FY 2014 Budget
We hope all of our readers enjoyed their Thanksgiving holiday. The long weekend brought some fantastic rivalry games, Michigan-Ohio State, Auburn-Alabama, Ravens-Steelers, and many more. Coaches often had to decide whether to punt or to go for it and keep the drive alive. But in Washington, where Congress has had clear opportunities to get our fiscal house in order, a new Fix the Debt infographic shows lawmakers have been doing much more punting than solving.
As the budget conference committee works to develop a plan to offset some of the sequester, they may be tempted to use budget gimmicks in place of hard choices (last week we warned against use of the war gimmick). One such gimmick would be to repeal most or all of the sequester now and pay for it by increasing the sequester later.
The second meeting of the budget conference committee will happen today at 10 AM Eastern time. The conferees do not have a lot of time, as their deadline of December 13 is now exactly a month away and government funding will expire a month later on January 15. Testifying at the meeting is a familiar face in the budget world, CBO director Doug Elmendorf, whose agency will also be releasing an updated Budget Options report at noon today.
It has been one week since the budget conference committee's first meeting, and many are speculating that the committee could realistically come up with a plan to replace some of the sequester's temporary cuts with permanent deficit reduction. The budget conference committee has a December 13 deadline to produce a compromise budget.
With conference committee meetings underway, many are weighing in with their take on what should be accomplished. On Friday, Fareed Zakaria at CNN compiled a wishlist for Congress, with the help of commentators, analysts, and policy makers. The 12 contributors all had different takes on what the conference committee should address.
With a deal on the appropriations bill last week, the government has been reopened and a default has been avoided. But the reality is that lawmakers do not have too long before the next budget deadlines draw near.
The first official meeting of the conference committee is expected to occur sometime next week, at which point the conferees will begin attempting to reconcile the Senate and House budget proposals. Both budgets were passed with largely partisan support, so both Democrats and Republicans will need to look toward compromises over the next two months.
Now that the government shutdown and debt default threat are in the rearview mirror (for now), analysts have been taking time to survey the economic damage, in particular the more quantifiable effects of the shutdown on the economy and the budget deficit. The results, of course, are not good and highlight the need to avoid confrontations like this in the future and not wait until the eleventh hour to find a solution. Since we will back in a similar position again at the beginning of next year, we will see soon if policymakers have learned their lesson.