The federal budget war: key battles
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Today’s budget wars – throughout the nation, at all levels of government – are the result of decades of chronic overpromising and overspending. But while previous governments have been able to both put off dealing with (or even publicly recognizing) the looming fiscal and economic crisis, the past years’ recession and still-slow economy has sped up our budgetary day of reckoning.
In the midst of several State budget showdowns, last week we gave you an overview of each state’s economic and fiscal condition. As Congress returns this week to face a showdown of its own, we thought we’d provide you with a quick guide to the key battles in this year’s federal budget war.
The Federal Budget War:
FISCAL YEAR 2011 CONTINUING RESOLUTION:
As Congress last year failed to pass a budget or single appropriations conference report, the federal government has been running on a temporary funding mechanism (a “continuing resolution” or CR) since the start of the current fiscal year that began on October 1. On March 4, the latest extension of the CR will expire and — unless Congress can agree to a spending level — the government faces a shutdown on March 5.
On February 19, the U.S. House passed a CR that would fund the federal government through September 30 at $61 billion below the current level of $3 trillion (a CR must be at-or-below the previous year’s budget level). While Majority leaders in the Senate have signaled they will not accept the House-passed levels in a long-term CR, a government shutdown is not imminent. It appears House Republicans and Senate Democrats may compromise to achieve spending cuts in the current year. Stay tuned…this battle will play out in part this week!
FISCAL YEAR 2012 BUDGET – FEDERAL GOVERNMENT:
The official kick off of the Fiscal Year 2012 budget season – President Obama’s submission to Congress of his budget request for the coming year – began a week late. The President’s budget did not propose significant spending reforms, and would lead to the largest deficit in history.
Politicians and editorial boards from across the political spectrum reacted with disappointment, and call for Congress to do far better. Congress’ deadline to pass a budget is April 15, but since it is still mired in the FY 2011 budget battle (see above), there is little hope Congress will come close to meeting this deadline.
INCREASE IN THE U.S. DEBT CEILING:
The U.S. government is expected to reach its statutory debt limit (the point at which the government can no longer legally borrow) of $14.3 trillion in April or May. The U.S. has raised its debt ceiling 75 times since 1962, an average of 1.5 times every year. Congress last increased the debt limit in early 2010 and is now faced with doing so again. Three options are on the table: pass a straightforward increase in the debt limit; refuse to pass an increase in the debt limit and insist lawmakers cut spending enough to ensure the U.S. doesn’t reach the limit; or pass an increase that include cuts to future spending.