Monthly Archives: December 2013

There is muddling through, and there is kicking the can down the road.  Although neither is conclusive, the former is more purposeful.  The budget deal announced yesterday – the “Bipartisan Budget Act” – challenges judgment with respect to its classification between these two pigeonholes.

There is some good news here.  The press has reported that the deal eliminates the risk of a government shutdown either this year or next.  That is not correct, at least not literally.  The government will shut down on January 15, 2014, and then again on October 1, 2014, if the Congress does not pass, and the President does not sign, appropriations bills (in addition to this deal) to keep the government funded and open.  However, unless and until this deal becomes law, the two Appropriations Committees of the Congress do not have the agreed-upon targets such that they can even try to pass those bills.  There are indications that the Appropriations Chairs have had significant input to the numbers in the deal, and that those Chairs are therefore now prepared to write those bills.  If so, then we are at least positioned to avoid government shutdowns, even though we have not yet done so.

The economy is shaky enough that it really does not need another shutdown shock.  Making a real step toward avoiding a shutdown crisis (although not fully accomplishing that goal, which this piece of legislation could not possibly do) for the next 22 months is clearly a positive.  Chalk one up for the Bipartisan Budget Act.

Also give the negotiators credit for standing close enough together to fit in one television shot.  Very little has been accomplished or even attempted on a bipartisan basis in Washington in recent months and years.  Budget chairs Ryan and Murray will catch a fair amount of flak within their own parties for even appearing to work together, so kudos on this front too.

Furthermore, the deal provides some relief from the budget “sequester” in this fiscal year and next, which are arguably the worst-affected years in the next eight that are covered by that irrational budget mechanism.  There is plenty more pain and irrationality to come in succeeding years – and even with the sequester fix these two years are not great either – but still, this relief is unquestionably welcome.  The deal “pays for” that sequester relief with savings that will arrive later, and this timing makes sense from the point of view of managing the nation’s macroeconomic policy.  So that is another positive.

That said, do not forget that the potential January 15 shutdown was not the only pending early-2014 crisis.  We go on debt-limit watch again on February 7 – and the debt limit is a more malignant issue by far than a government shutdown.  As an Act of Congress, this deal, at least in theory, could have increased the debt limit and taken that risk off the table.  It did not.  This is not to lay personal responsibility on the budget-deal negotiators; they may not have been given a green light on the debt limit by their leaderships.  But failing action in the budget deal leaves the larger dark cloud hanging over the economy, even while it dissipates the smaller.  You certainly should enjoy your holidays, but please do not put your guard down just yet.

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“Rumors” is a bar in Washington, D.C.  (Never been there.)  Rumors are also all we have to go on in anticipating a deal coming out of the budget-resolution negotiations this month.

The rumor is that a deal is relatively close, but still not in hand.  That makes life a bit tricky for those outside the room.  Virtually the entire purpose of this negotiation is to settle upon a number for the total annual appropriations – a so-called “302(a) allocation” – for the ongoing fiscal year (2014).  This is small ball, not a grand bargain.  By the ideal-world calendar, the appropriators would have received that total number on April 15, and that entire process would have been finished on September 30,.  So now, instead of the appropriators receiving their target five and one half months before the fiscal year, they are waiting for the number two and one half months into the fiscal year.  (No pressure, guys.)

Why is that a problem?  The toughest annual appropriations decisions are those over the last few dollars.  And it is virtually impossible even to prepare for those decisions if you do not know even to a close-enough-for-jazz tolerance how many last few dollars there are going to be.

But beyond that point, the appropriators’ ambition this year was to do legislation a little more tailored than a last-year-plus-or-minus-X-percent across-the-board full-year continuing resolution (CR), which has been the highly unfortunate recent pattern.  Even those most viscerally opposed to government as an institution should reject that approach, and instead want appropriations laws that dig much deeper – that perform “oversight” to weed out and disproportionately cut or repeal the least-cost-effective programs.

At least to take a crack at such meaningful legislation, the appropriators asked for their 302(a) allocation to be determined by about a week ago.  Without that number in hand, and with the current CR expiring on January 15, the chances of further short-term CRs and still-later final appropriations legislation are increasing by the minute.  And the shorter the duration of any real appropriations legislation, the less the potential beneficial impact of any well-chosen adjustments, the harder for well-meaning executive branch managers to do their jobs, and the more-abrupt any changes of appropriations levels need to be to hit an annual total much different from the annual rate of the initial part-year CR.

But it is not dreadfully surprising that the budget-resolution negotiators are having a hard time delivering their final numbers.  The substantive preferences of the House and the Senate have little in common.  And especially in the House, but even in the Senate, there is considerable diversity of opinion within the majority.  A deal cut by the House majority’s negotiator could be rejected by his own caucus and so rendered null, void, and an enormous waste of time and loss of face.  Therefore, the negotiation entails frequent consultations with the leaderships and at least indirectly with the full caucuses, which itself takes a lot of time.

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