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Looking Into My Budget Crystal Ball for 2012

1. There will be no movement on the federal budget until after the 2012 elections. Does anyone really think it will be easier in an election year for either political party to agree to a compromise that its base doesn’t want and won’t support than it was this year when it was already virtually impossible? A better question: Why does anyone think that the intractable budget politics of 2011 that led to repeated failures on every budget-related effort will be any different next year? If you have any doubt about what this means for the budget process: No Congressional budget resolution will be adopted in 2012.

2. Don’t be surprised if the sequester and tax cut expiration are delayed for six months or more. The Bush/Obama tax cuts expire Dec. 31, 2012, and the spending cuts triggered by the super-bust committee’s failure are supposed to begin on Jan. 2, 2013. Both will take place before the next Congress begins and the next president is inaugurated. It would hardly be a shock, therefore, if the only thing that happens in a lame-duck session is a deal that both extends the tax cuts and delays the sequester until June 30 or beyond.

3. 2012 will be “The Year of Avoiding the Sequester.” The big budget fight in 2012 will not be the deficit, it will be trying to come up with alternatives to the sequester.

4. President Barack Obama’s fiscal 2013 budget will not specify how the White House plans to comply with the sequester. There’s no legal requirement or political reason for the president to include in his spending plan released early next year the specific domestic and military spending cuts needed to comply with the sequester. It’s far more likely that the budget will include the administration’s plan for avoiding a sequester (see No. 3 above) and say that it will list the reductions later in the year if Congress does not agree with what it’s proposing.

5. There will be no tax reform in 2012. Even if all of the substantive and political work needed to get it done had been completed — and it hasn’t been — a tax “reform” bill that has as many losers who will pay more as winners who will pay less will be all but impossible to enact in an election year.

Stan Collender is a partner at Qorvis Communications and founder of the blog Capital Gains and Games. He is also the author of “The Guide to the Federal Budget.”

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