2014 budget debate
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?
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.
By changing it's rules yesterday to prevent filibusters on executive branch and judicial nominees (other than the Supreme Court) -- the so-called nuclear option -- the Senate further complicated a federal budget debate that was already overly complicated and had little chance of success.
Although it's still less likely than likely, the prospects for a government shutdown in January increased significantly. Based on yesterday's action, I have increased the possibility that funding for the federal government will not be adopted by the time the current continuing resolution expires to 40 percent.
And the likelihood for sequestration to occur as scheduled in mid-January also jumped significantly.
1. In general terms, the federal budget debate in recent years has always been more emotional than rational and far more political than substantive. The emotions and politics were significantly ramped up yesterday.
Eminent economist Martin Feldstein, former chairman of the Council of Economic Advisors during the Reagan Administration, had an op-ed in The Washington Post earlier this week that shows he just doesn't understand what's happening with the budget conference.
Here's the money quote:
The key to a political compromise is to recognize that raising revenue does not require increasing tax rates. Substantial revenue could be raised by limiting the government spending built into the tax code."
Feldstein accurately notes that this would give congressional Democrats enough of what they want in a budget deal to agree to changes in mandatory programs, especially "slowing the growth of Social Security and Medicare."
House and Senate budget conferees will formally get together again this week. This will be their first meeting since the ceremonial opening session on October 30 featured nothing more than politically self-serving opening statements,
Expect nothing to happen at this meeting...unless you believe that a further hardening of the positions each side stated at the last meeting represents something happening. it's simply too early in the process for anyone to offer a concession of any kind. The meeting will also be way too public for anything like a serious discussion, let alone an actual negotiation, to take place.
As I've said before, a budget conference committee of 29 representatives and senators is so unlikely to be able to agree on anything that, unless they want to go hungry, they had better delegate to a single staffer the authority to decide what to order for lunch. That's especially true if the lunch discussion takes place in an open hearing where CSPAN and others are broadcasting the deliberations.
Expecting little to happen should be the mantra for everyone following the budget events scheduled for the next few months.
As I posted yesterday, House and Senate budget conferees will meet for the first time this week as they begin a process that has a built-in December 13 deadline. It's either budget agreement by that Friday the 13th or bust.
Bust is far more likely. Here's why.
1. There is no agreement about the problem. Almost all previous successfully concluded budget deals have been based on at least a tacit up front agreement about what the two sides are trying to accomplish. Without that this time, Republicans and Democrats will spend a great deal -- maybe even most -- of their time arguing about what they should be debating rather than the possible answers.
2. There's no need for a deal #1. This is not a situation where the political or economic world will collapse if a deal doesn't get done. The debt ceiling has already been raised, taxes won't be raised automatically, the government won't shut down, Wall Street isn't threatening higher interest rates if there's no deal to reduce the deficit, etc.