After a series of short-term stopgaps, Congress passed and the President signed into law the Consolidated Appropriations Act of 2017 on May 5, more than half of the way through the current fiscal year. This omnibus spending bill keeps the lights on at the Federal agencies and funds all discretionary programs – everything from transportation projects, to the military and homeland security, to health and safety inspectors, to national parks – through September 30.
Of course, this spending bill would not touch the nearly two-thirds of Federal spending that is on autopilot: mandatory spending on the nation’s entitlement programs (chiefly Social Security, Medicare and Medicaid) plus the ever-rising interest on the national debt… but entitlement reform could in itself be the topic for another newsletter.
After clearing this backlog, Congress is beginning to turn to the FY18 Budget Resolution, a document that will very likely call for tax reform reconciliation instructions (effectively lowering the threshold in the Senate to pass much-needed, pro-growth tax reform and simplification to 50 votes instead of the usual 60). Another looming battle to monitor is whether Congress will lift the so-called sequestration caps on Pentagon and non-defense discretionary spending.
Complicating this sausage-making process will be a manmade – well, lawmaker made – hurdle known as the statutory debt limit. Estimated to hit again circa early autumn, this artificial spending cap has proven recently to be completely ineffective in eliciting lasting budgetary reforms, but has been extremely effective in hurtling our economy from one fiscal cliff to another, adding further uncertainty to businesses and their employees, and making markets jittery. Again, we should curtail our deficit spending and reduce the nation’s debt by enacting timely, responsible budgets and getting serious about entitlement reform (perhaps a down payment will be made in the health care reform bills). We should not risk the full faith and credit of the United States by reneging on the promises we made to our creditors at the back end of the process. Neither your family’s budget, nor your business’ operates that way, and Federal government’s should not, either. It is time to scrap the debt limit.
Information from the U.S. Chamber of Commerce Newsletter