Line Items: Star Trek Edition A Weekly Update on Fiscal Policy Developments and a Look Ahead
Live Long and Prosper – The Star Trek franchise is celebrating its 45th anniversary this month. The original show and its various progeny have presaged many technological and societal advances, fueled our imagination and provided an optimistic vision of our future. That rosy future seems especially distant now in the midst of a weak economy, non-stop partisanship that is eroding public confidence in our political institutions, and mounting national debt that threatens our future standard of living. The debt threat is proving to be as ferocious as a Klingon, as terrifying as a Borg, and as devious as a Romulan. Will we be able to use Vulcan-like logic to overcome the debt challenge?
Wrath of Cons – Once again, the federal government faces the prospect of a shutdown because Congress has been unable to pass a budget. With none of the twelve annual spending bills slated to be approved before fiscal year 2012 begins on October 1, a stopgap measure will be required to keep the government operating past Friday. However, the first shot at passing a continuing resolution (CR) that would fund the government through November 18 failed last week. House Democrats bristled at $1.5 billion in disaster aid that would be offset by cutting funding from the Department of Energy’s Advanced Technology Vehicles Manufacturing Loan Program. But it was conservatives in the Republican caucus that sunk the measure by voting against it because it follows the $1.043 trillion spending level called for in the recent Budget Control Act that avoided a government default last month instead of the lower level set forth by the budget resolution passed by the House earlier this year. After House leaders impressed upon members the need to support the measure and added a $100 million rescission to the program that provided the controversial loan guarantee to solar power firm Solyndra, the resolution passed 219-203 early Friday morning. But the Senate quickly rejected it later that day. Congress is supposed to be in recess this week, but the Senate is expected to vote Monday on an amendment to remove the offsets from the House bill. While neither side says it wants a government shutdown, neither appears willing to budge at this point.
To Go (Big) Where No Man Has Gone Before – As members of the deficit reduction Super Committee begin their unprecedented work, last week CRFB sent a loud and clear message that the group should “Go Big” in its recommendations. At a Wednesday forum on Capitol Hill, prominent experts, as well as current and former policymakers such as former Federal Reserve Chairman Alan Greenspan, former OMB Director David Stockman, White House Fiscal Commission co-chair Erskine Bowles, Sen. Mike Crapo (R-ID), Sen. Mark Warner (D-VA), Honeywell International CEO David Cote, former SEIU President Andy Stern, and Business Roundtable President John Engler, made the case for going big. The event also featured the debut of four new videos from CRFB on why we should go big in addressing deficits and debt. View the full video of the event here.
President’s Plan Not Exactly Warp Speed – President Obama submitted a deficit reduction plan to the Super Committee last week that also included his ideas for boosting the economy. In an analysis of the proposal, CRFB lauds the president for embracing the “Go Big” concept by calling for over $4 trillion in deficit reduction over ten years, but we state that it falls short because those savings include reductions in war spending that have already been put in place. The actual amount of savings relative to current policy is just under $2 trillion.
Pentagon Sets Phasers on “Strategically” Cutting Defense – U.S. Defense Secretary Leon Panetta told the Senate Armed services Committee last week that his department would “strategically” go about implementing $450 billion in savings from the Pentagon budget over the next ten years. He said that beyond overhead and duplication, he would also look at procurement and compensation.
Farm Subsidies: The Final Frontier – Farm subsidies have long been a sacred cow to lawmakers, but a recent article in Politico says it looks increasingly like that cow may be on the chopping block. Agriculture’s biggest supporters in Congress concede that some cuts will occur; the question is how deep the cuts will run.
Budget Reform Materializing? – With all the talk about improving our fiscal situation and changing how Washington works, it is hard to ignore the need to fix the broken budget process. Congress appears ready to energize the push to reform the federal budget process with two hearings on the topic last week and another forthcoming. CRFB board members Alice Rivlin and Rudy Penner offered their insight as former CBO directors in a Wednesday hearing before the House Budget Committee. Both agreed that the budget process needs reform, but they also agreed that improving the process would not replace the need for policymakers to make tough budget decisions. Both also agreed that Washington should take a longer view when crafting budgets. The next day, CRFB board member Jim Nussle, who is a former chair of the House Budget Committee as well as a former OMB director, joined former Senator Phil Gramm and Phil Joyce of the University of Maryland to testify before the same committee on the subject. Nussle recommended long- and short-term fiscal sustainability goals within the annual budget resolution. Also, Nussle and Joyce both noted that the necessary tools are already in lawmakers’ “fiscal toolbox” and it is simply a matter of using them effectively. Check out CRFB’s Fiscal Toolbox for a look at the budget tools that can be used. And Congress isn’t done talking about budget reform. CRFB President Maya MacGuineas will testify at a hearing on the subject before the Senate Budget Committee on October 4 along with several other experts, including CRFB board member William Hoagland. The Peterson-Pew Commission on Budget Reform (a project of CRFB) studied the issue for over two years, culminating in detailed reform recommendations in the report Getting Back in the Black.
Key Upcoming Dates
- The Conference Board releases the Consumer Confidence Index for September.
- U.S. Commerce Department releases the 2nd quarter GDP estimate.
- New fiscal year begins. Legislation fully funding the federal government, or a stopgap measure with temporary financing of government operations, must be enacted by this date.
- Senate Budget Committee hearing on improving the budget process at 9:30 am.
- GOP presidential debate in New Hampshire.
- Congressional committees must submit any recommendations to the Super Committee by this date.
- GOP presidential debate in Nevada.
- The Super Committee is required to vote on a report and legislative language recommending deficit reduction policies by this date.
- The Super Committee report and legislative language must be transmitted to the President and Congressional leaders by this date.
- Any Congressional committee that gets a referral of the Super Committee bill must report the bill out with any recommendation, but no amendments, by this date.
- Congress must vote on the bill recommended by the Super Committee by this date. No amendments are allowed.