Line Items: Easter Egg Edition A Weekly Update on Budget and Fiscal Policy Developments and a Look Ahead
What the Bunny Left Behind – We’ve given up on giving things up for Lent, Passover will be passing, and the Easter Bunny has hopped into the pastel sunset. Yet, plenty of tasty goodies have been left behind. Likewise, legislators left plenty in their wake as they rushed home for the holidays, though nothing very sweet. Congress was out last week and remains in recess this week. Lawmakers will then return to some unfinished fiscal business. Easter eggs are wondrous things – colorful and full of surprises. They can be found in unexpected places. You never know what you will find inside the plastic shell until you open it up. But sometimes what you find is disappointing – candy that you don’t like, or in the most disheartening cases, nothing at all. The hunt is often the best part – the exhilaration of finding hidden treasure where no one else dared to look. We are currently in the middle of such a hunt. Perhaps we will discover that the answers to our fiscal problems aren’t hidden at all…that they are right in front of us. Hidden in clear sight, they simply are not colorfully wrapped. Maybe we will find that by putting our eggs together, we can uncover what we are looking for.
Budget Still Isn’t Hatched – The House passed the FY 2013 budget resolution drafted by House Budget Committee Chair Paul Ryan (R-WI) on a party-line vote just before departing. A bipartisan alternative sponsored by Reps. Jim Cooper (D-TN) and Steve LaTourette (R-OH) that was based on the Simpson-Bowles proposal was defeated, but 38 courageous lawmakers supported the bill and the effort achieved a lot of outside support. Several other alternatives were also considered and rejected. Meanwhile, the Senate is not expected to approve of a budget blueprint, even though Senate Budget Committee Chair Kent Conrad (D-ND) says his committee will mark up a budget resolution next week.
Rolling off a Fiscal Cliff? – A confluence of events at the end of this year and beginning of 2013 – including the expiration of the 2001/2003/2010 tax cuts, reaching the statutory debt limit, and triggering the sequester – threaten the perfect fiscal storm. Yet, simply proscribing or delaying these actions would cause the national debt to mount to catastrophic heights. CRFB examined what Federal Reserve Chair Ben Bernanke calls the “fiscal cliff” and how to forge a sensible path in a recent paper. We also previously looked at how large-scale deficit reduction could be done in a smart way in a blog post.
Presidential Candidates Hunt for Traction – With former Massachusetts Governor Mitt Romney on track to be the Republican presidential nominee, the general election campaign is beginning to take shape. President Obama sought to make a contrast with his likely foe in a speech that was highly critical of the House Republican budget, which Romney embraced, calling it a "Trojan Horse" and a "prescription for decline." Meanwhile, a Gallup Poll found that the federal budget and the national debt is a top concern for voters. These developments illustrate why CRFB’s U.S. Budget Watch project is so important, as it assesses the budgetary impact of the candidates’ policy proposals and provides principles for conducting a fiscal debate that advances an informed and constructive discussion of the issue and possible solutions. Candidates need to seriously debate the debt during this campaign.
Don’t Put All Your Eggs in the Buffett Rule Basket – The Senate will vote next week on legislation sponsored by Sen. Sheldon Whitehouse (S. 2230) to implement the "Buffett Rule," which would ensure that taxpayers making over $1 million per year would pay at least a 30 percent effective tax rate. The bill also expresses the sense of the Senate that Congress should enact tax reform that makes the tax code more simple and fair by addressing tax loopholes. The bill is estimated by the Joint Committee on Taxation to increase revenue by $47 billion over ten years relative to current law. The vote, just in time for Tax Day, should bring needed attention to tax reform, but more fundamental reform of the tax code will be required. There are plenty of ideas for how addressing tax expenditures can be a part of fundamental tax reform, see here, here and here for a few.
First Half Deficit at $777 Billion – The Congressional Budget Office last week pegged the federal budget deficit for the first six months of fiscal year 2012 at $777 billion, somewhat lower than the $829 billion deficit at this point last year and on course to hit the $1.17 trillion deficit for FY 2012 projected earlier this year by CBO.
Egging on a Debt Reduction Plan – CRFB’s National Debt Tour recently hit New York City, where former Fiscal Commission co-chairs Alan Simpson and Erskine Bowles joined New York City Mayor Michael Bloomberg at a Wall Street Journal breakfast for business leaders. Simpson and Bowles then appeared on the Charlie Rose Show. The debt tour previously visited Boston, Massachusetts and hits Roanoke, Virginia next week; future stops will also include Seattle, Washington and Dallas, Texas among many other places. When it comes to addressing deficits and debt in a way that strengthens the economy, people are looking for leadership and solutions from Washington, but all they see is partisanship and soundbites. This cross-country tour will bring people together to confront this major challenge to our future. The National Debt Tour will inform Americans about what’s at stake, engage them in discussing solutions, and empower them to demand action from their leaders towards a "Go Big" plan to beat the debt.
Wyoming Calls for a Fiscal Plan from DC – One might not expect Wyoming to be the place that sparks action in Washington, DC for a comprehensive debt reduction plan, but that may well be the case. The Wyoming state legislature overwhelmingly approved of a resolution urging "the United States Congress to pass a comprehensive and aggressive budget resolution, based on the National Commission for Fiscal Responsibility’s The Moment of Truth plan, to address our nation’s deficit spending and national debt." Let’s hope other states follow suit.
Key Upcoming Dates (all times ET)
- Dept. of Labor's Bureau of Labor Statistics releases March 2012 Consumer Price Index (CPI) data.
- Tax Day! Federal income tax returns are due.
- House Subcommittee on Economic Development, Public Buildings, and Emergency Management hearing: "GSA's Squandering of Taxpayer Dollars: A Pattern of Mismanagement, Excess, and Waste"
- Presidential contests in Connecticut, Delaware, New York, Pennsylvania, and Rhode Island
- US Dept. of Commerce's Bureau of Economic Analysis releases its advance estimate of 2012 first quarter GDP growth.
- Dept. of Labor's Bureau of Labor Statistics releases April 2012 employment data.
- Presidential contests in Indiana, North Carolina, and West Virginia
- Presidential contests in Nebraska and Oregon
- Dept. of Labor's Bureau of Labor Statistics releases April 2012 Consumer Price Index (CPI) data.
- Presidential contests in Arkansas and Kentucky
- Presidential primary in Texas
- US Dept. of Commerce's Bureau of Economic Analysis releases its second estimate of 2012 first quarter GDP growth.