April 20, 2014

bbixby's blog

Fixing The Debt Limit Frankenstein

Like Frankenstein’s monster, the statutory debt limit will soon come back to life. It has been in a state of suspended animation since the October 2013 budget deal that ended the government shutdown.

The terms of that deal allowed the government to borrow without limit through this Friday, when the suspension period ends and the current debt level of about $17.3 trillion instantly becomes the new limit.

The Budget Deal: A Beginning or the End?

President Obama hailed the two-year budget deal reached by House Budget Committee Chair Paul Ryan (R-Wis.) and Senate Budget Committee Chair Patty Murray (D-Wash.) as a “good first step.”

If he meant a good first step toward broader reforms needed to put the nation’s finances on sounder footing for the long-term, let’s hope he is right.

It is not clear, however, that Capitol Hill leaders, or the President for that matter, have any plans to follow up this very modest achievement with anything more.

In Quest for a Grand Bargain, Lawmakers Can't Skip the Bargaining

Who says that Democrats and Republicans can't reach a grand bargain?

Harry Reid and Paul Ryan seem to have it figured out. If Democrats and Republicans don’t demand compromises from each other, everyone can get along. It’s the perfect political grand bargain: Do nothing.

Unfortunately, that could easily become a self-fulfilling prophecy.

We Need Less Bombast and More Breathing Room

We will soon see whether there is any remaining capacity in the U.S. political system to reach compromise across partisan lines for the common good.

Republican congressional leaders say that if President Obama wants the government to reopen and the debt limit to be increased he will have to make concessions on spending and agree to negotiate a long-term deficit reduction deal. Obama says he will not negotiate anything until the debt limit is raised and the government reopened. After that, he’ll talk.

Despite Difficulties, There's Still Hope for a Grand Bargain

Developments on the budget front last week demonstrated both the difficulty of achieving a grand bargain and why it may not be totally out of reach.  

First, the difficulty.

Political Turmoil Greatest Concern for Ratings Agencies

For those who follow the credit rating agencies’ assessments of the United States, the past several weeks have offered mixed messages. Overall, some improvement has been noted, mostly due to the steadily improving economy and the declining deficit. Concerns remain, however, about the long-term outlook and the ability of elected leaders to raise the nation’s debt ceiling without provoking a crisis.  

Mid-Session Review Amid Little Progress on the Budget

The Obama Administration released its Mid-Session Review (MSR) of the budget on Monday. It would be nice to say that this update arrived just in time to clinch the deal on a fiscal sustainability plan, or even a plan to get through the rest of the year, but sadly that is not the case.

This "Victory" Is a Surrender

Judging by recent media reports, there is a growing belief in Washington that the best way to deal with the deficit is to “declare victory.” 

It won’t work.

The deficit problem is far from being solved and its lengthy shadow will hang over every other issue, including the economy, until a fiscal sustainability plan is in place.

Hidden in Plain View: Aging, Health Care Costs and Interest Drive the Budget

For those inclined to look beyond the sharp drop in the deficit this year, as we should, the budget update released by the Congressional Budget Office (CBO) on May 14 has some striking indications of things to come.