Senate resolution calling for all funds saved from the earmark moratorium to be applied directly to reducing the national debt. Also, Senators Tom Coburn (R-OK) and Mark Begich (D-AK) introduced legislation to rescind “orphaned earmarks” – earmarked funds that are still at least 90 percent unused nine years after they were appropriated. The senators claim that total savings could exceed $500 million.
Senators Want to Follow House on Cutting Their Own Expenses – Senator Roger Wicker (R-MS) is calling on the Senate to reduce members’ office budgets and committee funding by 5 percent. The House approved a similar proposal last month. Senator Jeff Sessions (R-AL) wants to go even further, recommending a 15 percent reduction in the Senate’s budget. Also, Senator Johnny Isakson (R-GA) introduced legislation that would direct any unused funds from members’ office allowances to go towards deficit reduction. The House approved a similar bill last year. Moreover, Sens. Coburn and Mark Warner (D-VA) introduced a bill on Thursday to end the automatic printing of every bill and resolution introduced in Congress. The House approved the measure last month.
Senate Looks for Bipartisanship – The trend in the Senate so far this year has been to seek bipartisanship on fiscal issues. Bills last week to cap federal spending and change the budget process had bipartisan sponsors, just as many of the bills mentioned above. In addition, a meeting last week on fiscal responsibility attracted some 40 members on a bipartisan basis and a bipartisan group is working on a comprehensive fiscal plan based on the recommendations of the White House Fiscal Commission. This is taking the bipartisan seating at the State of the Union to the next level and encouraging bipartisan solutions.
Key Upcoming Dates
February 9 – Federal Reserve Chairman Ben Bernanke testifies before the House Budget Committee at 10 am on "The State of the U.S. Economy."
February 9 – House Oversight & Government Reform Committee (TARP & Financial Services Suncommittee) hearing on "State and Municipal Debt The Coming Crisis?" at 9:30 am.
February 10 – Congressional Budget Office Director Doug Elmendorf testifies before the House Budget Committee at 10 am on CBO’s Budget and Economic Outlook.
February 10 – U.S. Treasury Department releases its Monthly Treasury Statement of Receipts and Outlays for January.
February 10 – Weekly unemployment claims data released by the Department of Labor.
February 14 – White House unveils its FY 2012 budget.
Week of February 14 – House of Representatives will vote on extending the continuing resolution currently funding the government.
February 21 – Deadline for submitting entries to CRFB's "Voices of America" fiscal video contest.
March 4 – The current continuing resolution (CR) funding government operations expires. Congress must adopt spending bills funding the federal government for the rest of FY 2011 by then or pass another stopgap measure.
April 5 - May 31 – Period in which Treasury Secretary Geithner says the U.S. will likely reach the debt ceiling. (Revised)