July 26, 2014 SIGN IN | REGISTER

A Budget Crystal Ball for 2013

2. No big Medicare, Medicaid or Social Security changes will be enacted in 2013. This one is simple: These programs will not be touched unless a tax overhaul raises revenue compared with current law. No tax changes in 2013 (see No. 1) means that these mandatory spending programs will remain untouched next year as well.

3. There will be no grand bargain in 2013. This one is even simpler than No. 2. No tax overhaul plus no changes in mandatory spending means that there will be no big budget deal in 2013. Indeed, a tax overhaul that raises revenue, plus mandatory program changes that reduce spending, is the basic definition of a grand bargain.

4. The federal deficit will not be as big of an issue in 2013. The 2012 election results plus what appears to be newly discovered White House testicular fortitude when it comes to negotiating with congressional Republicans means that the deficit will be less of an issue as the GOP realizes that a deficit reduction effort is far more likely to mean higher taxes. In addition, either the deficit will fall by $600 billion as we go over the cliff and the focus will shift from deficit reduction to getting out of the cliff-induced recession, or we won’t go over the cliff and the economy will grow faster than currently forecast as business and markets rejoice.

5. CEOs will stop coming to Washington to lobby on the budget. Not only will the CEOs’ immediate concerns about the fiscal cliff and debt ceiling be over but serious questions will be raised about how much value they add to the legislative battle over the budget. There could even be some shareholder backlash against CEOs who spent a great deal of time inside the Beltway focused on the budget if their companies or stock prices do not do as well as expected. That will make it harder for the various groups that thought using CEOs was their ticket to fame and fortune, and they may decide to move on to other issues.

I wish you all the best in 2013. See you next year.

Stan Collender (@thebudgetguy) is a partner at Qorvis Communications and author of “The Guide to the Federal Budget.” His blog is capitalgainsandgames.com.

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