This week the Senate may begin its work on the FY2012 federal budget, while Vice President Joseph Biden holds a second high-level meeting with leading congressional figures on the budget.
Senate Budget Committee Chairman Kent Conrad (D-ND) is likely to release his FY2012 budget resolution sometime this week. As in the House, the Senate budget resolution serves as a framework for making budget decisions about spending and taxes and sets overall spending and revenue targets. (It does not, however, set specific spending amounts for particular programs.)
Meanwhile, freshman Senator Pat Toomey (R-PA), a member of both the Budget and Joint Economic committees, plans to announce his own budget proposal early this week. While few details are known, reports indicate that Senator Toomey's plan would balance the federal budget within nine years. This is a much quicker pace than the House GOP version introduced by Budget Committee Chairman Paul Ryan (R-WI), which projects a $391 billion deficit in FY2021 and doesn't reach a surplus for several decades. The House passed the Ryan plan on April 15.
It is likely that the Republican controlled-House and the Democratic Senate will have significant difficulty reaching agreement on overall budget limits for FY2012. It is not required that they do so – the budget resolution is not a legal document, but more a blueprint for the annual budget process – however, lack of an agreement will complicate the overall process and make congressional deadlock over spending issues more likely.
The so-called "Biden Group" was proposed by President Obama in his April 13 speech on fiscal policy. The goal of the bi-partisan group is to find common ground on possible fiscal reforms that would be linked to an upcoming vote on raising the federal debt ceiling. The group met for the first time last Thursday, and while no agreement was reached, the discussions were described as "optimistic." The next meeting is scheduled for Tuesday, with six more meetings planned for this month.
The group includes House Majority Leader Eric Cantor (R-VA) Rep. Jim Clyburn (D-SC) Rep. Chris Van Hollen (D-MD), and Senators Jon Kyl (R-AZ), Daniel Inouye (D-HI), and Max Baucus (D-MT). Administration officials attending the meetings include Treasury Secretary Tim Geithner, Office of Management and Budget Director Jacob Lew and Gene Sperling, Director of the National Economic Council.
In the coming weeks Congress is expected to vote on raising the legal limit on the U.S. national debt, which will shortly reach $14.3 trillion. Failure to raise the debt ceiling – the total amount that the U.S. government can borrow – would cause the government to default, ending funding for virtually all federal programs and potentially creating an international economic crisis.
Yet despite broad agreement among Democrats and Republicans that the debt ceiling must be raised, there are significant differences between both parties – and within them – about what changes in federal economic policy will be included in order to broker a deal. Generally, Democrats oppose deep cuts in social programs, which they argue would cripple them just when for economic reasons they are in greater demand. Republicans appear unwilling to support any plan that would increase taxes. And both party seem reluctant to take on the issue of reforming the entitlement programs Medicare and Medicaid.
For NPP’s analysis of Chairman Ryan’s plan and a comparison to the proposal by the Congressional Progressive Caucus, see “The President's Budget to the Chairman's Plan.”