Committee for a Responsible Federal Budget

‘Line’ Items: Heat Wave Edition

If You Can’t Stand the Heat… – Washington has been experiencing a heat wave, but it can’t all be blamed on the friction between the two parties. Before members of the House can escape at the end of the week for a long break, they must complete work on the war supplemental that has bounced around more than a beach ball. The Senate will stay an extra week before its month-long recess and will try to complete a small business measure amid votes on the Elena Kagan nomination to the Supreme Court, campaign finance reform, and energy legislation.

War Supplemental a Hot Potato – A measure to fund operations in Iraq and Afghanistan has gone back and forth between the two chambers as $23 billion in domestic spending added by the House has made it too hot to handle for the Senate. On Thursday the Senate sent back the version it originally passed without spending for domestic items like aid for teachers and summer jobs after a test vote on the House version came well short of the votes needed. The House wants to send a bill to the president this week so that funding for the troops is not affected. The likeliest outcome is for the House to adopt the Senate version and try later to attach the domestic funding to other legislation.

Trying to Keep the Small Business Fires Burning – The Senate is moving slowly on legislation to aid small businesses. Leaders agreed to drop a $30 billion lending program that some criticized as TARP junior only to have an amendment reinstating the fund get 60 votes to end a filibuster. Some senators are also pushing a divisive amendment reinstating the estate tax at lower levels. Leaders still need to reach agreement to bring the bill to a final vote.

Heat Turning Up for Tax Cuts – The issue of what to do about tax cuts set to expire at the end of the year is getting more attention as the expiration date draws near. The Senate Finance Committee recently convened a hearing on the topic and members held a private meeting last week, with the possibility of a committee mark-up before the recess. President Obama has recommended permanently extending the tax cuts for families making under $250,000 a year, but not all lawmakers are on board. The idea of extending the tax cuts for two years is gaining traction. It could have the affect of aiding the recovery in the short run and providing a space for much-needed fundamental tax reform to be considered. The House has said it will let the Senate go first on this difficult issue. Some have suggested that the costs of extending the tax cuts should not have to be offset. CRFB countered this argument in a blog post last week.

Social Security a Hot Topic – In advance of its 75th anniversary next month and a report expected soon from those overseeing the program that will highlight the need to shore up the finances of Social Security, possible reform is being discussed. Leaders from both parties in the House separately broached the idea recently of making adjustments to improve its long-term solvency. The idea of raising the retirement age is being discussed as a part of reform. This comes as more Americans doubt that Social Security will be there for them. A recent USA Today/Gallup poll indicates that a majority of non-retirees don’t think they will get benefits when they retire. The proportion is much higher among younger workers.

Four Congressmen Seek to REDUCE the Budget Heat – Last week four legislators introduced a package of legislation to reduce the national deficit by more than $70 billion over the next decade. The four bills, collectively known as the REDUCE Acts, cover defense, agriculture, the treasury, and energy.

Voters Cold to Congress – According to the latest Gallup poll, only 17 percent of voters have confidence in Congress, an all-time low. This comes as lawmakers have been unable to adopt a basic budget blueprint or to address long-term debt.

Mid-Session Review Released – The White House released its Mid-Session Review on Friday. It showed slight improvement for the  deficit outlook this year, but a dreary picture in the longer term. See here and here for initial analysis from CRFB and check back soon for a more in-depth examination.