Fiscal Speed Bumps: Challenges, Risks, and Opportunities

In the coming months and years, lawmakers will face a number of important budget-related deadlines, or Fiscal Speed Bumps, that will require legislative action. These Fiscal Speed Bumps will present challenges, risks, and opportunities. Addressed irresponsibly, they could cause serious disruptions and/or add as much as $3 trillion to the debt over the next decade above what current law would allow. But if dealt with thoughtfully, they offer an opportunity to pursue reforms that would grow the economy, improve the policy landscape, and reduce the risk of an uncontrollably growing national debt.

We have identified six major speed bumps this year and one next year that is significant enough that it should be dealt with in 2015. These speed bumps include:

• Expiration of the CR funding Homeland Security (February 27, 2015)
• Reinstatement of the debt ceiling (March 16, 2015/Fall 2015)
• Expiration of the “doc fix” and return of the SGR (March 31, 2015)
• Expiration of the highway bill, insolvency of the Highway Trust Fund (May 31, 2015)
• Expiration of 2015 appropriations, return of sequestration (October 1, 2015)
• Deadline to renew tax extenders retroactively (December 31, 2015)
• Insolvency of the Social Security Disability Insurance Trust Fund (late 2016)

In Fiscal Speed Bumps: Challenges, Risks, and Opportunities we discuss each of these moments in detail, put them into historical context, and explain the options available to policymakers as they navigate these speed bumps.

Each of these Fiscal Speed Bumps must be addressed to avoid a major disruption and in each case, unfortunately, addressing the issue irresponsibly could substantially worsen an already unsustainable fiscal situation.

Instead, policymakers should use these speed bumps as opportunity to pursue responsible changes that result in better policy, a stronger economy, and a more sustainable long-term debt path.

Read the full paper below, or download a printer-friendly version here.

Note: The paper has been updated from its original posting to clarify that the $3 trillion difference in debt is above what current law allows (assuming trust funds cannot borrow) rather than CBO's baseline.