continuing resolution

When I was much younger, I helped start a monthly breakfast meeting for a handful of inside-the-beltway budget wonks.

The question I've been getting most often since House Speaker John Boehner (R-OH) and Senate Majority Leader Harry Reid (D-NV) sort of announced an agreement on a six-month continuing resolution for fiscal 2013 is whether that CR can be used to stop the sequester from occurring on January 2.

The answer is yes, and it's happened before.

First, some quick background for anyone who isn't a complete budget process geek and doesn't repeat this hourly.

1. The sequester is the across-the-board spending cut that was triggered when the anything-but-super committee failed to come up with a deficit reduction plan last November.

2. The sequester will occur on January 2, 2013, unless Congress and the president legislatively agree to a change in the Budget Control Act, the law that created the anything-but-super committee and the fall back automatic spending cut if it failed.

There seems to be some confusion both inside and outside the beltway about the impact of the deal on a six-month continuing resolution that kind of/sort of was announced yesterday in separate statements by House Speaker John Boehner (R-OH) and Senate Majority Leader Harry Reid (D-NV).

The bottom line: Appropriations were never a formal part of the fiscal cliff so a deal on a CR is a separate issue that doesn't affect it.

To be technical...Something had to be done by October 1 -- the start of fiscal 2013 -- to avoid a government shutdown; the fiscal cliff as it was used by Fed Chairman Ben Bernanke primarily referred to the tax cuts that expire on December 31 and the sequester that will cut spending by $120 billion on January 2. The CR and cliff are related only in the sense that they both deal with the budget and so are often discussed at the same time, but the two are and always have been completely different.

Let me start by stating for the record that, while it would have been extremely entertaining to have a government shutdown a month before the 2012 election, the deal for a six-month continuing resolution kind of/sort of announced yesterday by Senate Majority Leader Harry Reid (D-NV) and House Speaker John Boehner (R-OH) and blessed later in the day by the White House is a good thing for the economy, financial markets, investors, business, and the country as a whole.

It may not be good for the tea party, but I'm more that okay with that.

Having said that, there are several points that need to be raised.

Patrick Caldwell, a writing fellow from American Prospect, sent several interesting questions in response to my post yesterday about how the need for a continuing resolution by October 1 is causing serious angst for Republicans:

Caldwell asks:

1. Wouldn't it be a nightmare for the Romney campaign if House Republicans shut down the government the same week as the first presidential debate? 

2. Wouldn't a fight over a CR provide an opportunity for Obama to tie Romney with a Republican Party controlled by extremists willing to toy with a precarious economy.

3. Won't Romney's folks promise the tea partiers that, if they just maintain the status quo through January, they'll have free reign and can make further changes under a President Romney?