Line Items: Supreme Contempt Edition

Decisions, Decisions – Washington waits with bated breath for the Supreme Court to rule Thursday on the constitutionality of the Affordable Care Act, the 2010 health care reform law. Not only will the decision have repercussions for politics and health care, it will also impact the federal budget significantly. In a blog last week, we laid out how the federal budget will be affected in different scenarios. In another blog post, we also noted that no matter what the Supreme Court says, policymakers will have a lot of work ahead in bending the health care cost growth curve down, since rising health care costs will be one of the biggest drivers of our national debt going forward. Also on Thursday, the House is expected to vote on a resolution on holding Attorney General Eric Holder in contempt of Congress involving the "Fast and Furious" investigation. There is a lot of contempt to go around in Washington. Partisan disdain is getting in the way of dealing with issues such as the national debt. Meanwhile, the contempt for politicians among voters grows as they cannot even accomplish relatively simple tasks like adopting a budget. Whether lawmakers can rise above the mutual contempt will be on display this week as they seek to renew highway funding and lower student loan interest rates ahead of deadlines.

Senate Puts Farm Bill in House Court – Last week, the Senate passed legislation setting federal agriculture policy. Several amendments were attached to the bill, including one sponsored by Sen. Tom Coburn (R-OK) to end conservation payments to millionaires and an amendment from Sens. Patty Murray (D-WA) and John McCain (R-AZ) requiring a report from the Department of Defense by August 15 on the effect of the Defense sequester on national security as well as a report on how the entire sequester will be implemented. The nearly $1 trillion dollar bill now goes to the House, where significant changes are likely.

Supreme (Un)Allied Command – The House and Senate are both making progress towards passing fiscal year 2013 spending bills, but they are moving in divergent directions with their spending levels. This week the House will vote on the FY 2013 Transportation, Housing and Urban Development appropriations bill.

Don’t Jump Off the Fiscal Cliff, Don’t Put it Off Either – While it is good news that lawmakers increasingly are recognizing that something needs to be done about the fiscal cliff at the end of the year, the bad news is that many seem content to kick the can down the road. As we have said repeatedly (see here, here and here), instead of moving the goalposts, lawmakers should be laying the foundation for a comprehensive plan that can replace the cliff.

Make the Most Out of the Campaign – Tuesday’s Utah contest marks the final presidential primary. With the general election already in full swing, it is critical that the campaign promotes a substantive discussion of the issues and solutions instead of accusations and sound bites. Our Debate the Debt initiative seeks to improve the process by calling for one of the three presidential debates scheduled for this fall to be devoted to the national debt and the specific budget plans of the candidates to address it. To learn more and sign the petition, go to https://debatethedebt.org.

Key Upcoming Dates (all times ET)

June 26

  • Presidential primary in Utah

June 28

  • US Dept. of Commerce's Bureau of Economic Analysis releases its third estimate of 2012 first quarter GDP growth.
  • House Ways and Means Committee and Senate Finance Committee joint hearing on “Tax Reform and the Tax Treatment of Capital Gains” at 10:00 a.m.
  • Supreme Court likely to rule on PPACA's constitutionality.

July 6

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

July 17

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

July 27

  • US Dept. of Commerce's Bureau of Economic Analysis releases its advance estimate of 2012 second quarter GDP growth and revised estimates of 2009 through 2012 first quarter GDP growth.

August 3

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

August 15

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

August 27-30

  • Republican National Convention is held in Tampa, Florida

August 29

  • US Dept. of Commerce's Bureau of Economic Analysis releases its second estimate of 2012 second quarter GDP growth.

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Recent Student Loan Actions Forgo $5 Billion in Repayments

The Department of Education announced last week a six-month extension of automatic forbearance to all borrowers enrolled in the SAVE income-driven repayment plan while it is being challenged in courts, adding that they will forgive any unpaid accrued interest during that time. We estimate that the Department of Education is forgoing roughly $500 million of repayments per month, meaning that this extension would result in $3 billion in forgone payments, bringing the total amount up to $5 billion. Importantly, much of those payments will instead be paid later, and so the net cost would be some fraction of that $5 billion.

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