The Stan Collender Archives
There was a time when a $200+ billion reduction in the federal budget deficit would have been big news and hailed as a singular achievement worthy of either fiscal sainthood or a dance-on-the-table party...or both.
Yet yesterday's Congressional Budget Office report showing that the fiscal 2013 federal deficit will be $642 billion, $203 billion less than CBO's previous estimate of $845 billion, did not create any spontaneous cannonizations or celebrations. It also didn't change the still-stalemated and crisis-oriented federal budget debate by even a small amount.
The bottomline: It's in almost no one's interest to be happy about the budget news that should have made everyone happier.
Here's why.
What do you call the effort that will be made in the House of Representatives this week to pass a budget-related bill that will never be enacted, won't work as promised even if it somehow does get signed into law and uses the legislative process for purely political purposes?
"Typical" may be the most common answers. My suggestion? That tried-and-true federal budget phrase so often used to complain about federal spending: "Waste, fraud and abuse."
The legislation is the Full Faith and Credit Act, a bill that supposedly would make payments to federal bond holders the priority if the federal debt ceiling isn't raised and the government doesn't have enough cash to pay all its bills when they come due. The legislation would allow the Treasury to borrow more than allowed by the statutory debt ceiling to make these payments.
Last August and September, I did a series of eight posts about how, contrary to Tea Party and John Boehner assertions, federal spending was actually very popular. As I said at the time, Americans don't want less government; they just want government that costs less.
The latest installment -- episode 9 -- happened last week when the air traffic control problems caused by the sequester were fixed in what by congressional standards was warp speed.
Faced with an immediate backlash from flyers, Congress and the White House enacted legislation that fixed the problems less than a week after the furloughs caused long delays in the skies and long security lines at the airports.
Yes...Flyers are a relatively elite group relative to the population at large. Yes...this is a group that has more influence and a larger megaphone than the average voter. And yes...the delays were easier for the media to cover and so were more visible than sequester-related reductions in other programs.
I've been meaning to ask this question for a while: Isn't this the equivalent of a tax increase?
Here's the story.
The sequester spending cuts forced the superintendent of Yellowstone to decide not to clear the winter snow from the park's road as early as it typically had been plowed in the past because...well...it will eventually melt as the weather gets warmer anyway. That seems like a perfect solution to the sequester-caused spending cut except for the businesses in and around the park. No plowing meant no tourists, and that meant much less business.
According to this story by Mark Barabak in the Los Angeles Times, the prospect of lower sales convinced many of the tourist-related businesses around Yellowstone to pay for the plowing. The Cody and Jackson Wyoming Chambers of Commerce raised $170,000 to get the snowed plowed.
Wasn't this the equivalent of a tax increase for those people who paid to have the snow cleared two weeks early?
As I posted on March 1, the sequester -- the across-the-board spending cuts ordered by the Budget Control Act-- would only become real for most voters when the predictions of the impact of the reductions actually started to have a effect on their lives.
Although some people felt it almost immediately, any budget analyst worth his or her salt knew that the real pain was always going to come when federal programs that were labor intensive started to implement furloughs, layoffs and hiring freezes and the services they provided had to be curtailed. That was always going to take a month or more because of the process that needs to be followed to notify employees.
But the fact that labor-intensive programs didn't reduce services immediately when the sequester began on March 1 never meant that it wasn't coming. It always was and the protests that the White House was playing fiscal chicken little were simply wrong.
Erskine Bowles and Alan Simpson, who stopped being the co-chairs of a failed deficit reduction commission at the end of 2010, are at it again. At some point today they will unveil yet another B-S plan they say will reduce the deficit and debt to manageable levels.
Never mind that they completely failed in 2010 to get their own commission to agree to what they recommended.
Never mind that since the B-S commission failed, Congress has overwhelmingly rejected several efforts that supposedly were based on what the two co-chairs recommended.
And never mind that after these repeated failures neither Bowles nor Simpson have any standing to offer a a new plan that is so politically toxic it has no chance of (1) being taken seriously, (2) jump starting negotiations or (3) having any positive impact whatsoever.
Watching Bowles and Simpson fight for relevancy in the federal budget debate these days is a bit like a rock band from a previous era going on tour but having to play in much smaller venues because its audience is so tiny that the arenas make no sense.
I decided not to comment immediately on the Obama 2014 released last week because I thought the usual instant micro analysis of what the president proposed was likely to be largely besides the point..
The Obama 2014 budget has far less to do with what was proposed than almost any other presidential budget in history. It's real purpose...and value...comes from understanding it as a document designed to drive a wedge between House and Senate Republicans.
To a certain extent it's hard to understand why more of the people who comment on the federal budget -- that is, almost all of Washington -- didn't get the fact that the individual proposals in the Obama plan weren't the big story. Regardless of the reasons for it being so late (some were legitimate, some were not), a president's budget that's sent to Congress more than two months after the statutory deadline and after the House and Senate have already adopted their own budget resolutions should never be analyzed in the same way as other presidential budgets have been. It simply won't -- or can't -- have the same micro impact on the budget debate even if it was going to declared dead on arrival anyway.
The Obama fiscal 2014 budget will be released today.
Because of the White House-generated leaks about the Obama budget, it has already been denounced by Republicans for proposing revenue increases and by Democrats for proposing a change in the way cost-of-living adjustments are calculated for Social Security.
Because the House and Senate have already adopted their own budget resolutions, the administration's budget may not even be voted on.
It's not impossible; in fact, there are GOP plans in the works in the Senate to make voting on the president's budget part of any effort to raise the debt ceiling when it's reached later this year. And Democrats might want a symbolic vote on the Obama budget just so they can oppose the president's Social Security proposal.
This week's most frequently repeated description of the Obama fiscal 2014 budget, which is scheduled to be released this Wednesday, April 10, will be something close to "...which was sent to Congress more than two months after the statutory February 4 deadline..."
Yes, the budget is very late. Yes, this may be the latest any president has ever sent his budget to Congress since the Congressional Budget Act became law in 1974. And, yes, in spite of the fiscal cliff at the beginning of January and the sequester on March 1, both of which got in the way of the typical presidential budget formulation process, this extreme delay is more than just a little hard to fathom.
Having said that, the only real difference the delay to April will make in this year's debate is that it deprived House and Senate Republicans from declaring the president's budget dead on arrival in February.
I'll be on CSPAN's Washington Journal this Sunday from 745 to 845 am EDT taking questions from all my fans (and probably more than a few critics).
If you're awake at that hour and have an EASY question...please call in.
Mention Capital Gains and Games and you get a discount.
Get ready for one of the most unusual federal budget spectacles of all time.
First, the Obama fiscal 2014 budget, which this year was supposed to be submitted by February 4th, is now expected to be released on April 8, that is, more than two months late and after the House and Senate adopted their own versions of a 2014 budget resolution. As far as I can tell this is the latest any president has submitted his budget (other than the first one after being elected) since the Congressional Budget Act was signed into law in 1974.
The administration deserves some slack here because of the fiscal cliff and sequestration. At the same time that every White House typically is putting the finishing touches on its budget for the coming year in December, this administration had to deal with the negotiations over the fiscal cliff and the possibility of the across-the-board cuts. This meant that the baseline and economic forecast that normally would have been locked and in place a month earlier was still a moving target at the start of February.
I've come back from two weeks on the mountaintop (and a few beaches) with an additional healthy dose of skepticism -- and that's saying a great deal given how skeptical I was before -- about what Washington says and does on everything having to do with the federal budget.
From my vantage point 5000+ miles away from the beltway, it was simply impossible not to think that what was happening in DC -- the House and Senate passing fiscal 2014 budget resolutions -- as being even slightly important.
I know that wasn't what was being said in Washington. The GOP was taking credit for its No Budget No Pay provisions pushing the Senate to pass a budget resolution for the first time in four years. Senate Democrats were crowing about passing that budget resolution. The House GOP was bragging about it adopting the latest plan drafted by House Budget Committee Chairman Paul Ryan (R-WI) even though it has no chance of becoming law. And Dems were expressing a great deal of pride about the job first-year Senate Budget Committee Chairwoman Patty Murray (D-WA) did in getting the resolution out of committee and adopted in the floor.
What's the digital equivalent of "gone fishin"?
Whatever it is, that's what I and CG&G will be doing the next two weeks.
See you March 25...renewed, refreshed, raring to go...and, with a little luck, decaffeinated and a few pounds lighter.
Some quick budget topics that deserve a mention but not a whole post:
1. About the delayed Obama fiscal 2014 budget
I've already posted once about this. On the one hand, the fact that the president's budget isn't going to be sent to Congress until early April (the current rumored date is April 8) is very distressing. On the other hand, the crocodile tears and phony outrage that will come from GOP members of Congress when the budget finally is released will be laughable.
Think about this: The Obama budget would have been declared dead on arrival by the GOP if it had been submitted by the February 4 statutory deadline and it would immediately have been ignored. Now those same House and Senate Republicans will wail about not having the chance to review what the president proposed before they put together their own budgets.
2. About the fiscal 2014 budget resolution
This is not a post about House Budget Committee Chairman Paul Ryan's (R-WI) exercise and diet program. It is, however, a post about how he's planning to produce a budget that gets to balance in 10 years without actually balancing anything.
What Ryan is proposing is the fiscal equivalent of him saying that he wants to lose 20 pounds but isn't going to counting the fat around his midsection to achieve it.
For weeks the budget and political worlds have been buzzing about how Ryan was going to be able to keep his pledge to bring a plan to the House floor that would balance the budget in 10 years without raising taxes. That's a substantial task even after the already enacted revenue increases in the fiscal cliff deal and the $85 billion in sequester spending cuts, both of which Ryan has said he will include in his plan. It requires significant and politically very sensitive reductions in Medicare, Medicaid and probably Social Security.
We now know how Ryan's planning to do it: by balancing the budget without counting interest on the national debt. In economic terms, that's called bringing the budget into "primary balance."
It was 1994 and Rep. John Kasich (R-OH), the soon-to-be-named chairman of the House Budget Committee for the just-elected GOP majority, was telling anyone and everyone who would invite him to speak that he didn't care if President Clinton submitted a budget for the coming year because House Republicans were going to ignore it. Kasich didn't use the standard "dead-on-arrival" line, he simply said that nothing Clinton proposed would be of interest because it would be "irrelevant."
Fast forward almost 20 years. The Obama fiscal 2014 budget proposal, which technically was required to be sent to Congress by February 4, now is not expected to be released until late March or even early April. That will make it irrelevant to the House and Senate Budget Committees, which are set to markup their respective versions of the fiscal 2014 budget next week, that is, two weeks or more before the White House's proposal will be available. The president's plan also won't be released before the full House and Senate are expected to debate and vote on what the budget committees produce.
How did the sequester happen? How is it possible that what supposedly was the worst possible way to cut the deficit somehow became what actually happened?
Over the weekend Ezra Klein, in a much retweeted blog post that was the talk of large parts of the political blogosphere, said that the GOP was never going to make a deal to avoid the sequester if it included a tax increase. Nothing...not the prospect of reductions in military spending, not the projected reduction in GDP, not the estimated increase in unemployment, not the lost possibility of a bigger deal to reduce the deficit and not the overwhelming likelihood that Republicans would get blamed for all of this...made any difference.
The GOP's position seems to defy all economic and political commonsense until you realize how much GOP politics have changed in recent years.
I don't use the word "defense" much when talking about the federal budget because it always prejudices the conversation. U.S. military spending isn't always defensive; it often is appropriately offensive and changing the name in 1949 from the Department of War to the Department of Defense should go down as one of the top 10 greatest public relations achievements of all time.
So why did I violate my own rule and use the word "defense" in the headline to this post? To make a point: In spite of all the spin and all the warm feelings Americans supposedly have about the military, Congress was more than willing to throw defense spending under the budget bus in the sequester. When it was a question of tax increases and Medicare reductions vs the Pentagon, not only did the Pentagon lose, but it wasn't even on the field or the same game.
What's happened so far on the sequester is the equivalent of spring training in baseball and pre-season in football: It doesn't count and isn't necessarily indicative of what's ahead.
But everything changes today as the sequester that so far has only been hypothetical and something primarily discussed inside the beltway starts to become real for increasing numbers of voters outside Washington.
This is not an insignificant number of people. Polls taken over the past week or so show that only about 25 percent of Americans say they have been following the sequester argument (It's really hard to call it a "debate"). That number will increase rapidly as the sequester spending cuts reduce federal services that people rely on and like and voter emotions change from amusement to annoyance to outrage.
The Clinton administration didn't play as much hardball as it could have during the 1995 and 1996 federal shutdowns because it decided that the air traffic control system was a critical government activity.
Doing the opposite -- and it definitely was a discretionary presidential decision rather than a legislated mandate -- likely would have ended the shutdowns much faster because of the outcry when planes were grounded and everything from Fed Ex to business trips to honeymoons were affected. The economic damage and anger would have been immediate and intense.
The Obama White House appears to be going in a very different direction with the sequester. As this story by Matthew Wald in today's New York Times shows, not only will the air traffic control system be included if the sequester occurs, the administration clearly is not reluctant in the slightest about making it clear that flights will be canceled or seriously delayed...or both if the sequester happens.
