Gloomy Budget Mavens Predict Government Shutdown
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The Fiscal Times
February 18, 2011

For those seeking a silver lining in Washington’s budget turmoil, a gathering of the town’s smartest and most experienced budget and economic experts on Friday at The Urban Institute was not the place to be. The roomful of budget savants, convened by former Congressional Budget Office director Robert D. Reischauer, spent much of the morning berating President Obama’s 2012 budget plan and warning of an almost certain budget train wreck on Capitol Hill  this spring.

Rudy Penner of the Urban Institute, another former CBO director, set the tone of the conference by denouncing Obama’s $3.7 trillion budget plan for the fiscal year beginning Oct.1 as “politically cautious and economically reckless.”  Penner warned that the president’s game plan for bringing down the long term deficit is far too tame, and that Obama and his advisers are crossing their fingers and “betting there isn’t going to be a sovereign debt crisis before the 2012 election.”

Deficit hawks Maya MacGuineas of the Committee for a Responsible Budget  and Robert  L. Bixby of the Concord Coalition, along with William G. Gale of the Brookings Institution all bemoaned Obama’s refusal to embrace many of the tough  tax and entitlement reform proposals embedded in the presidential fiscal commission’s final report in drafting his own budget. “The [president’s] budget is not a call to action, it’s a very status quo thing,” Bixby said.

And when Reischauer, the president of the Urban Institute and one of the most prominent economists in town, asked the 35 panelists – ranging from liberals to conservatives to libertarians – to raise their hands if they thought the federal government is headed for a shutdown this spring, 24 of them raised their hands.

“I’m getting depressed the more I hear this conversation,” said Paul L. Posner, the Director of the Public Administration Program at George Mason University and a former budget and public finance expert at the U.S. Government Accountability Office (GAO).

Norman J.  Ornstein likens the
looming budget and debt ceiling battles
to “the showdown at the O.K. Corral.”

The conference came at the end of an eventful and politically tumultuous week in the budget world, beginning with Obama’s release of his new budget on Monday, a series of congressional hearings in which Democrats and Republicans alike skewered the budget for inadequately addressing the long term deficit and debt, three days of battles on the Republican-controlled House floor over a GOP resolution that would cut $61 billion from this year’s spending, and massive demonstrations by teachers, fire fighters and other public employees protesting proposed budget cuts and pension overhauls in Wisconsin, Ohio and elsewhere.

A politically divided Congress and the White House must meet a March 4 deadline for passing a new spending resolution to keep the federal government operating through the end of the fiscal year, Sept. 30, or face the possibility of a government shutdown.  House Speaker John Boehner, R-Ohio, has warned that House GOP leaders won’t accept another short term extension of spending authority, adding to the possibility of a repeat of the government shutdowns during the Clinton administration in late 1995 and early 1996. Layered over  all of that is a concern that the Treasury will run out of borrowing authority before Congress finally agrees to raise the current $14.3 trillion debt ceiling, which could trigger a default on U.S. borrowing and a worldwide financial crisis.

Norman J.  Ornstein, a resident scholar at the American Enterprise Institute, likens the looming budget and debt ceiling battles to “the showdown at the O.K. Corral.” While there are some promising signs of bipartisan cooperation in the Senate, Ornstein believes the partisan divide is so great in the House that there  may not be room for a deal on spending for the current and coming year.

Ryan is “basically facing pitch forks and boiling oil
from his junior members over his inability
to reach that $100 billion pledge . . .
and he has been forced to up the ante.”

“What I think is going to be most interesting is to see first how Republicans in the House get past – if they do – their increasingly tough rhetoric from Speaker Boehner,” Ornstein said.  Adding to the problem, he said, is that Rep. Paul Ryan, R-Wis., the new chairman of the House Budget Committee and a GOP icon of fiscal restraint, is having trouble satisfying the demands of freshmen conservatives and Tea Party members to cut even more to reach a campaign pledge of $100 billion in savings this year. 

Ryan is “basically facing pitch forks and boiling oil from his junior members over his inability to reach that $100 billion pledge . . . and he has been forced to up the ante,” said Ornstein, who has written widely on Congress and the budget process.

While Obama and his advisers are being hammered from both sides of the aisle for not offering up a more ambitious and politically risk budget to address the long term debt and mounting entitlement spending, “Any initiative that emerges from Barack Obama is going to be declared dead on a arrival by Republicans in Congress, Ornstein said.

Washington Editor and D.C. Bureau Chief Eric Pianin is a veteran journalist who has covered the federal government, congressional budget and tax issues, and national politics. He spent over 25 years at The Washington Post.