‘Line’ Items: Post Easter Edition

Apr 25, 2011 | Budget Process

After the Bunny – Easter has come and gone. Chocolate-induced comas are being overcome and many -- though not Congress -- return this week from spring break. Are there still hidden Easter eggs waiting to be found? The debt ceiling and negotiations over a debt reduction deal will continue to be top items of interest.

President Makes the Case for His Plan – The Easter Bunny wasn’t the only one making the rounds last week. President Obama hit the road promoting his debt reduction proposal, convening town halls in Northern Virginia, Palo Alto, California and Reno, Nevada. CRFB took a deeper look at the President’s plan last week in a paper. We found that although the framework represents a step in the right direction, it falls short of the debt reduction proposed by the President’s Fiscal Commission.

Just Biden Time? – Deficit fighting “Gangs of Six” seem to be multiplying like bunnies now. The lawmakers have been chosen and a date has been set for the first meeting of the bipartisan, bicameral group called by the President to negotiate a debt reduction agreement, but it remains unclear if the new gang led by Vice President Joseph Biden will have any traction. What was first proposed by President Obama as a 16-member group will only have six members – Rep. Chris Van Hollen (D-MD), Rep. James Clyburn (D-SC), Rep. Eric Cantor (R-VA), Sen. Max Baucus (D-MT), Sen. Daniel Inouye (D-HI), and Sen. Jon Kyl (R-AZ). The group will have its first meeting on May 5. Meanwhile, the original “Gang of Six” senators continues its work on a bipartisan compromise, with a deal possible soon.

Trigger Talk Gets Bigger – The idea of a trigger mechanism to help reduce the debt -- and possibly coupling such a trigger with a debt limit increase -- continues to grow. The Peterson-Pew Commission on Budget Reform illustrated how such a mechanism can be implemented and a recent CRFB brief offered ideas on how the “debt failsafe” proposed by the President can be improved. A forthcoming paper will provide more detailed recommendations. And see the CRFB paper on responsibly raising the debt ceiling.

Key Upcoming Dates

April 25

  • New home sales for March.

April 26

  • Consumer Confidence Index for April from The Conference Board.

April 28

  • Advance estimate for Gross Domestic Product for the first quarter of 2011 from the Department of Commerce.

April 29

  • Consumer Sentiment Index for April (Thomson Reuters/University of Michigan).

May 16

  • Treasury Secretary Tim Geithner says the statutory debt limit will be reached no later than May 16.

July 8

  • Treasury Secretary Geithner says that the U.S. will default on its obligations around July 8 if the statutory debt ceiling is not increased before then.