–Cap Hill Democratic Leaders Try To Avoid Broad Debate On Fiscal Policy
–As Fiscal Policy Enters Pivotal Time, Weary Hill Says ‘Next Year’
–Presidential Panel Probes Fed’s Bernanke, OMB’s Orszag, Others
By John Shaw
WASHINGTON (MNI) – If there were ever a year in which Congress
should be at the forefront of the debate on American fiscal policy, this
would seem to be that year.
Saddled with record budget deficits, a mounting public debt, a raft
of expired and expiring tax provisions and a slumbering economy, U.S.
fiscal policy seems badly in need of vigorous debate, clear thinking and
careful planning.
But congressional Democrats, exhausted from pushing through
landmark health care, financial regulatory and fiscal stimulus
legislation, have shown no appetite for debating fiscal issues this
year.
Doubting the good will of congressional Republicans and fearful of
the surging discontent of the American public, Democrats have in effect
said they are ready to take up that fiscal debate — next year.
Neither the House nor Senate has passed its annual budget
resolution which sets five-year spending and revenue goals and makes
deficit estimates. Congress is required by law by pass annual budget
resolutions by April 15.
Senate Budget Committee Chairman Kent Conrad crafted a five-year
plan that was approved by his committee on a party line vote, but Senate
Democratic leaders have not brought the plan to the full Senate.
House Budget Committee Chairman John Spratt pushed through the
House a one-year resolution that only sets a ceiling on discretionary
spending for the 2011 fiscal year.
House and Senate Democrats have signaled they will delay most of
their work on the 12 annual spending bills for FY’11 until after the
November elections, even though the new fiscal year starts Oct. 1.
And congressional leaders have shown little desire to discuss the
future status of a host of tax cuts that were approved in 2001 and 2003
and are set to expire at the end of the year.
Arguably the most wide-ranging and consequential discussion of
fiscal issues is taking place in the sessions held by the National
Commission on Fiscal Responsibility and Reform which is co-chaired by
former Senator Alan Simpson and former White House Chief of Staff
Erskine Bowles.
The commission includes the chairmen and ranking members of the
Senate and House Budget committees, the chairman of the Senate Finance
Committee and a former White House budget director and vice chairman of
the Federal Reserve Board.
The panel includes some of fierce partisans of recent budget
battles, including five congressional Republicans who appear to believe
that tax increases should be off the table for fixing the U.S.’s fiscal
challenges and several Democrats who say that key social programs should
be kept off limits.
President Obama created the commission on Feb. 18 by executive
order after an attempt by lawmakers to create a panel by statute failed
in the Senate.
The commission is charged to issue a report by Dec. 1 that would
cut the deficit to about 3% of gross domestic product by fiscal year
2015 and begin slowing the growth of debt over the long term.
In order for the panel to issue recommendations, 14 of the 18
members need to reach an agreement.
So far, the commission has heard testimony from Federal Reserve
Board Chairman Ben Bernanke, White House budget director Peter Orszag,
Congressional Budget Office Director Doug Elmendorf and a host of fiscal
experts.
They held a lengthy session in late May with Carmen Reinhart, a
University of Maryland professor who recently co-authored a sweeping
survey of financial crises and the fiscal problems left in their wake.
The commission has also created working groups to examine
discretionary spending, entitlement spending and the tax code.
Analysts believe it will be very difficult for this panel to reach
an agreement, but believe its debate has generated ideas that could be
useful in future budget deliberations.
Stan Collender, a budget expert at Qorvis Communications, said the
panel has plunged into the fiscal debate with energy and commitment.
“You can make a pretty good case that this commission is the only
place in Washington where there has been a real fiscal debate,” says
Collender.
“But remember, it’s a safe venue. It doesn’t have to pass any
legislation. It doesn’t even have to produce a report — although it
wants to. It’s the closest thing to an Ivory Tower you will find inside
the Beltway,” he adds.
Collender says the panel’s deliberations have been calm and
substantive so far, partly because the focus has been to define the
nation’s fiscal problem, not offer solutions.
When that occurs, Collender says, the debate is likely to heat up.
“Let’s see what happens when they start to try to put together
recommendations. That will change the context completely. That will put
civility and high-mindedness to a real test,” he adds
** Market News International Washington Bureau: 202-371-2121 **
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