Line Items: Holidaze Edition

Happy Holidaze – The Christmas trees are up. The lights are lit. The shoppers are roaming the malls. The holiday specials are all over the television. The holidays are here and everyone is feeling festive, except perhaps on Capitol Hill, where lawmakers are in a daze working through their legislative list and checking it twice. They want to wrap up everything with a nice bow on top by the end of the week, but partisan fighting threatens to Grinch up the works.

Another Week, Another Deadline – Just as you can count on “A Charlie Brown Christmas” being shown on TV this time of year, fiscal deadlines have become ubiquitous in Washington nowadays. The continuing resolution funding the federal government expires Friday and Congress is scrambling to complete work on a massive package containing the nine remaining fiscal year 2012 spending bills before then. While negotiators are reportedly close to an agreement on the bill that will cost about $1 trillion, there are several policy riders that must be resolved. Meanwhile, David Rogers reports in Politico that there may be gimmicks involved, with overseas contingency funds possibly used to cover more defense and foreign aid costs.

No One Rolling Over on Payroll Tax Cut – Congress is also facing another deadline; to renew the two percent payroll tax cut for employees that is set to expire at the end of the year. Americans may favor extending the payroll tax holiday, which keeps money in their pockets, but as with most requests for Santa, paying for the gift is the main concern. Last week the Senate rejected competing Republican and Democratic proposals. At the end of the week, House Republicans unveiled a new measure that will be voted on this week. It will renew the payroll tax cut for one year, extend the Medicare doc fix for two years, and extend expanded unemployment benefits for a year. The cost is offset through several policies, such as raising Medicare premiums for high earners, eliminating unemployment and other social benefits for millionaires, extending the federal civilian pay freeze for another year, and changing federal civilian retirement benefits. Democrats prefer using a surcharge on millionaires to help offset the cost, and neither side is showing signs it intends to back down. Read the new CRFB brief on dealing with expiring provisions in a fiscally responsible manner.

Some Progress on Process Reform – Just like that calendar you get as a present – not the most exciting gift but ultimately useful – budget process reform is not at the top of the wish list for those wanting to address the country’s fiscal challenges, but could prove to be helpful in the effort. Last week, Republicans on the House Budget Committee unveiled a package of reforms. One of the measures, which would enhance the ability of the president to rescind individual items in spending bills, has bipartisan support from the top Republican and Democrat on the Committee – Chairman Paul Ryan (R-WI) and Ranking Member Chris Van Hollen (D-MD). That bill will be marked up by the Committee on Thursday. Ryan and Van Hollen will speak at a forum Tuesday on Capitol Hill convened by the Peterson-Pew Commission on Budget Reform, which has offered its own ideas for improving the budget process. In addition, the Senate will vote on competing balanced budget amendments this week. Neither proposal is expected to get the required support to move forward.

Europe Makes a Deal – European leaders gave the world an early Christmas present by averting a meltdown late last week. Most of the European Union, with Great Britain as the notable exception, agreed to stricter fiscal rules. However, there are emerging doubts as the deal is scrutinized more, with some worrying that the deal may not prevent a European collapse, but only put it on layaway.

Key Upcoming Dates (all times ET)

December 13

• Peterson-Pew Commission on Budget Reform forum - "After the Super Committee: Is Budget Process Reform Part of the Answer" at 1 pm. With House Budget Committee Chair Paul Ryan (R-WI) and Ranking Member Chris Van Hollen (D-MD).

December 15

• GOP presidential debate in Sioux City, IA sponsored by Fox News at 9 pm.
• House Budget Committee markup of the Expedited Line-Item Veto and Rescissions Act of 2011 at 10 am.

December 16

• Continuing resolution (CR) currently funding federal government operations expires.

 December 31

• Both houses of Congress must vote on a balanced budget amendment to the U.S. Constitution, as required by the Budget Control Act.

January 3, 2012

• Iowa Caucuses.

January 10, 2012

• New Hampshire Primary.

January 21, 2012

• South Carolina Primary.

January 31, 2012

• Florida Primary.