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The 5 Biggest Myths About The Budget Deal

18 Dec 2013
Posted by Stan Collender

Don't believe what you may have heard elsewhere about the budget deal. Here's the truth.

Myth #1: This prevents another government shutdown.

The deal may make a shutdown less likely, but it absolutely doesn't prevent one from happening.

Shutdowns occur when there is a lapse in appropriations, that is, when an existing appropriation expires and no new appropriation is enacted to replace it. This deal raises the ceiling on the amount that may be appropriated, but it does not actually appropriate anything.

There still could be, or likely will be, a fight in January over the amount being spent and what it is being spent on when the widely expected omnibus appropriation is debated. The deal provides a ceiling on the amount that may be spent rather than a guarantee and some members of Congress will want to re-litigate the increase that was negotiated in this agreement. Others will threaten to vote against the omnibus because they disagree with the bill's priorities.

Myth #2: Congress has now passed a budget for the first time in years.

Nonsense. This deal isn't a "budget" because (1) it only deals with appropriations (about 30 percent of all annual federal spending) and doesn't deal with taxes at all, and (2) it's not a congressional budget resolution. The House and Senate did pass their own budget resolutions earlier this year but this agreement is not a compromise between those two.

Myth #3: This is the beginning of a new era of bipartisanship in Washington.

More total nonsense: This is more wishful thinking and heavy duty prayer than serious analysis.

This deal was possible because both sides agreed not to consider anything controversial like Medicare, Social Security and taxes. There would have been no deal at all had those issues been on the table...or anywhere near the table.

Does anyone really think that there is enough good will in the aftermath of this deal for Congress and the White House to be able to take on these issues, immigration or Obamacare?

Myth #4: There will be no budget-related crises over the next two years.

This myth was exploded almost immediately after the deal was announced when House Budget Committee Chairman Paul Ryan (R-WI) and Senate Republican Leader Mitch McConnell (KY) announced that the GOP will not agree to the increase in the debt ceiling that likely will be needed by June without getting concessions on some as-of-yet unspecified issue(s) and the White House immediately rejected debt ceiling negotiations.

Trillion dollar coin anyone?

Myth #5: This deal was a significant change in fiscal policy

Sorry, but $23 billion in lower deficits over the next 10 years does not constitute a material change in the U.S. budget outlook. In fact, $23 billion is literally a rounding error (.000575) when compared to my estimate of total spending over that same 10-year period.

Bonus Myth: This deal shows the congressional budget process can work.

Oh, please. Not only was there budget resolution by the April 15 deadline, there was no budget resolution at all (see #2). The GOP in both houses prevented a budget resolution conference from happening. None of the FY14 appropriations were enacted by the start of the year and we had a government shutdown. The debt ceiling was suspended rather than increased. The sequester that was supposed to happen was changed.

And this virtually insignificant deal somehow changes all that?

Not only is the congressional budget process not working, it's basically already dead and buried.

But on the Bight Side...

The most honest thing we can say is that the deal was better than most expected. Happy Holidays!


This is best regarded as a

This is best regarded as a ceasefire rather than a truce. Hopefully a more durable ceasefire than the one agreed to just before the Tet Offensive.


You cannot seriously think

You cannot seriously think there will be a debt limit brouhaha in June, at the height of a run up to the 2014 election. This noise from Ryan et al is no more than posturing.




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