StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



December 13 Is The Seinfeld Budget Deadline

02 Dec 2013
Posted by Stan Collender

The budget conference committee that's been meeting sporadically since last month was given until December 13, that is, until a week from this Friday, to agree on some kind of deal.

So what happens if there is no agreement by December 13? 

Absolutely nothing.

Like Seinfeld, which was a TV show about nothing, December 13 is the budget deadline that's about nothing.

Yes, there will be headlines about how another budget-related committee, task force or working group -- think about the Bowles-Simpson (or BS) commission, the anything-but-super committee, and all of the other botched negotiations that have taken place the past few years -- has failed. That's bound to hurt a congressional approval rating that last week fell to its lowest level in history (see question 3) and doesn't have much further to fall.

But there will be no immediate practical impact if the budget conference committee fails. The government won't instantly shut down, the federal debt ceiling won't be breached the next day, and sequestration won't be immediately triggered.

In fact, as far as the federal budget is concerned, December 14 won't be any different regardless of whether the conference committee agrees to anything the day before.

The real deadlines are January 15 -- when the current funding for the government expires and another shutdown is possible -- and January 18 -- when the next sequester is likely to happen. That means that the real budget deadlines are a month later than December 13 and that the conference committee failing to come with something over the next 12 days should not be taken as an indication of impending fiscal doom.

It's certainly possible, of course, that the conference committee might not just fail, but it might fail so acrimoniously that additional negotiations before January 15-18 become even harder.

But it's far more likely that a failure by the 29-person budget conference committee to agree on anything by December 13 will simply means that the large-group negotiations that were always going to be difficult (as I've said before, 29 people meeting on Capital Hill these days won't be able to agree on what to order for lunch) will be replaced by a much smaller (as in 2) group that will continue the discussions.

There will be two questions at that point.

First, will this smaller group be able to agree on anything. Remember that a number of one-on-one budget negotiations have failed in recent years. This includes talks between the vice president and House majority leader and between the president and House speaker. There is hardly a guarantee, therefore, that yet another round of high-level budget negotiations will produce anything.

Second, even if the one-on-one talks do produce an agreement, there is no guarantee they will be accepted by the House and Senate. It's important to keep in mind that, as has been the case for the past few years on anything having to do with taxes and spending, it's not at all clear who has the authority to negotiate and agree to anything for their respective caucuses.

Let's be clear, when you say

Let's be clear, when you say "it's not at all clear who has the authority to negotiate and agree to anything for their respective caucuses" you are really referring only to the Republicans, no? Democrats have fallen in line with the President & leadership fairly consistently on these issues.

The issue is that there is no real leadership and hence no authority to represent the Republican "side" in one-on-one talks. Democrats realize this, and don't want to enter into those one-on-one talks, or don't want to give up anything and lose face with their constituencies, especially if what they "give up" is then rejected by the House Republicans.


Lack of core agreement

The sides are so far apart that a budget through normal process is not realistic. Republicans want to make very large cuts that would prove very unpopular. They have managed to make major cuts to the DOD budget which could put us on the road back to the peace dividend. The Defense lobby would never allow these cuts without the sequester.

The real Republican goal has always been cuts to social programs. However, those cuts are so overwhelmingly unpopular that they won't happen without extreme measures and hostage taking.




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