Line Items: Social Network Edition A Weekly Update on Budget and Fiscal Policy Developments and a Look Ahead
Much Not to ‘Like’ – Facebook had its initial public offering (IPO) on Friday. The hype surrounding the offering illustrated the prominence of social networking in our economy and society. Yet, for all the lofty numbers involved, they pale in comparison to the federal budget. The IPO valuation of Facebook at around $100 billion was indeed eye-popping, but consider that the federal budget ran a deficit of nearly $200 billion in the month of March alone. Social networking may have made us more connected to each other than ever before, but we are just learning how the federal budget connects to us. How we address the national debt will affect the economy in the short run and longer term. Budget decisions will also affect key issues like national security, education, taxes and entitlements. Policymakers will have to make some tough decisions. We can’t afford to kick the can down the road any more. If you think getting behind in checking your Facebook updates is bad, think about the deficit hole we continue to dig.
Debt Ceiling Status Update – If the statutory debt limit was on Facebook, its status might read: "In a relationship with Congress and it’s complicated." The last time we ran up against the debt limit, Washington went to the brink of default and Standard and Poor’s and a few minor credit rating agencies downgraded our credit rating for the first time. We are again looking at hitting the $16.4 trillion debt ceiling at the end of this year and the Treasury Department says it can utilize extraordinary measures to put off an increase until early 2013. Lines are already being drawn in the sand indicating that raising the debt limit will not be any easier this time around. At last week’s Peterson Foundation Fiscal Summit, House Speaker John Boehner (R-OH) made clear that he would only support a debt limit increase that is coupled with federal spending cuts of equal or greater value. The prospect of another debt limit fight makes it all the more critical that lawmakers agree on a comprehensive fiscal plan.
Budget Wonks Have a Meetup – Budget experts, economists, journalists, former policymakers and many others gathered in Washington, DC last week for the 2012 Fiscal Summit. The event featured former President Bill Clinton, House Speaker John Boehner, Treasury Secretary Tim Geithner, former Senator and Fiscal Commission Co-Chair Alan Simpson and many others. Most of the speakers brought up the coming fiscal cliff and the need to develop a fiscal plan. And many said that the Simpson-Bowles plan showed the way.
You’ve Got Fail – It’s hard to imagine for Millennials, but AOL, the granddaddy of social networks that made "You’ve got mail" famous, was once an online powerhouse. Now AOL is mostly AWOL from the digital scene. The concurrent resolution on the budget also seems to have gone the way of AOL. Congress has not adopted a budget resolution in three years and won’t produce one for fiscal year 2013, which begins October 1. The Senate voted on five budget resolutions on Wednesday, but all five went down in defeat in what was really just a political show. The lack of a budget is inciting many calls for reform of the budget process. Sen. Joseph Lieberman (ID-CT) proposed a commission to study the problem and suggest changes. The nonpartisan group, No Labels, is building support for its "No Budget, No Pay" proposal, which would withhold the pay for lawmakers if they cannot adopt a budget on time. And we have plenty of budget process reform ideas at http://budgetreform.org.
LinkedIn with the Fiscal Cliff – Talk of the looming “fiscal cliff” grows as it gets nearer. And it is becoming more obvious how the economic recovery could be linked to how we deal with the cliff. Though the estimates of the magnitude of the cliff vary, the consensus is clear that if the across-the-board tax increases and spending cuts occur all at once at the end of the year as the law currently calls for, it will significantly hamper the economy. Speaker Boehner indicated that the House will hold votes on extending the expiring tax cuts before the election to score political points. But the real work will occur after the voting in a lame duck session of Congress. Read more about the fiscal cliff and how to address it here.
Lots of MySpace Between Houses on Appropriations – The House Appropriations Committee last week approved bills funding Homeland Security, Military Construction/Veterans Affairs, Defense, and State/Foreign Operations. Despite this progress, Congress is given little chance of completing all the spending bills before the new fiscal year begins on October 1 because the House and Senate disagree on spending levels. The Senate wants to follow the levels set forth in the Budget Control Act while the House wants to go lower. We can expect stopgap funding measures possibly going into the next calendar year.
Tweet Nothings – Last week the House passed the National Defense Reauthorization Act (H.R. 4310), which provides about $8 billion more in funding for defense that the White House requested, rolling backed the spending cuts the Pentagon proposed. While there may have been lots of Tweets about the bill, the Senate will likely pass a significantly different version. More political posturing forthcoming.
Silly-con Valley – California is the home to Facebook and many other tech startups. But it is also becoming famous for budget dysfunction that rivals Washington, DC. The state faces a budget deficit of around $16 billion … and possibly growing. Under law the budget must be balanced, but there is little agreement on how to do it.
Lots of Pinterest in a Debt Debate – A new Gallup poll shows that the federal budget deficit and debt is at the top of voters' concerns this election year. All the more reason for the presidential candidates to Debate the Debt. Our newest campaign is calling for one of the presidential debates this fall to be devoted to the national debt and the candidates' specific plans to address it. Check out the website to learn more, see who has signed the petition demanding a debt debate, and join the cause.
Key Upcoming Dates (all times ET)
- Presidential contests in Arkansas and Kentucky
- Senate Appropriations Committee mark-up of FY 2013 spending bills for Homeland Security and Military Construction/Veterans Affairs at 10:30 am.
- Senate Appropriations subcommittee mark-up of FY 2013 spending bill for State/Foreign Operations at 2:30 pm.
- Senate Finance Committee hearing on health care delivery at 10 am.
- 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.
- Dept. of Labor's Bureau of Labor Statistics releases June 2012 employment data.
- Dept. of Labor's Bureau of Labor Statistics releases June 2012 Consumer Price Index (CPI) data.
- US Dept. of Commerce's Bureau of Economic Analysis releases its advance estimate of 2012 second quarter GDP growth and revised estimates of 2009 through 2012 first quarter GDP growth.