An Information Service of NCSL's Standing Committees
Volume 18 Issue 16- May 11, 2011
DEBT LIMIT MUSIC IS PLAYING
Last week, U.S. Treasury Secretary Timothy Geithner announced he could continue to make payment on the nation’s obligations through Aug. 2, 2011, a one-month extension of a previous drop-dead date marker. The secretary reported that the extension is largely “a result of stronger than expected tax receipts.” Even so, the secretary commenced use of “extraordinary” tools to avoid hitting the $14.29 trillion debt limit ceiling. First out of the box is suspension of State and Local Government Series (SLGS) securities, which last occurred in 2007 when a similar debt limit showdown was in progress. The Treasury has sold $47.4 billion worth of these securities this year, an amount that is scored as a debt. SLGSs are an administrative tool state and local governments use to comply with Internal Revenue Service rules on how the proceeds of tax-exempt bonds can be invested.
At the White House, Vice President Joe Biden convened a bipartisan group of six House and Senate members on May 5 to come to consensus on a debt limit extension, spending cuts and enforcement mechanisms, with the debate over tax and entitlement reform sidelined until after the 2012 elections. This group meets twice this week in a continuing search for compromise.
On May 9, Speaker John Boehner of Ohio announced that any plan to increase the federal debt has to be met with equal or larger spending cuts. “We should be talking about cuts of trillions, not just billions,” he said. The speaker noted that health care reform, including Medicare and Medicaid, needs to be addressed, but he emphasized tax increases and expenditures are not under consideration. He did note, however, that the 112th Congress may consider restructuring the corporate tax code and, perhaps, the personal income tax code. One day later, Nevada Senator and Majority Leader Harry Reid stated that a comprehensive deficit reduction/debt management plan must derive savings from equal portions of spending cuts and new revenue. And, his Finance Committee chair, Montana Senator Max Baucus, pronounced during a hearing that Social Security should be off the deficit reduction table, a position echoing that of the Majority Leader. Stay tuned. (NCSL staff contacts: Michael Bird, Jeff Hurley)
SENATE BUDGET EFFORTS DELAYED
Plans by Senate Budget Chairman Kent Conrad of North Dakota to mark-up a fiscal year 2012 budget resolution appears to be off until next week at the earliest. Senator Conrad, also a member of the “Gang of Six,” had initially hoped to offer his proposal this week, but this appears unlikely as Budget Committee rules require a 48-hour notice. Senate Majority Leader Harry Reid, who previously mentioned he would bring up the House-passed budget resolution (H. Con. Res. 34), has yet to schedule a vote on the legislation. In the interim, President Obama this week will meet with Democratic senators on Wednesday and Republican senators on Thursday, in hopes of reaching agreement on debt and deficit reduction issues. Comparable meetings with House members are expected to take place in the coming weeks. Meanwhile, the Senate’s Gang of Six spearheaded by Virginia Senator Mark Warner and Georgia Senator Saxby Chambliss continues to meet, but consensus on a comprehensive deficit reduction outline remains elusive. (NCSL staff contacts: Michael Bird, Jeff Hurley)
ON THE HORIZON
On Thursday the House Ways and Means Committee has a scheduled markup of H.R. 1745, legislation in the process of being modified that will address state unemployment insurance funds. … Despite all the haggling about the national debt ceiling and FY 2012 budget resolutions and related agreements, the House Appropriations Committee will begin marking up FY 2012 appropriations bills the week of May 23, 2011.