Committee for a Responsible Federal Budget

‘Line’ Items: Of Brinkmanship and Statesmanship Edition

Feb 28, 2011 | Budgets & Projections

Shutting Down Versus Sitting Down – Congress returns to Washington this week after lawmakers spent last week back home. Just before leaving town the House of Representatives passed legislation funding the federal government for the rest of this fiscal year that slashes spending by about $60 billion compared to current levels. The steep cuts pushed through by House leaders drew a veto threat from President Obama, though that won’t be necessary as the bill stands no chance of making it past the Senate. The leadership there is countering with a proposal to cut spending by about $8.5 billion, which is not enough for those running the House. The political posturing will bring Washington to the brink of a government shutdown as the continuing resolution (CR) currently funding the government expires on Friday, March 4. Although a temporary CR will likely avert a shutdown this week, the two sides are not close to a final resolution. Meanwhile, a bipartisan group of senators is taking a decidedly different approach to confronting our fiscal challenges, sitting down together at the negotiating table towards a comprehensive fiscal plan based on the recommendations of the White House Fiscal Commission. And there was some awards show Sunday night too.

Standing Off – On Friday, the House Appropriations Committee unveiled a two-week CR that reduces spending by around $4 billion. The cuts come from earmark funding and areas the president identified for reductions or elimination in his budget. The House will vote on it as early as Tuesday, which will put the ball in the Senate’s court to either accept it or face blame for causing a government shutdown. While it appears that the temporary measure has the support to pass both chambers, it only buys a little extra time for Congress. Although lawmakers agree that they want to avoid a shutdown, the parties are still far apart on how extensively spending should be cut.

Standing Up and Standing Apart – The nation’s governors presented a unified front in calling for Washington to avoid a federal government shutdown (and the loss of federal funds), yet they diverge on approaches to their own state budgets. We are following how the states are dealing with their fiscal challenges in our Spotlight of the States blog series. The budget showdown in Madison, Wisconsin continues to make the one in Washington, DC look tame.

Standing By – As the fighting over spending for Fiscal 2011 drags on, the FY 2012 budget awaits action. Appropriators on both sides of Capitol Hill will get started this week with hearings examining the budget requests of various departments and agencies (see partial schedule below).

Senate Reviews State of Play on Tax Reform – This week the Senate Finance Committee will kick off a year-long series of hearings exploring tax reform. The first hearing on Tuesday – “How Did We Get Here? Changes in the Law and Tax Environment Since the Tax Reform Act of 1986” – will look at how a plethora of tax breaks crept back into the tax code (and made it more complex) after the last major reform. CRFB has ideas for reforming these tax expenditures here.

In Need of a “King’s Speech” – The Oscar victory of the movie “The King’s Speech” underscores the need for such a moment now for this country. We are in need of a leader who can spell out the fiscal challenges ahead and show us a way through.

Will Debt Cause a “Black Swan” Event? – Black swans were once thought to be nonexistent, until they were discovered in Australia. Long before the movie, many have been on the lookout for the next Black Swan event – an unforeseen, high-impact episode that could change the world. Some fear that such an event could derail the global economy and more than a few believe that mounting debt could somehow trigger such an occurrence. The ongoing European debt dilemma provides fodder for such a view. This week Portugal will continue its attempts to avoid an EU bailout with a simultaneous bond buyback and Treasury bill sale.

Key Upcoming Dates

February 28 – Commerce Department releases January consumer spending data.

March 1 – House of Representatives may vote on a two-week continuing resolution (CR) to fund the federal government.

March 1 – House Appropriations Commerce, Justice, Science, and Related Agencies Subcommittee hearing on the FY 2012 Budget Request for the Department of Justice with Attorney General Eric Holder at 9 am.

March 1 – Senate Finance Committee hearing on "How Did We Get Here? Changes in the Law and Tax Environment since the Tax Reform Act of 1986" at 10 am.

March 1 – House Appropriations Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Subcommittee hearing on the FY 2012 Budget Request for the Department of Agriculture with Secretary of Agriculture Tom Vilsack at 10 am.

March 1 – House Appropriations Financial Services and General Government Subcommittee hearing on the FY 2012 Budget Request for the Internal Revenue Service with IRS Commissioner Douglas Shulman at 10 am.

March 1 – Senate Banking, Housing & Urban Affairs Committee hearing on the Semiannual Humphrey-Hawkins Monetary Policy Report to Congress with Federal Reserve Chairman Ben Bernanke, 10 am.

March 1 – Senate Environment and Public Works Committee hearing on the FY 2012 Budget Request for the Federal Highway Administration with Transportation Secretary Ray LaHood at 10 am.

March 1 – Senate Appropriations Defense Subcommittee hearing on “The Impacts of a Long-Term Continuing Resolution on the Department of Defense and the Fiscal Year 2012 Budget Request” at 10:30 am.

March 1 – House Appropriations State, Foreign Operations, and Related Programs Subcommittee hearing on the FY 2012 Budget Request for the Department of State and Foreign Operations, with Secretary of State Hilary Clinton, 2 pm.

March 1 – Senate Commerce, Science and Transportation Committee hearing on the FY 2012 Budget Request for the Department of Transportation, with Transportation Secretary Ray LaHood, 2:30 pm.

March 1 – Institute for Supply Management manufacturing index for February released.

March 2 – Senate Foreign Relations Committee hearing on “National Security & Foreign Policy Priorities in the FY 2012 International Affairs Budget” with Secretary of State Hilary Clinton at 9:30 am.

March 2 – Senate Energy and Natural Resources Committee hearing on the FY 2012 Budget Request for the Department of Interior, with Secretary of the Interior Ken Salazar, 10 am.

March 2 – Senate Budget Committee hearing on the FY 2012 Budget Request for the Department of Energy, with Energy Secretary Steven Chu, 10 am.

March 2 – Senate Appropriations Homeland Security Subcommittee hearing on the FY 2012 Budget Request for the Department of Homeland Security, with DHS Secretary Janet Napolitano, 10 am.

March 2 – House Appropriations Defense Subcommittee hearing on the FY 2012 Budget Request for the Depart of Defense with Defense Secretary Robert Gates and Joint Chiefs of Staff Chairman Admiral Michael Mullen at 10 am.

March 2 – House Committee on Financial Services hearing on the Semiannual Humphrey-Hawkins Monetary Policy Report to Congress with Federal Reserve Chairman Ben Bernanke, 10 am.

March 2 – Senate Appropriations State, Foreign Operations Subcommittee hearing on the FY 2012 Budget Request for the Department of State and Foreign Operations, with Secretary of State Hilary Clinton, 2 pm.

March 2 – House Appropriations Homeland Security Subcommittee hearing on the FY 2012 Budget Request for the Department of Homeland Security, with DHS Secretary Janet Napolitano, 2 pm.

March 2 – Senate Environment and Public Works Committee hearing on the FY 2012 Budget Request for the Environmental Protection Agency with EPA Administrator Lisa Jackson at 2:30 pm.

March 2 – The Federal Reserve releases its latest Beige Book on regional economic conditions.

March 3 – House Appropriations Interior, Environment, and Related Agencies Subcommittee hearing on the FY 2012 Budget Request for the Environmental protection Agency, with EPA Administrator Lisa Jackson, 9:30 am.

March 3 – House Appropriations Commerce, Justice, Science, and Related Agencies Subcommittee hearing on the FY 2012 Budget Request for NASA, with NASA Administrator Charles Bolden, Jr., 10 am.

March 3 – Senate Budget Committee hearing on the FY 2012 Budget Request for the Department of Transportation, with Transportation Secretary Ray LaHood, 10 am.

March 3 – Senate Appropriations Transportation/HUD Subcommittee hearing on the FY 2012 Budget Request for the Department of Housing and Urban Development, with HUD Secretary Shaun Donovan, 10 am.

March 3 – House Natural Resources Committee hearing on the FY 2012 Budget Request for the Department of the Interior, with Interior Secretary Ken Salazar, 10 am. March 3 – House Homeland Security Committee hearing on the FY 2012 Budget Request for the Department of Homeland Security, with DHS Secretary Janet Napolitano, 10 am.

March 3 – Senate Appropriations Legislative Branch Subcommittee hearing on the FY 2012 Budget Request for Architect of the Capitol and the Office of Compliance, 2:30 pm.

March 3 – Weekly unemployment claims data released by the Department of Labor.

March 3 – Final estimate on 4th Quarter 2011 Productivity from Labor Department.

March 4 – February report on the employment situation from the Labor Department.

March 4 – The current continuing resolution (CR) funding government operations expires. Congress must adopt spending bills funding the federal government for the rest of FY 2011 by then or pass another stopgap measure.

March 10 – CRFB event - "The Human Side of the Fiscal Crisis"

April 5 - May 31 – Period in which Treasury Secretary Geithner says the U.S. will likely reach the debt ceiling.