Budget Debate Remains Hot Topic

Even though fiscal year 2011 budget battles have wrapped up, several more will face Congress when they return from recess on May 2. Now that the House has passed their FY 2012 budget resolution, normal procedure would be for the Senate to follow with their budget resolution. Following Senate passage, the differences in each chamber’s budget would be resolved in conference. Senate Budget Chairman Kent Conrad (D-N.D.) , who is one of the “Gang of Six” Senators working on a bipartisan budget deficit plan, has indicated he will not offer his FY 2012 budget resolution until he sees if the “Gang of Six” can produce a deficit reduction plan.  It remains to be seen if any deal on the FY 2012 budget can be reached. In addition to the FY 2012 budget, Congress must act to raise the debt ceiling.  The debt ceiling is the congressional limit set on federal borrowing.  With federal borrowing rapidly approaching the $14.294 trillion debt limit, most Republicans are demanding deficit reduction concessions in exchange for voting to raise the ceiling.  The United States is expected to exceed its debt limit by May 16 and will likely default on debts if the ceiling is not raised on or around July 8. President Obama has indicated that he wants a “clean debt ceiling increase” without including any long term deficit reduction to the vote as demanded by most Republicans.  In what appears to be an attempt to address Republican demands to include deficit reduction as part of the debt ceiling vote, President Obama has created a new deficit reduction panel to be led by Vice President Biden.  The new panel will meet May 5 and involve bipartisan House and Senate leaders with a goal of creating a legislative framework for long-term budget issues. For more information, contact Sean O’Neill at (202) 547-8892 or oneills@agc.org.