Budget Debate Will Take Center Stage

May 4, 2011

Returning to Washington, D.C. this week after a two-week recess, lawmakers are expected to focus on deficit reduction. After a shutdown was averted last month with an 11th-hour measure funding the government through September, the full debate over the 2012 budget plan can begin.

On Thursday, the president’s new deficit-reduction working group will meet for the first time. Chaired by Vice President Joe Biden and made up of Republican and Democratic congressional leaders, the group—the so-called Biden Commission—is charged with coming up with a bipartisan deficit-reduction plan by the end of June.

Meanwhile, on Capitol Hill both chambers are already working on legislation to allow an increase in the $14.3 trillion debt ceiling before July. House Republicans are crafting a bill that would include a debt-ceiling increase, spending cuts and some form of budget-enforcement mechanism.

In a political ploy, House Republican leaders may allow a floor vote to increase the nation’s credit limit without any of the accompanying spending or deficit-reduction reforms they have been demanding all along. The idea is to allow the vote, which they expect to fail, as a way to demonstrate that the idea of a “clean vote,” being championed by President Barack Obama and other Democrats, has no chance of passage.

Obama and many Democrats have been calling for a clean vote to raise the nation’s $14.3 trillion debt ceiling. They argue it is irresponsible to use the nation’s credit and ability to pay bills as a bargaining chip to advance a partisan agenda, which they accuse the Republicans of doing.

Aside from President Obama’s fiscal 2012 plan, the budget crafted by House Budget Chairman Paul Ryan (R-Wis.) that passed the House last month, and the package drafted by the president’s deficit-reduction commission, there also is a group of six senators—three Democrats and three Republicans—who have been working for months to come up with a bipartisan plan to reduce the deficit.

Although the so-called “Gang of Six” have pledged not to publically discuss the specifics of their deliberations, their plan is expected to include spending cuts as well as increased revenue, which would likely come from rolling back tax expenditures. The proposal will be viewed as a bipartisan alternative to Rep. Ryan’s proposal.

In the same political maneuvering, Senate Majority Leader Harry Reid (D-Nev.) also is queuing up votes on dueling budget plans. He has said he will force a vote on Chairman Ryan’s plan to get Republicans—particularly moderates like Sens. Olympia Snowe (R-Maine), Scott Brown (R-Mass.) and Richard Lugar (R-Ind.) on the record on its more controversial reforms, including Medicare. Meanwhile, in response, Senate Minority Leader Mitch McConnell (R-Ky.) said he intends to force a vote on President Obama’s 2012 budget too, to put Democrats on the spot, a step designed to emphasize that Democrats have not proposed a detailed deficit reduction plan.

Senate leadership have not yet decided on a vehicle for these dueling budget votes, which would probably be offered at amendments.

Senate Budget Chairman Kent Conrad (D-N.D.)—a member of the Gang of Six—had hoped to include the gang’s plan as part of his budget resolution, which includes language that appropriators need to help write the fiscal 2012 spending bills. But with the need to move the appropriations process along and the Gang of Six not having reached agreement, Conrad is considering moving the Senate spending blueprint separately from the gang’s eventual plan.

Whatever the mechanism, the Treasury Department has indicated that Congress needs to pass an increase in the debt ceiling by August 2.

Please visit the NSBA Web site for more on NSBA’s stance on deficit reduction and tax reform.

Please click here to register for NSBA’s upcoming Issue Briefing Teleconference on taxes and deficit reduction.

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