By Domenic Ruscio, Partner, CRD Associates
Soon after President Obama unveils his FY2017 budget proposal on February 9, CRD Associates will begin posting a series of reports, beginning with an overview of its fiscal and economic implications. We’ll follow up with more in-depth analyses of the budget’s key elements like public health, education, defense and transportation.
But before we look at the fine print of the budget, we thought it might be helpful to consider the context.
For one thing, an election year—especially a presidential election year—doesn’t leave a lot of time for well-reasoned legislating. According to their published work schedules, the House will only be in session 111 days, or about two days per week on average, while the Senate will be on the job for 149 days. Both chambers will be out for two weeks in July for the national party conventions, followed by the usual recess for the month of August.
But the calendar may be the least of lawmakers’ concerns.
In one of those green eye-shade reports that only budget geeks read, the Congressional Budget Office last week warned of nothing short of a “zombie apocalypse!”
In its Budget and Economic Outlook, CBO announced that federal deficit is expected to grow by $100 billion this year, the first increase since 2009, and the picture only gets bleaker from there. CBO predicts that the cumulative deficit over the next decade will be $1.5 trillion higher than the $7 trillion it forecast just five months ago. The reason: a sluggish economy and the actions of Congress.
Those spending caps that were put in place in 2011 just aren’t holding. If Congress again avoids sequestration in FY2017, without reducing spending elsewhere, the cumulative deficit will increase by $897 billion over the next 10 years.
But wait, there’s more!
The tax extender package included in the Omnibus is projected to add $680 billion to the deficit over the next decade. According to the Committee for a Responsible Federal Budget, when the cost of borrowing to finance the resulting deficit is added, the real cost of the tax package will exceed $800 billion.
Recent polling indicates that the general public is less concerned with the deficit than it is about education, Social Security and Medicare. We’ll see.