–After More Than A Year Of Battles, Several Months of Fiscal Calm Loom
–Hill To Shift From Consequential Fights To Nonconsequential Fights
–Major Fiscal Issues Likely To Be Postponed Until After Nov Election

By John Shaw

WASHINGTON (MNI) – Ever since the 112th Congress was sworn into
office in January of 2011, Republican lawmakers have been clashing with
President Obama over fiscal policy.

Seemingly endless battles have come and gone over stop-gap spending
bills, regular spending bills, the debt ceiling, the Super Committee and
the payroll tax cut extension package.

Budget experts agree this season of unrelenting partisan warfare
seems poised to go into hibernation until the late fall when it could
return with a vengeance after the November congressional and
presidential elections.

This is not to say that the coming months will not have plenty of
partisan fighting, but just that this fighting will be almost totally
focused on political positioning and will have little tangible
consequences — apart from the loss of six months that could be spent
trying to tackle the nation’s fiscal challenges.

“I think we are now about to enter the lull before the storm,” says
Bob Bixby, executive director of the Concord Coalition.

“My guess is that we are about to begin six pretty intense months
of political posturing before the election. This is unfortunate but is
probably to be expected. But I sure hope congressional leaders are
quietly trying to game out what happens after the elections because
there is a huge backlog of issues that are going to hit during the Lame
Duck session,” says Bixby.

He adds: “We could have something very close to systemic overload
in November and December unless some plans are being made to deal with
these issues that will come to the fore.”

Bixby notes that by the end of the year Congress will probably have
to deal with a new debt limit extension at about the same time the
Bush-era tax cuts are set to expire and across-the-board spending cuts
are poised to be triggered in January of 2013.

“Things are going to go quiet on the budget front,” agrees says
Stan Collender, a budget expert at Qorivs Communications.

“There will be no hostage taking opportunities until the late fall
at the earliest, and maybe not until halfway through next year,” says
Collender.

“Without hostages people tend to not think very much about the
budget,” he adds.

Collender said congressional leaders could pass a short-term
extension of the Bush tax cuts and a debt ceiling increase until the
spring or summer of 2013 allowing a new Congress and either a re-elected
President Obama or a new president deal with them.

Obama released his fiscal year 2013 budget last week. When Congress
returns to session next week, Congress’s budget, tax, and appropriations
committees will continue to hold hearings on budget issues.

The House and Senate Budget Committees are expected to work on
their respective FY’13 budget resolutions in March.

House Budget Committee Chairman Paul Ryan is likely to offer a
variation of the fiscal plan he offered last year. It’s unclear if
Senate Budget Committee Kent Conrad will offer a budget this year. Last
year, Conrad wrote a budget late in the spring, but it was never
considered by his committee let alone the full Senate.

Last year’s debt ceiling agreement set discretionary spending caps
for FY’13, so there is no immediate need for a budget resolution this
year.

While the fiscal debate in the House and Senate is expected to
continue along partisan lines, there are also likely to be some
bipartisan budget talks this spring led by the Senate’s so-called “Gang
of Six” and possibly a bipartisan group in the House.

These talks are unlikely to lead to any policy action this year
but could keep alive bipartisan discussions of deficit reduction.

Bixby said his greatest concern is the 2012 presidential and
congressional campaigns will make deficit reduction in 2013 even more
difficult if candidates take intractable fiscal stances that are
designed to appeal solely to their political bases.

“It’s critical that the Simpson-Bowles template is preserved
through this election season,” Bixby said.

Erskine Bowles and Alan Simpson chaired a fiscal panel created by
Obama and they released a plan in late 2010 that calls for about $4
trillion in deficit reduction over a decade.

** Market News International Washington Bureau: (202) 371-2121 **

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