Committee for a Responsible Federal Budget

‘Line’ Items: Dark Horse Edition

May 23, 2011 | Budgets & Projections

Not Rounding the Bend Yet – Like the Triple Crown field, the fiscal policy landscape is muddled with several solutions vying to break out from the pack (see a comparison of fiscal plans here). With the Gang of Six at an impasse, no dark horse is emerging yet that can take the roses. Fiscal policy is seemingly mired in the backstretch, moving at a plodding pace. With no breakthroughs expected this week, many are asking: when will we round the bend towards the home stretch?

Presidential Field Taking Shape – While the Preakness saw another dark horse victor this weekend, a potential White House contender who was emerging as the favorite dark horse of many pundits decided not to make the field when Indiana Governor Mitch Daniels, also a former OMB director, opted not to run. Confronting the national debt would have been a key plank in his platform. On the other hand, former Minnesota Governor Tim Pawlenty officially threw his hat in the ring today and in a USA Today op-ed says that he will be straight with Americans concerning the difficult choices that will be required to reduce the debt. Meanwhile, Politico reports that some continue to push House Budget Committee Chairman Paul Ryan to make the race.

Biden Group Back in the Saddle – With the House of Representatives back from its recess, the Biden group will resume its negotiations with a meeting on Tuesday, continuing its effort to forge a deal pairing an increase in the statutory debt limit with significant deficit reduction. While the group so far has only agreed on about $150 billion in savings, a new CRFB analysis of recent fiscal plans finds approximately $1 trillion in common-ground deficit reduction.

Debt Ceiling Watch – Just as anxious spectators who had something riding on the Preakness watched the race with great anticipation, many are keeping an eye on the debt ceiling, but in this case the stakes are much higher. The Treasury Department is now taking "extraordinary measures" to prevent a U.S. default. CRFB is tracking these measures with a new table that will be constantly updated as new actions are taken. Treasury Secretary Geithner says that such measures can hold off a default no longer than early August. CRFB provided some ideas for responsibly raising the debt limit while also addressing the mounting debt.

Coburn Takes Break from Gang of Six – While not completely hanging up his stirrups, Senator Tom Coburn (R-OK) says he is taking a “sabbatical” from the ‘Gang of Six’ senators attempting to forge a bipartisan, comprehensive fiscal plan. He plans to release his own plan this week that he says will include $9 trillion in deficit reduction.

Conrad Pulls Back the Reigns on Senate Budget Resolution – Senator Kent Conrad (D-ND), chair of the Senate Budget Committee, says that there will not be a FY 2012 budget resolution coming from his committee anytime soon. After trying to corral enough votes among committee members to pass a resolution out of the committee, Conrad decided that a budget resolution would best serve as a vehicle for any agreement that the Biden group, or possibly Gang of Six, can come up with.

Senate to Vote on Competing Budgets – The Senate is heading for a dog and pony show over the FY 2012 budget--planning on votes on the budget resolution passed by the House as well as the budget request submitted by the White House earlier this year. Neither one will garner enough votes; it is a maneuver to put senators on the record and show each side that their favored approach cannot be adopted. Meanwhile, the House will move on with its portion of the process, with the full House Appropriations Committee set to mark up the FY 2012 appropriations bills for Homeland Security and Military Construction-VA on Tuesday.

More Contenders About to be Added to the Field – The second annual Fiscal Summit hosted by the Peter G. Peterson Foundation will take place on Wednesday in Washington, DC. In addition to remarks from former President Bill Clinton and other luminaries, several new fiscal plans from various groups will be released.

Eye on the CPI – No, its not the latest crime drama on TV. The consumer price index (CPI) is the inflation measure used to adjust portions of the budget and tax code to reflect increases in the cost of living. A recent paper recommends changing to a more accurate measure (chained CPI) that could save some $300 billion over the next decade. It's not quite sweeps weeks material, but the idea is getting increased attention as policymakers look for new ways to cut the deficit. This horse may just break out of the pack.

Key Upcoming Dates

May 24

• Meeting of the Biden group of budget negotiators.

• House Appropriations Committee meeting to approve of FY 2012 subcommittee allocations and to mark up the Homeland Security and Military Construction-VA appropriations bills at 9:30 am.

• House Ways and Means Committee hearing on tax reform lessons from abroad at 2 pm.

• House Appropriations Committee agricultural subcommittee markup of the FY 2012 agriculture appropriations bill at 4pm.

May 25

2011 Fiscal Policy Summit in Washington, DC.

• Senate Homeland Security and Governmental Affairs Committee hearing on ending duplication in federal government at 10 am.

August 2

• Treasury Secretary Geithner says that the U.S. will default on its obligations by around August 2 if the statutory debt ceiling is not increased before then.