–Congress’s Deficit Panel Enters Critical Week; Deal Needed Soon
–House To Vote This Week on Balanced Budget Constitutional Amendment
–FY’12 Stop-Gap Bill Funding The Federal Government Expires Friday
–Hill Panels To Probe Fannie Mae, Freddie Mac; House Eyes Compensation
By John Shaw
WASHINGTON, Nov. 14 (MNI) – This appears to be the critical week
for Congress’s deficit reduction panel, with a scored deficit reduction
agreement needed to be in place by next Monday.
The Joint Select Committee on Deficit Reduction is charged to
submit a report to Congress by Nov. 23, 2011, a week from Wednesday,
that reduces the deficit by between $1.2 trillion and $1.5 trillion for
the 2012 to 2021 period.
The final package, if one is agreed to by the majority of the
panel’s 12 members, must be voted on without amendment by the House and
Senate by Dec. 23, 2011.
If the panel fails to agree on a spending cut package or Congress
rejects its plan, a budget enforcement trigger would secure $1.2
trillion in budget savings through across-the-board cuts.
The cuts would be equally divided between defense and non-defense
programs but would exempt Social Security, Medicaid and low-income
programs.
According to the rules of the deficit panel, the members of the
panel must have 48 hours to review the package with Congressional Budget
Office cost estimates before a vote in the deficit panel on Nov. 23.
The status of the negotiations in the deficit panel remains nearly
impossible to assess. The two parties began the endgame talks by
offering plans in late October that were largely a restatement of
long-held party positions.
Senate Finance Committee Chairman Max Baucus, a Democrat, floated a
plan in late October that calls for about $3 trillion in deficit
reduction over a decade with a nearly equal blend of spending cuts and
tax increases.
Baucus’s plan called for about $1.3 trillion in new revenues, $575
billion in health care entitlement savings, $400 billion in
discretionary savings and about $250 billion in other entitlement
savings.
Republicans on the panel counteroffered with about $1.5 trillion in
spending cuts and about $600 billion in revenues. The revenues come
largely through the increase in some fees and an assumption that tax
reform would generate hundreds of billions in new revenues.
Since then, the two parties have exchanged proposals that have
moved them closer together. The most recent GOP offer includes a $1.2
trillion deficit reduction package with about $750 billion in spending
cuts and $500 billion in revenues. Democrats are now offering a $2
trillion deficit reduction plan that cuts spending by $1 trillion and
raises $1 trillion in revenues.
But it is unclear if the two parties are willing to make the final
concessions needed to reach an agreement.
The deficit panel’s impasse has prompted congressional leaders to
intervene more directly in the panel’s deliberations, as they meet with
members of the committee. The impasse has also prompted the panel’s 12
members to break into smaller groups to explore possible compromises.
In other action this week, the House will vote on a balanced budget
constitutional amendment.
After much internal deliberation among House Republicans, the House
will vote on a version that simply requires federal outlays to equal
receipts. Waiving this requirement would require a three-fifths vote of
each chamber. It would also require three-fifth votes by Congress to
increase the debt ceiling.
For the balanced budget amendment to pass the House, it must secure
a two-third majority. House Republican leaders, presumably with an eye
on that goal, opted not to go forward with a much more stringent version
of the amendment that would have mandated that spending never exceed 18%
of GDP.
The Senate will also vote on a balanced budget amendment this year.
Passage in the Senate is much more uncertain. If identical versions of
the amendment were to pass the House and Senate, they would have to be
ratified by three-quarters of the states.
The current stop-gap fiscal year 2012 spending bill funding the
federal government expires Friday. The House and Senate must pass
another stop-gap spending bill this week to keep the government funded.
The Senate may also take up a second “minibus” spending bill this
week that combines three fiscal year 2012 spending bills: Energy-Water,
Financial Services, and State-Foreign Operations.
Two weeks ago, the Senate completed action on a fiscal year 2012
spending bill that also combined three of the regular bills:
Agriculture, Commerce-Justice-Science, and Transportation-HUD.
The 2012 fiscal year began on Oct. 1. No final version of a regular
FY’12 appropriations bill has yet been passed.
In committee action this week, the Senate Banking Committee is
holding a hearing Tuesday at 10 a.m. ET on the Federal Housing Finance
Agency. Edward DeMarco, the acting director of the agency, will testify.
The Senate Finance Committee will hold a confirmation hearing
Thursday at 10 a.m. ET on pending nominations, including Mary John
Miller to be undersecretary of Treasury for domestic finance and
Alastair Fitzpayne to be deputy Treasury undersecretary for legislative
affairs.
The Senate Budget Committee will hold a hearing Tuesday at 10 a.m.
ET on the economic effects of fiscal policy choices. Congressional
Budget Office director Doug Elmendorf will testify.
The House Financial Services Committee will consider pending
legislation Tuesday at 10 a.m. ET to suspend the current compensation
packages for senior executives at Fannie Mae and Freddie Mac.
One of the panel’s subcommittees will consider a bill Tuesday at
noon to amend provisions of the derivatives title of the Dodd-Frank law.
The Joint Economic Committee will hold a hearing Thursday at 10
a.m. ET on how tax reform might affect job creation.
** Market News International Washington Bureau: (202) 371-2121 **
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