‘Line’ Items: May Flowers Edition

May 9, 2011 | Taxes

What Will Bloom This Month? – In April we were showered with fiscal policy developments: namely, a last-minute FY 2011 budget deal; a deluge of budget plans from across the political spectrum (see here, here, here and here ); House passage of a FY 2012 budget resolution; a major fiscal policy speech from President Obama along with a new fiscal framework; and a steady stream of budget process ideas. What sort of May flowers will these April showers bring? A deal to raise the debt limit? A bipartisan, comprehensive fiscal plan?

Biden Hopes to Cultivate a Debt Deal – Vice President Biden on Thursday chaired the first meeting of the task force of lawmakers called by President Obama to discuss debt reduction. The first priority of the group is to reach an agreement on raising the statutory debt ceiling. While the initial meeting was devoted to each side staking out its position, this week negotiators will dig into the more difficult task of finding common ground. CRFB offered ideas for responsibly raising the debt limit in a recent paper. There is growing consensus that a deal will include some budget cuts and some sort of process to ensure further deficit savings. CQ Weekly (subscription required) examined the emergence of budget enforcement such as debt triggers as part of a deal, as well as their mixed record of success and compared recent plans. The Peterson-Pew Commission on Budget Reform recently offered some timely recommendations for making triggers effective. For further reading, so also CRFB’s statement on the need for a timely deal with, at least, debt targets and triggers and a “down payment” of specific savings.

Senate Budget Committee to Sprout Resolution? – Senate Budget Committee Chair Kent Conrad (D-ND) plans to unveil his mark of a FY 2012 budget resolution this week, with a committee mark-up possible later in the week. The plan seeks about $4 trillion in deficit savings over ten years and pays for the Medicare "doc fix."

Toomey Too – Sen. Pat Toomey (R-PA) will plant his own fiscal seed this week, releasing a FY 2012 budget proposal on Tuesday. It reportedly will balance the budget in nine years.

House Appropriators Set to Unveil 302(b) Allocations – Where there are flowers, you can expect bees, or in this case “b”s, as in 302(b) allocations. The House Appropriations Committee plans to release the top line spending levels for each of the 12 FY 2012 spending bills this week. The budget resolution passed by the House last month caps FY 2012 discretionary spending at $1.019 trillion. The allocations will divide that amount up between the 12 appropriations subcommittees. The budget process also moves forward on another front as congressional committees continue examining 2012 budgets for the various government agencies. In an annual ironic twist, the Congressional Budget Office (CBO) defends its own budget on Wednesday before a subcommittee of the House Appropriations Committee.

Gang of Six Not Pushing Up Daisies – The Gang of Six senators continues to work on a bipartisan, comprehensive debt reduction plan. With the Biden group beginning deliberations and Sen. Conrad poised to mark up a budget resolution in his committee, some feared that the original Gang of Six would be pushed aside. However, budget watchers like Erskine Bowles are hopeful the gang will agree on a plan soon and many still believe it is the best hope for achieving a comprehensive, multiyear fiscal plan.

Business Support Springs UpOver 100 business leaders have signed on to a statement from the Committee for Economic Development (CED) demanding that lawmakers act now to reduce the debt and offer “concrete, realistic ideas.” The group promises not to penalize those who tell the truth about the painful choices necessary, but “will not look kindly on political posturing and delay in this time of crisis.” This latest group joins other prominent efforts such as the over 60 budget and economic experts who joined in a letter in March calling for everything to be on the table in devising a comprehensive fiscal plan.

Pruning Tax Breaks – Prominent economist Martin Feldstein argued in the New York Times last week that tax reform “limiting the deductions, credits and exclusions that are essentially government spending by another name” can result in increased revenue to reduce the deficit without raising tax rates. Feldstein also recently wrote a paper with CRFB President Maya MacGuineas and Daniel Feenberg detailing a plan to cap so-called tax expenditures. The White House Fiscal Commission made eliminating most tax expenditures a centerpiece of its tax reform plan–the “Zero Plan”–which Progressive Policy Institute Senior Fellow Paul Weinstein and CRFB’s Marc Goldwein expanded upon in a recent paper. CRFB identified tax expenditures as ripe for reform last year. Rep. Tim Walz (D-MN) has now set sail with a modest proposal to eliminate the mortgage interest deduction for yachts that currently qualify as second homes under the tax code. The bill is a baby step towards the fundamental tax reform that is required.

Weeding out Excess Federal Property – The White House has designated over 12,000 federal properties across the country as excess and has worked with Rep. Jeff Denham (R-CA) on legislation creating a process modeled after the Base Closure and Realignment Commission (BRAC) that closed and sold off obsolete military installations. The bill will create a Civilian Property Realignment Commission that will recommend selling or redeveloping federal properties–the recommendations of the panel will get an expedited up-or-down vote in Congress. The bill calls for a one-time appropriation of $88 million to get the process started, but OMB estimates that at least $15 billion can be saved by selling the properties.

Key Upcoming Dates

May 9

  • House Speaker John Boehner (R-OH) speaks before the Economic Club of New York.

May 10

  • Vice President Joe Biden hosts the second meeting of the congressional deficit reduction talks.
  • Senate Finance Committee hearing on the role of Social Security in deficit reduction at 10 am.
  • Senate Homeland Security and Governmental Affairs Committee Federal Financial Management Subcommittee hearing on "Roadmap for a More Efficient and Accountable Federal Government: Implementing the GPRA Modernization Act” at 2:30 pm.

May 12

  • Producer Price Index for April released.
  • House Ways and Means Committee hearing on comprehensive tax reform at 9 am.
  • House Ways and Means Committee Health Subcommittee hearing on reforming Medicare physician payments at 2 pm.

May 13

  • Consumer Price Index for April released.
  • University of Michigan consumer sentiment index for May released.

May 16

  • Treasury Secretary Tim Geithner says the statutory debt limit will be reached no later than May 16.

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 (revised).