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This column was written a few days before the elections and is being published on Election Day. So rather than talking about the election results before they happen (What a concept!), and instead of continuing what is now my weeks-long rant about the fiscal cliff, I thought it best to focus on something that few other federal budget watchers so far have dared talk about: There will be a big budget debate next year and it’s likely to be very ugly.
This will come as a shock to those who watched the comparative — that is, relative to the chaos of 2011 — peace and quiet of this year’s debate and assumed that was the new normal.
The truth, however, is very different. Unless something very unexpected happens on Election Day (I know I promised, but I just couldn’t help myself), the 2013 debate is more likely to resemble what happened in 2011, when a steady series of federal budget-related cliffhangers kept us on the edge of our seats through most of the year.
There were several close calls in 2011 on government shutdowns as short-term continuing resolutions were about to expire. There was also the debt ceiling debacle that continued to the last minute before a deal was reached. The debt ceiling deal created yet another deadline that the anything-but-super committee failed to meet and that triggered one of the two fiscal cliffhangers that are now causing so much economic and financial agita.
And let’s not forget the failed budget negotiations in 2011 between the president and the Speaker, the vice president and the Majority Leader, the Bowles-Simpson commission and the “gang of six” in the Senate.
Most of this budget warfare stopped in 2012 because, unlike the situation the year before, few budget-related decisions absolutely had to be made.
The debt ceiling deal raised the government’s borrowing limit enough to last through the elections. The federal government was funded with a continuing resolution that lasted through all of fiscal 2012, and when that ended, another CR was enacted for the first six months of fiscal 2013.
There was endless bluster, bombast and bravado, but once the decision was made about the six-month CR, it was all budget barking with no opportunity to bite anything or anyone.
Fast-forward to next year and ask yourself whether what’s ahead doesn’t give you a strong sense of deficit and debt déjà vu.
The government could be facing one or more spending and taxing decisions in January and February if the fiscal cliff (My apologies, there I go again.) is either delayed for a few weeks or happens as scheduled on Jan. 1 and Jan. 2 because inevitably there will be efforts to change some or all of it retroactively.
Shortly thereafter, the federal debt ceiling will have to be raised. The government will reach its borrowing limit sometime in December, and the Treasury has indicated that it will be able to use various cash management techniques until the middle of February. At that point, legislation will be needed.
The current continuing resolution for fiscal 2013 is in effect through March. Without further action by Congress and the president, some of the federal government will shut down on April 1.comments powered by Disqus