The fiscal cliff is behind us, or over us, depending on your point of view. But with deadlines looming for extension of the debt limit, for avoiding the across-the-board cuts required by sequestration, and the need to extend the Continuing Resolution to keep the federal government operating, it certainly looks like we have weeks of bungee jumping over the budget cliff ahead of us.
There will be three key votes between now and the end of March. Each vote will be just as challenging for the White House and for Congressional leadership as it will be for the continuation of many federal programs. The House of Representatives is scheduled to be in session for six more days in January – including the week of President Obama’s inauguration – and only eleven days in February. So there is a lot do with very few session days. The Farm Bill is caught up in all of this, with Senate Agriculture Committee Chairwoman already saying she wants to move immediately to a markup, while House Agriculture Committee Chairman Lucas says that he may delay the Farm Bill markup until after the spending cut votes are done. Let’s look at the key dates ahead of us.
For late February – Bungee jump #1: The maximum amount of federal borrowing – the debt limit – is set as a matter of law. According to Treasury Secretary Timothy Geithner, the current limit of $16.4 trillion was hit on December 31. Over the next several weeks, Secretary Geithner says that the Treasury Department will use “extraordinary measures” to avoid breaching the limit. But, in the end, the debt limit will have to be extended for the federal government to continue the borrowing needed as a result of deficit spending. Some argue that the debt limit should just be extended because it will provide stability in both domestic and international financial markets, and avoid another downgrading of U.S. government securities. Others argue that the debt limit should be extended only if there is a commitment to spending reductions as a condition. President Obama says he will not negotiate over the debt limit.
For March 1 – Bungee jump #2: The recent deal to extend many tax provisions also delayed sequestration until March 1. Unless a deal is reached regarding how to cut $1.2 trillion in spending over the next ten years, automatic across-the-board cuts totaling nearly $110 billion, equally divided between defense and non-defense spending, will occur on March 1. Congress and the White House agreed to sequestration in August 2011, as an enforcement mechanism to ensure that broad spending cuts would be made. With no agreement having been achieved in the past 17 months, many remain skeptical about the likelihood of an agreement being reached in the next two months. President Obama continues to say that he will only sign a balanced agreement that calls for more revenue along with spending cuts. Many key Republican leaders, including Speaker Boehner and Senate Minority Leader McConnell, say that the tax issue is over – now they want to see spending cuts. If sequestration does occur on March 1, the impact will be significant because spending reductions will have to be absorbed over the last seven months of the federal fiscal year. If a grand budget deal is reached, then its implementation will dictate Congressional action for months to come.
For March 27 – Bungee jump #3: The 112th Congress did not complete a single appropriations bill. Instead, the entire federal government is funded, for the most part, at FY 2011 levels through March 27. Either a new spending bill is put in place, or the federal government could be shut down. Some in Congress say that they believe a shutdown is necessary in order to get serious consideration of spending priorities. Senator Barbara Mikulski is the new Chairwoman of the Senate Appropriations Committee, and will have the completion of this measure as her first challenge. Add to this the fact that there will be new Chairs of the House and Senate Agriculture Appropriations Subcommittees – Congressman Robert Aderholt of Alabama in the House, and the Senate Chair yet to be named – and there is no easy way to predict what will be the priorities of these new leaders. Will there be a spending deal that will dictate reductions in the FY 2013 bill, or will we see House and Senate action that mandates spending reductions apart from or maybe even in addition to any spending deal?
Beyond These Dates – Even though these three essential votes are coming, let’s not lose sight of other important activities. Following the inauguration, President Obama will present his State of the Union address to a joint session of Congress. While his inaugural address is expected to set forth his vision for his second term, the State of the Union address may well set his priorities for the coming year. His FY 2014 budget proposal, which should come to Congress early in February if traditional dates are followed, will demonstrate which programs he believes should be cut, and which ones should be maintained. Add to this the fact that many organizations make their annual trip to Washington between February and April to tell Congressmen and Senators what their respective organizations’ legislative interests are. What will be their priorities? What kind of reception will they receive? How will they react to the evolving Congressional legislative action?
One thing is for sure: the coming weeks and months are not for the faint of heart.
