The Stan Collender Archives
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.
In a post several days ago, I listed House Budget Committee Chairman Paul Ryan (R-WI) as one of the losers of the budget deal because it hurt his chances to become the GOP presidential nominee in 2016.
It now appears that Ryan agrees with that assessment. Yesterday, Ryan said publicly for the first time what many had been speculating privately for some time -- that he wants to be chairman of the Ways and Means Committee rather than president. He plans to pursue it when the current chairman -- Dave Camp (MI) -- is term-limited out of the post at the end of 2014.
It's been less than a week since House Speaker John Boehner (R-OH) surprised the political world by publicly and directly taking on the right wing groups -- and, by inference, the tea party wing of the GOP -- two days in a row. He then openly defied them by allowing the House to vote on a budget deal that was a compromise with Democrats they didn't like.
Four days later the question is whether this was a permanent change for Boehner. Will he continue to tell the tea partiers in his caucus, the Club for Growth, Heritage Action and the others he so resoundingly criticized that they can go to hell, or was this a one-time event not likely to be repeated?
The indications are that this was a not permanent change in the speaker's political testosterone level. Here's why.
Regardless of whether it's actually adopted, five individuals, groups and organizations stand out as being the biggest losers from the budget deal announced Tuesday evening. They are:
1. Fix The Debt. FTD is the high-profile corporate-funded organization that has been pushing hard for a grand bargain dealing with the long-term budget issues. In spite of the statement FTD issued, this deal was a total rejection of what FTD has raised and spent so much money trying to get Congress to do. You might even call it a smackdown. Not only will there be no Fix the Debt-preferred agreement in 2014, the deal closes the door on that type of agreement in 2015 as well. And does anyone really think Congress is going to take on Social Security and Medicare just before the 2016 presidential election?
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.
Appropriators have hated the Congressional Budget Act since even before it was enacted in 1974.
During the two years in which that act was drafted, revised, re-revised, debated, re-debated and eventually adopted, appropriators from both houses complained that it wasn't needed, that they already had the power of the purse that was being given to the budget committees, that they had been the stewards of the people's money since the beginning of the republic, that it infringed on their jurisdiction and that it wouldn't work.
That attitude has barely changed over the past almost 40 years, which is why it was hardly a shock when my friend Jim Dyer, former staff director of the House Appropriations Committee, emailed me last week to say that it was time to do away with the budget act. With Jim's permission, here's the exact quote from his email:
As I posted yesterday, House and Senate budget conferees will meet for the first time this week as they begin a process that has a built-in December 13 deadline. It's either budget agreement by that Friday the 13th or bust.
Bust is far more likely. Here's why.
1. There is no agreement about the problem. Almost all previous successfully concluded budget deals have been based on at least a tacit up front agreement about what the two sides are trying to accomplish. Without that this time, Republicans and Democrats will spend a great deal -- maybe even most -- of their time arguing about what they should be debating rather than the possible answers.
2. There's no need for a deal #1. This is not a situation where the political or economic world will collapse if a deal doesn't get done. The debt ceiling has already been raised, taxes won't be raised automatically, the government won't shut down, Wall Street isn't threatening higher interest rates if there's no deal to reduce the deficit, etc.
The speculation about what the conference committee -- the 29-person House-Senate committee that has until December 13 to negotiate a budget deal and which will meet for the first time this Wednesday -- will do will be intense all this week.
In fact, if history is any indication, every interest group in town will be so certain that the one thing it most cares about will be given away in the opening session that it will denounce what the conference committee does even before the first meeting begins.
And pundits across the political spectrum will be predicting that the conference committee will defy expectations and a big budget deal of some kind not only is possible but actually likely.
The technical term for all of this is B.S. (and I don't mean "Bachelor of Science").
The meeting on Wednesday is just the opening session. The 29 members of the conference committee won't do anything other than preen for the cameras and give 5-minute opening statements. 29x5 = almost two and a half hours of vapid oral essays that will have no bearing at all on the deliberations.
I have far less hope for the post-shutdown talks that are about to get underway than many of the others who follow, analyze, comment and report on federal budget doings.
Actually, I am astounded at how quickly so many people who should know better seem to have forgotten the insanity of the past few years that led to the total craziness of the past few weeks and have decided there are no lessons to be learned from what happened.
Here's what I've learned.
It's nice to see that some members of Congress, especially some Republicans, have already rejected another showdown when the current continuing resolution expire and debt ceiling expire. It's important to note, however, that the representatives and senators who have said this are not the ones who will determine whether it happens again. Until tea partiers in both houses say a shutdown and debt ceiling fight isn't going to happen, the threat has to be considered a real possibility.
Some quick thoughts this morning:
1. It's still no better than 50-50 ("a coin flip" as @thefix said to me on Washington Post TV last week) that the debt ceiling will be raised by October 17, the date Treasury says it will run out of the ability to use "extraordinary measures" and the government will have to operate just from the cash it has on hand every day.
2. If anything the situation has gotten worse rather than better over the past few days with House Republicans in open warfare against their GOP Senate colleagues. It appears that House Republicans need to get something out of the box the are in with the government shutdown and debt ceiling even if it means extracting a pound of political flesh from their own party to do it.
3. Let me say this yet again as directly as possible: John Boehner (R-OH) is the weakest and least effective speaker in my lifetime, and he may come close to taking the all-time title.