StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between

2011 Budget Debate Will Make "The Perils Of Pauline" Look Like A Romantic Comedy

20 Dec 2010
Posted by Stan Collender

The question I got over the weekend was whether the inevitable decision to go with a continuing resolution that keeps the federal government funded only until March means there won't be a big fight over the debt ceiling next year.  Because the existing debt ceiling currently is assumed to be reached close to the same date the the CR will expire, won't the two issues be combined into a single piece of legislation?

First, all projections of when the debt ceiling will be reached should be considered to be highly subject to change. This is especially the case now because of the substantial upward revisions in GDP growth that are being made on Wall Street and elsewhere.  Faster growth implies lower spending and higher revenues than was previously assumed and, therefore, reduced borrowing needs by the federal government.

Second, combining the two issues would certainly be possible and perhaps even likely in a rational world where efficiency is the goal.  But in the hyper political and partisan world that will exist in Washington next year, will it really make any sense for the GOP voluntarily to give up one of what it will believe will be its two major points of leverage over the White House?  Even if the two need to be dealt with at close to the same time, why would the GOP not use both opportunities to exert influence that it otherwise won't have?  After two years of constantly delaying even strictly procedural votes where the outcome was virtually certain, why does anyone think that the GOP won't take advantage of a major opportunity like a debt ceiling to force at least a symbolic confrontation with the White House and congressional Democrats?

And does anyone really think that there won't be a continuing series of cliff hanger-like episodes when any issue having anything even remotely to do with revenue, spending, deficit, and debt is considered?

The only question is who will be tied to the track and who will be saying the federal budget equivalent of "Curses, foiled again."


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