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The big budget question for this week is whether the budget conference committee will be able to agree to anything by its deadline this Friday.
My big budget answer: It doesn't matter.
1. The budget world won't end at midnight this Friday. The government won't shut down, the debt ceiling won't be breached and no sequester will occur. So there's no immediate practical impact if the conference committee fails to come up with anything. It would not be at all surprising, therefore, if at some point this week the committee announces that it will continue its deliberations when Congress returns to Washington in January.
2. Even if the conference committee does agree to something this week, there's only a limited chance that the deal will actually be voted on by one or both houses. If it happens at all, it will happen in January.
No...I'm not reporting that the Obama administration's fiscal 2015 budget, which by law is supposed to be sent to Congress by Monday, February 3, 2014, will be late. Neither the White House nor the Office of Management and Budget have made any such announcement and I seriously doubt they will any time soon.
Yes...I'm predicting, based on my reading of the budget tea leaves, that the Obama 2015 budget will be seriously late.
The reason is how long it's taking Congress to deal with 2014.
The only real question in my mind is how late the Obama budget will be. My guess is not only won't we see it before the end of February but that the end of March or later is a real possibility.
Although the process by which the president's budget is put together starts much earlier in the year, the vast majority of big decisions typically are made in the fall, that is, after Congress has completed work on the current year budget and appropriations and other decisions can be taken in to account and reflected in the administration's plan.
At least that's the way it's supposed to work.
One of the ideas discussed during the fiscal cliff debacle in late 2012 and early 2013 to deal with the GOP's intransigence on raising the federal debt ceiling was the platinum coin trick.
The idea was pure genius. Using previously-granted legal authority, the Treasury would mint a platinum coin with a face value of $1 trillion and would sell that coin to the Federal Reserve which would then credit the U.S. government with the cash. That would eliminate the need for additional government borrowing any time soon and...presto...the White House's debt ceiling problem would go away.
The White House eventually said no to the platinum coin trick by saying that it didn't have legal authority to do the sale. It also became apparent when the administration rejected the other debt ceiling escape hatches like the 14th amendment that the White House's political strategy was to keep the pressure on congressional Republicans by making them deal with the one and only debt ceiling process: voting on it.
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.
I've been talking for months about how the Grand Bargain or Big Deal that's always mentioned whenever there are budget talks in Washington won't happen until 2019 at the earliest.
I first posted about 2019 in June and have mentioned it a number of times on television and radio and in speeches since then.
I've also been told that my analysis recently made the big time when a group of the most senior tax lobbyists in Washington discussed it at a private meeting (It's not clear whether they were happy about having six more years to work on issues or sad that nothing much would be done before the end of this decade at the earliest).
Each time I've talked about 2019 I've gotten reactions that range from shock to amazement. No one ever tells me I'm wrong; they just shake their heads in disbelief.
So once again, here's are the top 10 reasons we're likely facing six more years of crisis-by-crisis budgeting in Washington and no Grand Bargain any time soon.
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."
I'm willing to bet that most of you -- part of a readership that is far more interested in the federal budget than any group of typical Americans -- didn't know that the deficit was significantly lower in fiscal 2013 than it was in 2012.
For the record, the Treasury reported a little over a week ago that the 2013 deficit was $680 billion, a 38 percent drop from the approximately $1.1 trillion deficit in 2012 and 48 percent less than the $1.4 trillion deficit in 2009.
The 2013 deficit was 4.1 percent of GDP, the smallest since 2008. Fiscal 2013 was the fourth consecutive year the deficit has fallen as a percent of GDP. And the 4.1 percent-of-GDP deficit was almost a third less than the 6.0 percent that had been projected when the White House submitted its fiscal 2014 budget to Congress less than 6 months ago.
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.