StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



Remember: It Doesn't Matter If The Budget Conference Doesn't Agree To Anything This Week

09 Dec 2013
Posted by Stan Collender

The big budget question for this week is whether the budget conference committee will be able to agree to anything by its deadline this Friday.

My big budget answer: It doesn't matter.

Here's why.

1. The budget world won't end at midnight this Friday. The government won't shut down, the debt ceiling won't be breached and no sequester will occur. So there's no immediate practical impact if the conference committee fails to come up with anything. It would not be at all surprising, therefore, if at some point this week the committee announces that it will continue its deliberations when Congress returns to Washington in January.

2. Even if the conference committee does agree to something this week, there's only a limited chance that the deal will actually be voted on by one or both houses. If it happens at all, it will happen in January.

3. It's not at all clear, however, that whatever the conference committee comes up with will be acceptable to the full House and Senate. In fact, there have been increasing signs over the past 10 days that the deal being discussed -- eliminating the sequester and a smaller deficit in exchange for higher spending, an increases in fees and other non tax revenues and mandatory spending program reductions other than Social Security or Medicare -- isn't acceptable to significant factions in both houses and both political parties.

The great fallacy behind the creation of the conference committee was always that its mere existence somehow would change the intractable budget politics of the past few years. That was based largely on the premise that a deal cut by House Budget Committee Chairman Paul Ryan (R-WI) automatically would convince the House GOP caucus to abandon its previously fixed-in-cement positions on budget issues.

It was also based on the assumption that everyone wanted to prevent the 2014 sequester from happening and that they would do whatever was needed to avoid those spending cuts.

So far, neither one has proven to be true. Ryan's participation has not yet changed the political equation for the tea partiers in the House and Senate. In addition, the sequester is still proving the be far more popular option than most of the alternatives being discussed.

The result? Unless the conference committee comes up with a deal that both houses of Congress approve this week, this Friday's deadline is absolutely inconsequential and insignificant. The failure will be worth noting and reporting only because it will be the latest example of the intractable budget politics in Washington. The immediate impact of that failure, however, will not be that big of a deal.



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