Line Items: Star Wars Edition A Weekly Update on Budget and Fiscal Policy Developments and a Look Ahead
A Galaxy Far, Far Away – Friday was Stars Wars Day, the annual observance of the popular movie series that plays on the date, as in May the Fourth (be with you). The franchise seems as strong as ever, having survived Jar Jar Binks and returning to the big screen again; this time in 3-D glory. The classic battle between good and evil portrayed in the films is timeless and offers many lessons for us today. Not only do the films illustrate how political dysfunction can destroy a great republic, they also portray how even the most entrenched and powerful forces can be overcome against all odds. With the national debt currently on course to reach unprecedented levels, getting back to a sustainable path may seem to be as far away as Tatooine, but if Ewoks can take out Storm Troopers, then putting in place a comprehensive fiscal plan is doable.
May the Forced Cuts Be with You…or Not – The House and Senate are both back from recess this week. The House has immediately resumed its work to alter the spending cuts that will automatically kick in at the beginning of 2013 due to the failure of the Super Committee to forge a deal. House Republicans are pushing a “reconciliation” package that will replace $78 billion of the cuts set for 2013 with $260 billion in savings over ten years. The House legislation would replace scheduled cuts in defense programs with reductions in other areas, such as food stamps, Medicaid, and the health care reform law. The House Budget Committee marked up the package on Monday and a floor vote is set for Thursday. As usual, the party lines drawn over the bill will resemble those between Jedi and Sith. Democrats on the Budget Committee expressed their opposition to the replacements in a paper and the Senate is not expected to act on the measure if it does pass the House.
Fiscal Death Star Awaits – The House reconciliation bill will serve as a marker for House Republicans in negotiations expected in a lame duck session of Congress after the elections, when lawmakers will have to grapple with the sequester, the expiration of tax cuts, and a great many other matters occurring at the same time. How Washington handles what Federal Reserve chair Ben Bernanke describes as the “fiscal cliff” will significantly affect the economy and the debt trajectory. The cliff needs to be exchanged for a smart, comprehensive plan to reduce the debt. See more on the fiscal cliff here, here and here.
Appropriations Turns Away from Dark Side…Slightly – While lawmakers still must contend with a plethora of issues at the end of the year, such as the fiscal cliff described above and the likely need for another debt ceiling increase, one thing legislators may not have to fret over is a government shutdown. While House Republicans still support a topline spending level below the $1.047 cap specified for fiscal year 2013 in the Budget Control Act and adopted by the Senate, the House reconciliation bill includes language effectively agreeing to that level through the end of the calendar year, meaning that lawmakers should be able to agree to a stopgap continuing resolution that funds the federal government into January of 2013. However, hoping that this signifies some sort of thaw in the partisan budget fights is akin to expecting spring to arrive on the ice planet of Hoth. Spending fights are still expected next year and the budget process is still in desperate need of reform.
No More E-Vader-ing the Debt – The general election campaign for the White House is formally underway. Much of the Republican Party is rallying behind former Massachusetts Governor Mitt Romney and President Obama kicked off his campaign with rallies in Ohio and Virginia over the weekend. Recent polling indicates an extremely tight race between the two. How can voters differentiate between the two candidates and get an idea of how they would govern? Make the candidates debate the debt! A debt debate would showcase the candidates’ differing approaches to the federal budget and national priorities. Most polls show deficits/debt to be the second most important issue to voters behind the economy/jobs, yet it has been the Phantom Menace, with little substantive discussion. Devoting one of the three scheduled presidential debates for this fall exclusively to the topic and requiring the candidates to present detailed plans at the debate would advance the constructive discussion that this country needs on the debt challenge and how to address it. Just like Luke Skywalker had to confront Darth Vader, candidates seeking to lead us must address the national debt head on. To learn more and sign a petition calling on the candidates to debate the debt, visit http://debatethedebt.org/.
Be a Budget Jedi – Addressing the debt in a smart way that takes into account economic concerns requires the wisdom of Yoda. Think you got what it takes? Then try your hand at the newest version of our federal budget simulator. We recently updated the numbers and added several new options based on ideas currently being floated. We also released the results based on the choices users have made. These results show that when Americans get a better understanding of the depth of the problem, they are willing to make hard decisions to reduce the debt. The “median plan” based on the options that received majority support among those users who voluntarily submitted their results shows the way for a grand compromise. Among the surprising findings is that several Social Security reform options to strengthen the vital program’s finances received majority support, along with allowing at least some of the 2001/2003 tax cuts to expire.
Key Upcoming Dates (all times ET)
- Presidential contests in Indiana, North Carolina, and West Virginia
- House votes on FY 2013 spending bill for Commerce, Justice, Science and related programs
- House Appropriations subcommittees mark-up FY 2013 spending bills for Defense and Military Construction & Veteran's Affairs
- Conference committee on the surface transportation reauthorization bill meets at 3 pm.
- House Appropriations subcommittees mark up FY 2013 Homeland Security and State Dept. and foreign affairs spending bills.
- House floor vote on the Sequester Replacement Act.
- 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.
- 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.