WASHINGTON, Aug. 7, 2013- While a “grand bargain” on tax and entitlement reform seems out of reach by the end of the fiscal year, focus will soon shift to the pressing deadlines for appropriations levels and the debt ceiling, noted top budget and policy experts at a meeting for agricultural economists.
Senior vice president at the Bipartisan Policy Center, Bill Hoagland, spoke during the Agricultural and Applied Economics Association (AAEA) annual meeting in Washington this week, where he outlined some immediate budget and policy challenges.
Nine legislative days is all Congress has between recess and Fiscal Year 2014 on Sept. 30 and Congress has sent zero appropriations bills to the President’s desk. “We will either have a government shutdown on Oct. 1 or a Continuing Resolution [CR],” Hoagland said, noting that a Continuing Resolution is most probable, since “I don’t think anybody politically wins with a government shutdown.”
While agriculture has its own set of spending disagreements—the difference in appropriations between the House and Senate is $1.5 million—Hoagland noted many other areas present high hurdles for congressional consensus. He said the largest difference between the House and Senate appropriations is the $42 million gap in proposed Labor, Health and Human Services, and Education agency appropriations.
“What we’re dealing with this fall is a real dilemma and a real question about the role of government going forward,” he said.
Overall, House and Senate appropriators are a full $91 billion apart on next year’s funding levels, according to the Committee for a Responsible Federal Budget.
“There’s not going to be a grand bargain,” said deputy director at the National Governors Association, Barry Anderson.
“The way I see it, we’re headed toward another fiscal cliff,” he said, adding that the most likely scenario is enactment of a Continuing Resolution. However, the level of the CR will be another contentious issue. If the CR level is set at 2013 spending, forced “across-the-board” reductions of sequester must come into play one way or the other, Anderson noted.
The biggest problem, according to Hoagland, will be the expiration of the statutory debt limit, or the debt ceiling. Noting that the U.S. Treasury is operating under extraordinary measures, Hoagland said the federal government will default if the debt ceiling isn’t raised this year.
Deputy staff director in the House Budget Committee, Andrew Morton, outlined three major hurdles in the next few months relevant to agricultural economists and the country. They include the farm bill expiration on Sept. 30, the need for annual appropriations or a short-term CR funding resolution by Oct. 1 and the exhaustion of the extraordinary measures keeping the government under the debt ceiling, which has an unpredictable deadline.
Morton said the government is likely to exhaust its extraordinary measures in October or November, while Anderson, predicted late November or possibly December.
Disagreements on appropriations and spending levels circle back to the federal budget and extreme differences in how to address the federal deficit. Though near-term deficits are expected to continue to decline from recent highs, debt held by the public as a share of GDP remains well above historical averages.
“The differences driving our debt—healthcare and social security—are not even close,” Anderson said. “You can have all the dinners you want in Washington, but if you don’t get something closer than what we have, we’re not going to get there.”
“Unless you’re going to address the issues that are the extreme problems, you’re not going to address the deficit.” said Hoagland, referring to Medicare, Medicaid and Social Security.
The big areas of spending and disagreement are healthcare and social security, which he said are projected to continue to grow in cost, while non-defense discretionary spending “is really getting squeezed.”
“Unless you figure out a way to control the top line spending, you’re going to continue to see pressure on the rest,” Hoagland said, which includes programs focused on science, technology, research and education.
Morton described the House Budget Committee’s efforts to outline a budget plan that would gradually reduce mandatory spending. However, Hoagland noted that while the House budget does address spending, the Senate will refuse to pass it without increased revenue levels.
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