Line Items: Presidents Edition Weekly Update on Budget and Fiscal Policy Developments and a Look Ahead
Honoring Leaders – We celebrated President’s Day on Monday, the day we recognize those who have led this great nation. The House and Senate are honoring such leadership by taking the week off while a couple of key fiscal deadlines approach. While names like Washington and Lincoln often come to mind when thinking of presidents, we’ve had many other men occupy the office that we can learn something from, for better or for worse, even the ones we may not remember.
Still Polk-ing Around for a Deal – James K. Polk was a dark horse victor for the White House in 1844. He is remembered by many historians for his ability to set an agenda and accomplish his goals in office. Achieving a comprehensive debt deal seems like a dark horse nowadays with some pundits declaring it hopeless because extreme partisanship is in the way, but Americans are demanding action. A Quinnipiac Poll taken just before last week’s State of the Union address showed that the federal budget deficit was a top issue that voters wanted addressed in the speech, coming in second only to the economy. President Obama dedicated a good deal of his speech to the deficit, which was welcomed by CRFB, but our president Maya MacGuineas also called for more leadership and specifics from the President. Erskine Bowles and Alan Simpson entered the discussion on Tuesday by releasing a new framework that seeks to find middle ground to replace the sequester with a more comprehensive, longer term approach.
No Nixon the Sequester? – Policymakers continue to joust over the sequester, with the March 1 deadline now less than two weeks away. While both parties acknowledge that sequestration is not the optimal way to reduce the deficit and there is no lack of ideas for replacing it, finding an approach that both sides can agree on is looking less likely and many are resigning themselves to the disgrace of the sequester taking effect. President Obama reiterated his call to replace the sequester on Tuesday in a White House event. The Senate plans to vote on a Democratic alternative to the sequester next week that would replace this year’s sequestration with $120 billion in deficit savings featuring an even mix of spending cuts and tax increases. The revenue would be produced by implementing the so-called “Buffett Rule” by requiring millionaires to pay a 30 percent effective tax rate. Spending cuts would come from eliminating agriculture subsidies and defense reductions not as severe as scheduled under the sequester. The White House has signaled another possible approach in an economic plan released in conjunction with the State of the Union address, which calls for $1.5 billion in deficit reduction over the next decade through $900 billion in spending cuts and $600 billion in revenue through tax reform that closes loopholes known as tax expenditures. Republicans still are not showing support for any additional revenues. Richard Nixon is one of the most infamous presidents, but he had some noteworthy accomplishments, such as easing tensions with China. This required Nixon to go against his anti-communist ideology, but it paid dividends. Of course, he put politics above the best interests of the nation in the Watergate scandal and ultimately resigned in disgrace. Will anyone from either party go against their entrenched positions to facilitate a solution, or will they continue to put politics above country?
Looking to Fillmore Time – Anticipating no deal before the March 1 sequestration deadline, some lawmakers are looking at the next deadline (see the full list of fiscal speed bumps), the March 27 expiration of the stopgap measure funding the federal government. The reasoning is that agencies can make adjustments to deal with sequester cuts initially and then a new government funding bill could reduce the cuts or at least give agencies more flexibility in how to implement them. Reports are that House Speaker John Boehner (R-OH) has promised conservatives in his caucus that a continuing resolution will be advanced with spending set at $974 billion, below the current level of $1.043 trillion. However, House Appropriations Committee Chair Harold Rogers (R-KY) is saying his committee will consider a stopgap measure maintaining the $1.043 trillion level with instructions to follow the sequester. Millard Fillmore is not looked upon favorably by most historians, as he was unable to prevent the growing rift between North and South. The Compromise of 1850 he championed resolved nothing, paving the way to the Civil War. After his presidency, he further sullied his reputation by joining the nativist Know Nothing movement. Lawmakers are not resolving anything with deals that simply kick the can down the road. The Know Nothings and Do Nothings of the present will not be looked kindly upon by history.
Keeping their Coolidge on Tax Reform – Despite dire predictions earlier this year that tax reform was dead, lawmakers are pushing on. Last week the House Ways and Means Committee announced 11 bipartisan working groups that will look at various parts of the tax code. The White House is also signaling it is serious about tax reform. Treasury Secretary Designee Jack Lew said at his Senate confirmation hearing that tax reform is a top priority. Calvin Coolidge was known as a man of few words, but decisive action. Washington could use more of those qualities.
Key Upcoming Dates (all times are ET)
- Dept. of Labor's Bureau of Labor Statistics releases January 2013 Consumer Price Index data.
- Bureau of Economic Analysis releases second estimate of 2012 4th quarter and annual GDP.
- Across-the-board cuts to defense and non-defense discretionary spending prescribed in the Budget Control Act, known as "sequestration," will take effect.
- Dept. of Labor's Bureau of Labor Statistics releases February 2013 employment data.
- Dept. of Labor's Bureau of Labor Statistics releases February 2013 Consumer Price Index data.
- Current continuing resolution (CR) funding the federal government expires.
- Bureau of Economic Analysis releases third estimate of 2012 4th quarter and annual GDP.
- Dept. of Labor's Bureau of Labor Statistics releases March 2013 employment data.
- Congress must pass a budget resolution as specified in the Congressional Budget Act. Also, due to the debt ceiling suspension bill, lawmakers will have their pay withheld after this date until their respective chamber passes a resolution.
- Dept. of Labor's Bureau of Labor Statistics releases March 2013 Consumer Price Index data.
- Bureau of Economic Analysis releases advance estimate of 2013 1st quarter GDP.