July 31, 2014

Washington Budget Report: July 8, 2014

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Congress Faces Long To-Do List for July

Returning to Washington from their July 4 break, members of Congress have only a limited amount of time before their August recess to get a great deal of work done -- much of it unfortunately postponed from earlier this year.

And after the August recess, Congress will have only a few weeks before Oct. 1, the start of Fiscal 2015. Lawmakers could adjourn shortly after that until after the November elections.

So starting today, lawmakers need to pick up the pace if they want to avoid wasteful delays, ill-informed decisions, last-minute votes and short-term budget fixes.

Ideally, Congress should approve the 2015 spending measures through the regular budget process, completed well before Oct. 1. Prospects for this, however, have dimmed.

The House has passed only five of the twelve required appropriations bills while the Senate is batting zero on them. Failure to act in a timely manner risks another costly government shutdown or one enormous and unwieldy omnibus bill that lumps all unfinished business together.

In addition to creating a crisis in transportation funding (see story below), lawmakers have yet to find a way to pay for improvements they seek in veterans’ health care. Instead, some in Congress have put their energy into browbeating their budget office over its cost estimates on their proposals.

Such inappropriate pressure undermines the credibility of the budget process. And when problems have been years in the making, lawmakers should also avoid using phony “emergency” declarations to get around their own spending caps.

Immigration issues remain unresolved, and the defense budget requires prompt action as well. Lawmakers have rejected reasonable military savings without offering many alternatives. As in other areas, Congress should resist gimmicks designed to dodge spending caps.

Warning Sign: Delays Ahead on Highway Funding

Due to a long-predicted financial crunch, the Department of Transportation has announced that it will begin delaying payments next month from the Highway Trust Fund to the states.

Lawmakers must quickly find a solution to avoid postponement or cancellation of transportation projects across the country. In addition to the immediate shortfall, the Congressional Budget Office estimates that over the next decade dedicated revenues in the trust fund -- from motor fuels taxes -- will fall short of planned spending by $167 billion.

Meanwhile, lawmakers also soon need to renew authorizations for highway and transit programs.

Congress has struggled to find a consensus on how to stave off trust fund insolvency and find a dedicated long-term funding source that can fully finance transportation spending.

Several lawmakers have suggested raising revenue from sources unrelated to transportation, including the postal service -- which has its own financial problems.

Motor fuels taxes have not been raised since 1993 and so have failed to keep up with inflation and transportation needs. Proposals to raise these taxes, however, have failed to gain much congressional support.

A promising proposal by Rep. Earl Blumenauer (D-Ore.) would raise motor fuels taxes by 15 cents over three years and then index them to inflation.

Weigh Options to Curb Defense Spending

A new presentation by the Congressional Budget Office showcases the difficult choices lawmakers and military leaders must make over the next several years to comply with lower caps on defense spending.

The presentation shows options for downsizing the armed forces, reforming compensation, modifying TRICARE health plans and cutting weapons systems. Some specific options and their projected 10-year savings:

  • Capping increases in basic pay for military members -- $25 billion.
  • Prohibiting working-age military retirees from receiving TRICARE Prime, a health care benefit with lower co-pays than regular TRICARE -- $70 billion.
  • Replacing the F-35 joint strike fighter development program with enhanced F-16 and F-18 aircraft -- $37 billion.

To meet spending caps solely by reducing the military’s size relative to plans for 2017, the Pentagon would have to cut 10 of 66 Army brigades, 2 of 11 Marine regiments, 34 major warships out of 244, and 170 Air Force fighters out of 1,100.

Military leaders have proposed a number of cost-saving reforms for the coming year. If lawmakers continue to reject such savings, they need to find reductions elsewhere. But military leaders warn that further cuts in areas such as training and research could reduce national security.