Congress Misses Its Deadline

Speaker Kevin McCarthy
Reuters
By Yuval Rosenberg

Welcome to the weekend! Congress is about to miss its statutory budget deadline yet again. When lawmakers returns from their recess next week, we’ll start to hear a lot more about the debt ceiling. Here’s what to expect.

Can McCarthy Unite Republicans on a Debt Limit Strategy?

House Speaker Kevin McCarthy and his conference are preparing what one Republican described to Politico as "an opening salvo" on raising the debt limit and slashing federal spending.

As we highlighted yesterday, McCarthy is working to pull together a proposal that can unify his fractious members and pressure President Joe Biden to negotiate a deal on the debt limit, which will have to be raised or suspended within months.

The framework of the GOP plan, as detailed by Politico and others, would center on an extension of the debt limit until May 2024 as well as a cap on discretionary spending based on fiscal year 2022 levels. Republicans also want to pass their energy bill, rescind some $70 billion in unspent Covid funding and enact new work requirements for Medicaid and food stamps, among other points.

But even as Republicans eye a vote by late May, that blueprint is reportedly far from final — and as Politico’s Sarah Ferris and Jordain Carney write, "it is riddled with potential political pitfalls — including an expiration date that would tee up another high-stakes fiscal fight just months before the 2024 presidential election."

Why that timing? "It would put Republicans on the record raising the debt limit by about $2 trillion — as opposed to the $4 trillion figure required to punt the whole shebang until after the 2024 election," Politico says.

McCarthy’s agenda: The current high-stakes fiscal fight is a treacherous one for McCarthy, who must try to satisfy his party’s various factions, dubbed "the five families," many of which have already laid out their proposals or demands for a deal. "Republicans involved in the talks insist it’s less about the specifics so far — and more about getting a unified GOP strategy against Democrats," Politico reports. "More important than the specifics, according to GOP sources, is that the party can demonstrate to Democrats that it’s serious about refusing a ‘clean’ debt limit."

Democrats, for their part, haven’t budged from their insistence that the debt limit should be raised without any strings attached. "Privately, Democrats close to party leadership said the entire GOP list is a nonstarter," Politico notes.

The bottom line: Republicans will soon make their opening bid, accompanied by an effort to ramp up pressure on Biden to negotiate. But McCarthy will be under intense pressure as well, and his speakership could be at stake if GOP divisions on defense spending and other items lead to intraparty conflict.

Quote of the Day

"We suspect that McCarthy’s speech is designed to rally financial players to pressure the administration to the negotiating table on spending. However, this does exacerbate the risk that the speaker will startle investors more than he intends, in our view."

– Benjamin Salisbury, director of research at Height Capital Markets, in a note to clients on Friday as quoted by MarketWatch.

Congress Misses Budget Deadline for 20th Straight Year

April 15 is the statutory deadline for Congress to complete a joint budget resolution for the next fiscal year. Congress will miss that deadline for the 20th year in a row.

The Congressional Budget Act of 1974 laid out a timetable for the annual process. The president is supposed to kick off the process by submitting his budget proposal by the first Monday in February, a deadline President Joe Biden missed for the third straight year. And Congress has only rarely met the deadlines set out by the 1974 law or a related one from 1985.

"Congress has completed action on a budget resolution prior to April 15 four times since FY1985, the last time being for FY2004," the Congressional Research Service said in a report last year. "In years when Congress has completed work on a budget resolution, it has typically been in late spring or early summer in the months of April through June."

This year, neither the House nor the Senate have put forth a budget plan, let alone pass one. And Congress is likely to skip the joint budget process this year. "That means that in the past quarter-century, Congress will have taken a pass on a budget in almost as many years — 12 — as lawmakers have actually adopted one — 13," Roll Call’s Peter Cohn writes. "It's become practically optional given other tools Congress has to put internal controls on budget bills, such as "deeming" appropriations limits or statutory spending caps like the ones imposed in 2011 as part of that year's debt ceiling deal."

Cohn notes that the last time Congress adopted a joint budget that wasn’t just meant to grease the path toward a budget reconciliation package was in 2015.

"Budgeting is a fundamental part of governing, and the fact that Congress has not taken this role seriously shows just how broken our budget process has become," Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said in a statement. "Passing a budget is one of lawmakers’ most basic tasks, and it is absurd that it’s been eight years since we passed one that wasn’t just a vehicle for budget reconciliation bills. It is long past time for lawmakers to do their jobs and put out their budgets."

Have a great weekend! Send your feedback to yrosenberg@thefiscaltimes.com. And please encourage your friends to sign up here for their own copy of this newsletter.

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