'Line' Items: State of the Union Edition A Weekly Update on Budget and Fiscal Policy Developments and a Look Ahead

Stating the Obvious – President Obama delivers the State of the Union address Tuesday evening. The SOTU is the annual rite where presidents attempt to hit the “reset” button and lay out their agenda for the coming year. Not surprisingly, Obama reportedly will focus on economic and fiscal issues in his speech, as they are the two most important issues to voters in this election year. The President is expected to lay out an economic blueprint that promotes fairness and reduces inequality. Proposals will include tax reform that requires the wealthy to pay more. Indiana Governor Mitch Daniels (R), who served as the director of the Office of Management and Budget (OMB) in President George W. Bush's administration, will give the official response immediately after the address. No doubt Daniels’s remarks will involve the need for fiscal restraint (watch him discuss the national debt and how to address it here). The coming months will underscore how intertwined the two issues are, as the fiscal impact of economic proposals are scrutinized and vice versa. Meanwhile, have some fun watching the speech with our DEBT-O bingo game.

States Weigh In On ‘Go Big’ – The National Conference of State Legislatures (NCSL) last week sent a letter to leaders in Washington urging them to include a “comprehensive, aggressive and bold plan to address America’s long-term fiscal gap” in the FY 2013 budget. The letter underscores how federal budget decisions are connected to those at the state and local levels. See the depth of support for a Go Big approach here

Still Not Much Unity on Payroll Tax Extension – The conference committee charged with forging agreement on a longer-term extension of the 2% payroll tax holiday, Medicare payment doc fix, and unemployment benefits holds its first meeting Tuesday. Paying for the extension is the main source of contention, along with the Keystone pipeline. Negotiators have until the end of next month to strike a deal. Read our ideas on how to approach the issue in a fiscally responsible manner.

Congress Looks to Improve Sorry State – The President will address a Congress suffering from historically low approval ratings on Tuesday. Lawmakers will seek to improve their standing by showing action on the budget. House Speaker John Boehner (R-OH) confirmed that his chamber will produce a FY 2013 budget resolution. The House will also move forward on a legislative package this week through committee to reform the budget and appropriations process to make it more functional. Proposals include giving the budget the force of law, moving to a biennial budget process, including government sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac in the budget, and including dynamic scoring of major legislation. The Peterson-Pew Commission on Budget Reform, a project of CRFB, offered a comprehensive budget process reform package of its own and also explored other ideas such as multi-year budgeting, performance budgeting, fiscal rules, and budgeting for emergencies.

Making a Statement on the Debt Ceiling – Last week the House voted to formally reject a $1.2 trillion increase in the statutory debt limit. The Senate is expected to vote on the resolution of disapproval on Thursday. These are largely symbolic votes because even if the Senate follows the House, which is unlikely, President Obama can veto it and it would take a 2/3 super majority to override. The increase will automatically occur on Friday unless it is blocked. Keep track of debt ceiling developments here and refresh your memory on the topic here.

Trigger (Un)Happy – Some lawmakers are keen to disable, or at least alter, the sequestration of $1.2 trillion in federal spending over nine years that will be triggered next year due to the failure of the Super Committee. One proposal would exchange reductions in the federal workforce for the scheduled cuts in defense spending. President Obama has been firm that he would veto changes to the sequester absent agreement on $1.2 trillion in deficit reduction and his FY 2013 budget request reportedly will contain such language. CRFB has been vocal on the need to maintain the trigger in order to prompt a comprehensive deficit reduction plan.

State of Confusion in Election – The presidential campaign took an unexpected turn over the weekend as former House Speaker Newt Gingrich won the South Carolina Republican primary. The surprise victory has brought renewed attention to the election. The four remaining Republican candidates spar again tonight in Florida, site of the next contest. The economy and the federal budget deficit have been the top issues for voters in the three states (Iowa, New Hampshire, and South Carolina) that have voted so far. Fittingly, CRFB has re-launched its US Budget Watch project in order to inform the campaign fiscal debate, providing the 12 Principles of Fiscal Responsibility for the 2012 Campaign last month.

Budget Release Pushed Back – The White House will release its FY 2013 budget request on February 13 as opposed to the traditional first Monday in February, which is February 6 this year.

Key Upcoming Dates (all times ET)

January 23, 2012

  • The Senate convenes for the Second Session of the 112th Congress.
  • House Rules Committee markup of HR 3575 to make the budget resolution legally binding at 5 pm.
  • Florida GOP debate sponsored by The St. Petersburg Times, NBC News, and The National Journal at 9 pm.

January 24, 2012

  • First meeting of the congressional conference committee on extending the payroll tax holiday, Medicare doc fix, and unemployment benefits.
  • House Budget Committee begins two-day markup of budget process reform bills - HR 3582, Pro-Growth Budgeting Act; HR 3578, Baseline Reform Act; HR 3581, Budget and Accounting Transparency Act; and HR 3575, Legally Binding Budget Act - at 10:15 am.
  • House Rules Committee hearing on HR 114, the biennial budgeting act, at 10:15 am.
  • President Obama will give the State of the Union Address at 9 pm.

January 25, 2012

  • House Budget Committee markup of budget reform package continues at 10 am.
  • House votes on CLASS Act repeal.
  • The World Economic Forum Annual Meeting in Davos, Switzerland begins and runs through Jan. 29.

January 26, 2012

  • Senate Budget Committee hearing on the US and global economic outlook at 10 am.
  • Dept. of Defense unveils budget cuts.
  • Florida GOP debate sponsored by CNN at 8 PM.

January 27, 2012

  • Dept. of Commerce releases 2011 fourth quarter GDP data.
  • A $1.2 trillion debt ceiling increase will automatically occur unless Congress formally blocks it.

January 31, 2012

  • Congressional Budget Office (CBO) releases its 2012 Budget and Economic Outlook at 10 am.
  • Florida Primary.

February 3, 2012

  • Dept. of Labor's Bureau of Labor Statistics releases January 2012 employment data.

February 4, 2012

  • Nevada Caucus.

February 7, 2012

  • GOP presidential contests in Colorado, Minnesota and Missouri.

February 13, 2012

  • The President will submit his FY 2013 budget request to Congress.

February 17, 2012

  • Dept. of Labor's Bureau of Labor Statistics releases January 2012 Consumer Price Index (CPI) data.

February 22, 2012

  • Arizona GOP debate sponsored by CNN at 8 pm.

February 28, 2012

  • GOP presidential contests in Arizona and Michigan.

February 29, 2012

  • The temporary payroll tax cut, unemployment insurance, and doc fix extensions will expire.
  • US Dept. of Commerce's Bureau of Economic Analysis releases its second estimate of 2011 fourth quarter GDP.

March 3, 2012

  • Washington Caucus

March 6, 2012

  • Super Tuesday - presidential contests in Alaska, Georgia, Idaho, Massachusetts, North Dakota, Ohio, Oklahoma, Tennessee, Vermont and Virginia.

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