The 113th Congress returned from summer recess Monday and nine legislative days remain before the 2014 fiscal year starts on October 1. President Barack Obama submitted his budget in April.
The Obama budget calls for a reversal of ‘sequestration’ cuts while maintaining $1.8 trillion in deficit reduction over 10 years. The president’s budget also: prioritizes preschool education for children paid for by increasing the tax on cigarettes by 94 cents per pack, increases the federal minimum wage to $9 an hour, and would establish the Buffett rule, also called the Fair Share Tax.
Budget talks fell apart at the end of August. Congressional Republicans cited a lack of ‘common ground’ on tax issues. If a deal can’t be reached within the month, a government shutdown, default on the national debt, or another credit rating downgrade are all possible.
A $90 billion budget gap remains between the Senate and House appropriations bills. Meanwhile, House Majority Leader Eric Cantor (R-Virginia) indicated the debt limit would be raised but not before securing larger concessions from Democrats.
Although the debt ceiling was technically reached on May 19, ‘extraordinary measures’ have been used in the interim to float the national government until now. What used to be common practice has now become the kindling for partisan gridlock. On August 5, 2011 the United States’ credit rating was downgraded by Standard and Poor’s credit rating agency.
In a release, S&P explained why the U.S. was downgraded from AAA, the highest, to AA+, the second highest credit rating,
“… [T]he downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges…”
Congress managed to raise the debt ceiling 78 times since 1960, but over the last four legislative sessions budget negotiations have been exceedingly stagnant and polarizing. Only time will tell whether or not fiscal year 2014 will escape another budget crisis.
Source: Peter G. Peterson Foundation