Line Items: Sweet Sixteen Edition

Bittersweet – The madness is here. The NCAA tournament field has been reduced to 16 teams, and after this weekend there will be only four remaining. While the budget field has been reduced to two, don’t expect a clean conclusion like the one we will see in Atlanta. In Washington, the brackets are broken before the action begins (for a really scary bracket, check this out). The elimination process gets especially byzantine at this point. In fact, a third budget will enter the picture next month. On the brighter side, a government shutdown will be avoided -- at least until October, but plenty of potential pitfalls remain. However, that’s not deterring Congress from taking a two-week spring break despite some backlash.

Budget Battle Moves to Next Round – Last week, the House and Senate approved vastly different budget blueprints for fiscal year 2014, which starts October 1. The House approved with no Democratic votes the budget drafted by House Budget Committee chair Paul Ryan (R-WI) that relies on deep spending cuts and no additional revenue, and the Senate approved with no Republican votes the budget from Senate Budget Committee chair Patty Murray (D-WA) that features a mix of spending cuts and additional revenue. Several other budgets were rejected. While they all put the debt as a share of the economy on a downward path, they diverged sharply on how to do so. You can compare all the congressional budgets here. The Senate budget was passed after a marathon vote-a-rama where over 100 amendments were voted on. Check out some of the most relevant amendments to fiscal policy here and the full list here.

No Celebrating Yet – A select group of lawmakers will now try to reconcile the two surviving budgets, which not only contain many differences, but also many holes as well. That process probably won’t begin until President Obama unveils his budget proposal around April 8. The negotiations could serve as the new platform for forging a grand bargain to address the debt comprehensively and if a deal is arranged, the reconciliation instructions for the budget could aid the passage of the deal by shielding it from a filibuster.

Spending Bill Signed – As they marched through next year’s budget lawmakers also managed to finally cut down the nets on spending for the rest of this fiscal year. Last week Congress passed a bill funding the government until September 30, the end of fiscal year 2013. President Obama signed the bill on Tuesday. The $984 billion measure takes into account the spending cuts of the sequester and moves around funding for some agencies to make the cuts more palatable. See here for a closer look at how the spending is allocated.

Eyeing a More Accurate Inflation Measure – Chained CPI may sound like a 16-seeded school, but it is actually a small fix with bipartisan support that can significantly reduce the deficit. In previous debt negotiations, President Obama has offered to include switching to the more accurate measure of inflation, known as chained CPI. An updated paper from the Moment of Truth Project says the change can reduce the deficit by $390 billion over the next decade.

Lawmakers Send Themselves Home – Congress is taking a two-week spring break, but their work is coming home with them. Lawmakers are bracing to hear from their constituents about sequestration. If lawmakers get enough pressure from voters, they will be more likely to replace it with a smart, comprehensive plan that is phased-in and more targeted.

Tax Reform Could Be a Cinderella – The powerful chairs of Congress’ tax-writing committees, Sen. Max Baucus (D-MT) and Dave Camp (R-MI), have achieved the type of bipartisan collaboration that has mostly alluded policymakers these days by quietly laying the groundwork for fundamental tax reform. Charles Krauthhammer suggests that tax reform could be the key to a grand bargain and further suggests that reform could involve capping tax expenditures as proposed by Martin Feldstein, Maya MacGuineas and Daniel Feenberg. Read more about the Feldstein-Feenberg-MacGuineas approach here.

Interest in Interest Rates -- The Congressional Budget Office (CBO) says in a new blog post that if interest rates go up higher than expected, it can have a profound affect on budget deficits. We took the data further and illustrated what the CBO scenarios would do to the national debt. Implementing a credible fiscal plan now could keep interest rates from rising higher than they normally would, thus aiding the economy and the budget.

Key Upcoming Dates (all times are ET)

March 28

• Bureau of Economic Analysis releases third estimate of 2012 4th quarter and annual GDP.

April 5

• Dept. of Labor's Bureau of Labor Statistics releases March 2013 employment data.

April 15

• Congress must pass a budget resolution as specified in the Congressional Budget Act. Also, due to the debt ceiling suspension bill, lawmakers will have their pay withheld after this date until their respective chamber passes a resolution.

April 16

• Dept. of Labor's Bureau of Labor Statistics releases March 2013 Consumer Price Index data.

April 26

• Bureau of Economic Analysis releases advance estimate of 2013 1st quarter GDP.

May 3

• Dept. of Labor's Bureau of Labor Statistics releases April 2013 employment data.

May 16

• Dept. of Labor's Bureau of Labor Statistics releases April 2013 Consumer Price Index data.

May 19

• The debt limit is re-instated at an increased amount to account for debt issued between the signing of the suspension bill and this date. After re-instatement, the Treasury Department will be able to use "extraordinary measures" to put off the date the government hits the debt limit potentially for a few months.

May 30

• Bureau of Economic Analysis releases second estimate of 2013 1st quarter GDP.