U.S. Treasury Secretary Jacob “Jack” Lew
Will It Impact Legislative Agenda ?
U.S. Treasury Secretary Jack Lew sent a letter to Congress on January 22 strongly urging Congress to again increase the U.S. borrowing authority “before February 7 to ensure orderly financing of the government.” Lew warned Congress in an earlier letter on December 19 estimating that the U.S. debt limit would be reached by late February or early March. The most recent calculations and information available have led Treasury to “believe that it is more likely to exhaust those measures in late February.”
The nations debt is currently $17.34 trillion.
That Was Then, This Is Now
At the very same time last year leaders of the U.S. House and GOP rank-n-file members were meeting at their annual retreat in Williamsburg, VA. During that retreat a plan was crafted that would:
- allow for a short-term suspension of the U.S. debt ceiling without demanding matching spending cuts, and
- mandate a budget resolution pass in both the House and Senate.
The new plan would give Congress more time to decide on how to deal with the automatic across-the-board budget cuts under budget sequestration and allow the GOP time to plan a strategy on the national budget debate.
Fast-forward to today:
- Congress adopted a two-year budget agreement, The Bipartisan Budget Act of 2013 for FY’s 2014 and 2015.
- The budget agreement offers relief from budget sequestration by providing dozens of more specific deficit-reduction provisions creating mandatory savings totaling $85 billion and overall deficit reduction of $23 billion. It sets overall discretionary spending for FY 2014 at $1.012 trillion
With relief from automatic budget sequestration and the budget agreement in place, the only remaining question is how the GOP will deal with the national debate on the budget. Perhaps that will be a major topic of their retreat scheduled for next week.
Timing Is Everything
Now that the Treasury Department has signaled the debt limit increase debate must occur sooner rather than later, this could pose threats to pending legislation, like the Farm Bill, Water Resources Development Act (WRDA) and Moving Ahead for Progress (MAP-21), that otherwise would have greater odds of passing in this session. Why? There are Members of Congress that have issues with these bills and their issues could create savings. However, achieving those savings could topple carefully crafted alliances currently supporting adoption of such bills.
For instance, Senator Charles Grassley (R-IA) would like to see additional changes in the Farm Bill to the eligibility requirements for being “actively engaged” in farming. The Congressional Budget Office (CBO) recently scored Senator Grassley’s issue as creating a savings of $387 million over the next ten years. But, such a cost-saving change will likely upend support from commodity groups.
With regard to WRDA legislation, the Corp of Engineers continues to come under scrutiny by some Members of Congress due to a lack of prioritization of projects that has caused a backlog of between $60 and $80 billion in construction projects.
Moreover, the timing creates a perfect storm. Conservatives have a history and proven record of causing setbacks in the legislative agenda of the House of Representatives. Given that these conservatives have suffered recent setbacks that have impacted their prominence on Capitol Hill, look for them to try and regain some of their clout during the upcoming debate on the debt ceiling, transportation issues and Farm Bill.
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