This post assesses the task facing the budget negotiators on Capitol Hill. It concludes that those negotiators could achieve real progress by laying out a budget plan based on those fundamental issues on which the two parties should be able to agree. So rather than trading mini-concessions that would have little long-term payoff, the two sides instead should build the framework of a plan that would have true ultimate beneficial impact.
With the debt limit / shutdown standoff now on temporary hold (thank goodness), attention has shifted to the newly appointed conference committee for the fiscal year 2014 budget resolution, whose formation was a part of the shutdown-settlement deal. This conference committee is just a bit late – given that it was supposed to produce a resolution to be passed by both chambers of the Congress back on April 15, and the fiscal year already is more than three weeks underway; but better late than never.
In fact, the budget conference committee faces a formidable task. Job one will be to find a way past the new deadlines of January 15 (when the continuing resolution for the annual appropriations expires, and also when the second round of the budget “sequester” kicks in), and February 7 (when the Treasury again hits the debt limit). These deadlines might suggest a game of small-ball – finding a few dollars here and a few dollars there to justify another punt, like the one that was played a couple of weeks ago.
But small-ball far understates the occasion. The last few months have been a disaster for the economy and for U.S. business. Both businesses and households reacted to the uncertainty of the indefinite shutdown and the impending default by going into a freeze – businesses on hiring and investing, and households on spending. Meanwhile, government employees who weren’t getting paid and government contractors who were in economic limbo were not engaging in much commerce either. All of this scrubbed off some of what little momentum the already stumbling economy had. Washington cannot revert to this self-destructive pattern barely a quarter of a year later, when appropriations could again expire, and the debt limit could again constrain the nation’s ability to pay its bills. In fact, any hint now of a relapse into shutdown showdown and default deadlock could impose an even greater economic toll. The nation – in the person of the budget conference committee – must find a better way.