‘Line’ Items: Happy Holidays Edition

Deck the Halls with Bills of Folly – On Friday President Obama signed the $858 billion tax cut package that Congress passed earlier in the week, deeming it a great bipartisan achievement. The great “compromise” greatly compromises our fiscal outlook and makes it more imperative that fundamental tax reform and a comprehensive debt reduction plan be enacted next year. The challenge next year will be finding bipartisan agreement on reducing the debt, not adding to it. There are plenty of good ideas out there. Check out our table comparing many of the deficit reduction plans here.

It’s Beginning to Look a Lot Like CRistmas – The omnibus broke down last week as the Senate gave up on a catch-all federal government spending bill for Fiscal Year 2011. Senators faced increasing pressure over spending levels and billions in pork attached to the measure. [We assume that we can kiss that multi-million dollar earmark to fund a comprehensive study of fiscal irresponsibility in Washington goodbye.] Instead, the Senate approved the third stopgap Continuing Resolution (CR) that will continue to fund government operations at 2010 levels until Tuesday. By then lawmakers are expected to adopt yet another CR that will last until March 4, which will boost funding for some programs, including Pell Grants, and will freeze federal civilian pay for two years. That means that Congress will have to complete 2011 appropriations at around the same time it considers the President’s budget request for FY 2012. Congress finds itself in this mess because it was unable to approve of a Budget Resolution or any of the 12 spending bills this year. Suffice it to say, the budget and appropriations process is broken. Reforms like those recommended recently by the Peterson-Pew Commission on Budget Reform would prevent budgeting disasters like this one and likely improve Congress’ record low approval rating.

Appropriators in 2011 Will Be Scrooge, Not Santa – The incoming chairman of the House Appropriations Committee signaled last week that the focus on his committee next year will be cutting spending, not doling out financial goodies as in years past. Representative Harold Rogers (R-KY) said that each Appropriations subcommittee will be given spending cut targets to reach towards the ultimate goal of reducing federal government spending to the FY 2008 level of $1.028 trillion.

Incoming House Leadership Wrapping Up Rules Changes – Republicans who will control the House of Representatives next year are putting the finishing touches on rules for the new Congress that they hope will prove their sincerity in reducing spending. The draft rules to be posted this week will include a new “cut-go” rule requiring that the cost of any proposed new program must be offset by equal or greater cuts in other programs. Another rule may be a new “deficit reduction lockbox” that ensures that spending cuts to appropriations bills made on the House floor will go towards deficit reduction and not to spending elsewhere. Some are also pushing for the creation of a joint Senate-House committee that will consider possible changes to the 1974 Budget Act that governs the budgeting process. Solid recommendations for reforming the budget process to help get the country on the right fiscal track are in the recent report, Getting Back in the Black.

Fiscally Responsible Policymakers Will Find Something Under the Tree – New awards were announced last week to recognize and promote fiscal responsibility among our leaders. The inaugural Fi$cy Awards will be presented to Indiana Governor Mitch Daniels (R), Senator Kent Conrad (D-ND), and Representative Paul Ryan (R-WI) on January 5. CRFB President Maya MacGuineas was one of the judges for the prize.

Happy Holidays from everyone at the Committee for a Responsible Federal Budget. Enjoy the season responsibly.