Line Items: Game of Thrones Edition A Weekly Update on Budget and Fiscal Policy Developments and a Look Ahead
Winter is Coming – HBO’s “Game of Thrones” has a legion of devoted fans. The show deftly combines mystical elements with real-world political intrigue. Of course, the gratuitous sex and violence may also play a role in its popularity. The fictional capital of King’s Landing could be mistaken for Washington, DC except for the (slightly) better sanitation in our capital. King’s Landing is filled with plotting and backstabbing and is currently under siege. DC has more than its share of schemes and, in a way, is also under siege due to the increasing unpopularity of its inhabitants and their inability to address the problems plaguing the nation. The days may be getting longer and the temperatures higher in DC, but there still is a growing sense that, as the Starks constantly warn, “Winter is coming.” This winter could be particularly harsh as the “fiscal cliff” that Federal Reserve chairman Ben Bernanke warns of could wreak havoc on the already fragile economy a the end of the year. The expiration of the 2001/2003/2010 tax cuts, the payroll tax holiday, the Alternative Minimum Tax (AMT) patch and several tax extenders (referred to by some as "Taxmageddon”) along with the across-the-board cuts imposed by the sequester under the Budget Control Act (BCA), will all occur at once, along with the debt ceiling also being reached. The challenge for lawmakers in a post-election lame duck session of Congress will be to replace fiscal cliff with a comprehensive plan that achieves a significant level of deficit reduction, but in a smart, phased-in manner. Learn more about the fiscal cliff here.
You Either Win or You Die – As they set the stage for the election and its aftermath, both parties appear to be following the Cersei Lannister view of politics, “When you play the game of thrones, you win or you die; there is no middle ground.” As Politico reports, Republicans want to soften the defense cuts under the sequester by further cutting social programs while Democrats plan to hold firm. Meanwhile, no progress is being made on entitlement and revenues, which will have to be a significant part of any comprehensive plan to significantly reduce the deficit. Last week the House passed legislation replacing the defense cuts for 2013 under the BCA sequester with $238 billion of cuts over ten years to programs such as Medicaid, food stamps, and the health care reform law. We’re all about being ambitious, but our idea of a "Go Big" approach depends on middle ground. Each side must put everything on the table to reach a comprehensive plan that puts the country on a sustainable fiscal course.
House Passes First Fiscal Year 2013 Spending Bill – The appropriations process is as dysfunctional as the Lannister family. Temporary stopgap measures have now become the norm when it comes to funding the government and this year appears headed in the same direction. Last week the House passed the first spending bill for the fiscal year that begins October 1. The Commerce, Justice, and Science appropriations bill provides $51.1 billion in funding for these agencies. Because this amount is less than the spending level agreed to under the BCA, the President has threatened to veto the bill if it somehow manages to pass the Senate. The White House also objects to policy riders contained in the bill. This week the House Appropriations Committee will mark up the FY 2013 spending bills for Homeland Security, Military Construction/Veterans Affairs, Defense and State/Foreign Operations. The security bills have spending levels above those agreed to in the BCA. All this means we can again expect the fiscal year to begin without most, if any, spending bills in place.
Going on Offense on Defense – Military action is significant to the plot of Game of Thrones. Likewise, defense spending is significant to the federal budget, and a source of great friction. The House this week will consider the National Defense Authorization Act for FY 2013, which rolls back some of the cuts proposed by the Pentagon to comply with the BCA. This comes as the public expresses support for some defense cuts.
Senate Budget Votes Expected – The annual federal budget blueprint has become akin to the Zombie-like White Walkers – not really among the living but nearly impossible to completely kill. While all hope has been lost for the House and Senate agreeing on a FY 2013 budget resolution, the Senate is still expected to vote on several versions this week in what will be no more than political theater. Senators will exercise their right to bring up budget proposals to the Senate floor since no budget has been approved. The Senate is expected to consider the resolution approved by the House, a version of President Obama’s budget proposal, and proposals from Sens. Pat Toomey (R-PA), Rand Paul (R-KY) and Mike Lee (R-UT). None is expected to muster enough votes to pass. Budget process reform is needed to help improve federal budgeting.
Broad Agreement on Debt Fix – The people of Westeros may not be able to agree on who their king is, but Americans appear to be in general agreement that a comprehensive approach will be required to address the national debt. According to a recent poll from the Peter G. Peterson Foundation, 87 percent of respondents say that a solution to the long-term debt solution will require tax increases and spending cuts. That corresponds with the results of our federal budget simulator, where 94 percent of those who voluntarily submitted their results used a combination of spending cuts and revenue increases.
Want to Know Where the Presidential Candidates Stand? – While not as catchy as "King in the North," cries for the presidential candidates to “Debate the Debt” are growing. Visit the website to learn more and sign the petition calling on the candidates to devote one of the three debates scheduled this fall exclusively to the debt and their specific plans to address it.
Key Upcoming Dates (all times ET)
- 2012 Fiscal Summit in Washington, DC, starting at 8:30 am. Speakers include former President Bill Clinton, House Speaker John Boehner, Treasury Secretary Tim Geithner, Sen. Rob Portman, Rep. Paul Ryan, Rep. Chris Van Hollen, former Sen. Alan Simpson and The Travelers Cos. Chairman and CEO Jay Fishman
- Senate Finance Committee hearing on what tax reform could mean for tribes and territories at 10 am.
- Senate Appropriations subcommittee mark-up of FY 2013 appropriations bill for Military Construction/Veterans Affairs at 11 am.
- Senate Appropriations subcommittee mark-up of FY 2013 appropriations for Homeland Security at 3:30 pm.
- Presidential contests in Nebraska and Oregon
- Dept. of Labor's Bureau of Labor Statistics releases April 2012 Consumer Price Index (CPI) data
- House Appropriations Committee mark-up of FY 2013 appropriations bills for Homeland Security and Military Construction/Veterans Affairs at 10 am.
- House Appropriations Committee mark-up of FY 2013 appropriations bills for Defense and State/Foreign Operations at 10 am.
- 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.
- Dept. of Labor's Bureau of Labor Statistics releases May 2012 employment data.
- Presidential contests in California, Montana, New Jersey, New Mexico, and South Dakota
- Dept. of Labor's Bureau of Labor Statistics releases May 2012 Consumer Price Index (CPI) data.
- Presidential primary in Utah
- US Dept. of Commerce's Bureau of Economic Analysis releases its third estimate of 2012 first quarter GDP growth.