August 22, 2014

Washington Budget Report: Nov. 8, 2011

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Super Committee Gets Earful of Good Advice

The special congressional committee on deficit reduction recently heard testimony from the leaders of two prominent bipartisan panels that developed sweeping proposals that could cut federal borrowing by $4 trillion or more in the next decade -- well above the committee’s assigned goal of $1.2 trillion to $1.5 trillion.

Appearing at the committee’s hearing last week were former Sen. Alan Simpson (R-Wyo.) and former Clinton White House Chief of Staff Erskine Bowles, co-chairs of President Obama’s National Commission on Fiscal Responsibility and Reform, and Brookings Senior Fellow Alice Rivlin and former Sen. Pete Domenici (R-N.M.), co-chairs of the Bipartisan Policy Center’s Debt Reduction Task Force.

Both the fiscal commission and the task force produced balanced reports that deserve careful consideration. Their co-chairs last week emphasized the importance of the super committee’s assignment and offered a variety of constructive suggestions for developing a credible, far-reaching  fiscal plan by the panel’s Nov. 23 deadline.

In a column this week in the Milwaukee Journal Sentinel, Diane Lim Rogers, chief economist for The Concord Coalition, points out that the super committee has many different options available.

She suggests that committee members take a comprehensive approach and make a commitment to “strict, no-exceptions, pay-as-you-go rules” for new or extended tax cuts as well as spending increases.

Rogers also emphasizes that the best policies to support the economy in the near term are those that most effectively stimulate demand -- which are not necessarily the best policies to encourage longer-term economic growth. A critical question in either case, she says, is how deficit financing of such policies affects their results.

Last week Concord Coalition Executive Director Robert Bixby suggested that with their deadline fast approaching, super committee members could combine their initial deficit reduction package with instructions to the committees of jurisdiction to go further. This, he wrote in a blog post, “would allow the process to go big by keeping it going.”

Warner, Chambliss Honored As ‘Economic Patriots’

2011 Fiscal Patriots Awards Recipients

Senators Mark Warner (D-Va.) and Saxby Chambliss (R-Ga.) received the 2011 Paul E. Tsongas Economic Patriot Award at The Concord Coalition’s annual dinner Wednesday night in Washington.

Former Sen. Sam Nunn (D-Ga.), a member of Concord's board of directors,  praised the two senators – who have led the Senate’s bipartisan “Gang of Six” -- for their political courage in seeking broad fiscal reforms. Chambliss called this “the issue of our lifetime” while Warner said the public had the right to expect elected officials to take action and declared: “This should not be so tough.”

The two senators were then joined by four other budget experts for a panel discussion on the country’s fiscal, economic and demographic challenges. They agreed that Congress should pursue more deficit reduction than the targets set in last summer’s legislation to increase the federal debt limit. Panel members differed, however on the likelihood of effective action before next year’s elections.

The other four panel members were former Sen. Evan Bayh (D-In.), Brookings Senior Fellow Alice Rivlin, Comeback American Initiative CEO David Walker and Concord Coalition Executive Director Robert Bixby. The moderator was Candy Crowley, CNN’s chief political correspondent.

Other topics addressed by panel members included the difficulties faced by political moderates in Washington, the importance of public engagement in deficit-reduction efforts, voters’ disenchantment with Congress, and the reasons why a comprehensive fiscal reform effort is more likely to succeed than a piecemeal approach.

A video of the program will be posted on Concord’s website as soon as it becomes available.

House and Senate Hold Appropriations Conference

On Capitol Hill last week, attention turned to Fiscal Year 2012 appropriations as the House and Senate convened a formal conference on a “minibus” bill which combines three appropriations bills: Agriculture; Commerce, Justice, Science; and Transportation, HUD. The meeting was the first joint conference on an appropriations bill since 2009.

While the House is in recess this week, staff members are expected to continue negotiations with the goal of considering a final agreement on the House floor next week.

The new fiscal year began Oct. 1 but none of the twelve FY 2012 appropriations bills have been enacted. Government agencies are currently being funded with a continuing resolution that expires Nov. 18.

A Mixed Bag on Deficit Reduction

Will Congress be able to approve a plan this year to significantly reduce deficits over the coming decade? Just in time for Halloween last week, Concord Coalition Chief Economist Diane Lim Rogers wrote in a Tax Notes column about the “tricks and treats” that the bipartisan committee on deficit reduction had received.

On the negative side, she pointed out that some tax-writing lawmakers in both parties still want to keep certain tax and entitlement options off the negotiating table. Some lawmakers have continued to offer unrealistic projections about tax cuts, regulatory changes and economic growth.  And the budget committees “can’t seem to bring themselves around to saying they could be a big part of the solution,” Rogers writes.

On the “treats” side, however, the members of many congressional committees with jurisdiction over spending programs have acknowledged the need for significant cuts. Many have also made clear, Rogers says, that deficit reduction “will ultimately involve sacrifices from all of us.”

Finally, she sees reason for hope that “quiet, behind-the-scenes discussion” of bipartisan ideas may be able to take advantage of some common ground in areas like tax reform and improvements that could strengthen Social Security and Medicare.

Debits & Credits

Everything ‘On the Table’: Ignoring pressure from left and right to maintain the status quo, 40 Republicans and 60 Democrats in the House last week told the super committee ”all options for mandatory and discretionary spending and revenues must be on the table” for it to succeed. The lawmakers also urged the panel to aim for $4 trillion in deficit reduction over 10 years because that amount would be required to “assure America’s fiscal well-being.”

Not So ‘Automatic’ After All: When Congress passed debt limit legislation this summer, it promised that if the  “super committee” process failed to produce at least $1.2 trillion in deficit reduction, a “trigger” mechanism would ensure automatic spending cuts in both domestic and defense spending. Cynics noted that Congress could always do away with the trigger later. Now, even before the super committee has finished its work, some lawmakers in both parties are discussing how to ensure the automatic cuts don’t happen.