Committee for a Responsible Federal Budget

Line Items: Debate Edition

Oct 22, 2012 | Budgets & Projections| Taxes

Up for Debate – Election 2012 is entering the final stretch and it is still up for grabs. The presidential contest has been marked more by missteps than by anyone stepping up and observers are waiting to see who will mimic the Washington Nationals and Redskins and give it away at the end. The third and final presidential debate is tonight at 9 pm Eastern Time and is the last time the contenders will go head to head. So far, the candidates have largely avoided discussing specifics regarding the federal budget and national debt in the debates and on the campaign trail in general. (This short video will get you up to speed on where the candidates stand so far.) Tonight likely will not be an exception as the topic for the debate is foreign policy. Yet, a discussion on the debt would not be inappropriate in this context. After all, former Joint Chiefs of Staff Chair Adm. Mike Mullen said, "Our national debt is our biggest national security threat." Furthermore, how we address the debt will affect our global standing.

Can’t Ignore the Debt for Long – What’s not debatable is that the next president will have to deal with the debt shortly after taking office. The "fiscal cliff" of abrupt tax increases and across-the-board spending cuts will kick in at the beginning of the year. In addition, the statutory debt ceiling will likely be reached in January, which will require action to increase the debt limit in order to avoid default. And the stopgap continuing resolution funding the federal government expires in late March, necessitating agreement on providing funding for the second of half of Fiscal Year 2013 shortly after the president unveils his budget blueprint for FY 2014. Voters at the previous debates in Denver and Long Island added their voices for addressing the debt. Will the candidates listen? Do they have a choice?

Fiscal Cliff Straight Ahead – While the two parties fight over who will have the steering wheel, the U.S. is driving towards the fiscal cliff at year’s end. A bipartisan group of lawmakers is trying to avoid it by replacing the cliff with a smart, comprehensive debt reduction plan. That also is the aim of CRFB’s Fix the Debt Campaign, which in a short period of time has amassed over 285,000 Americans supporting its goals. Congress is expected to return shortly after the election to address the fiscal cliff during a lame duck session. That debate will be one not to miss.

Tax Reform Debate Heats Up – Positions are beginning to be staked out on the role of taxes in a fiscal cliff deal. The White House took a firm stand on the matter last week, threatening a veto if its demands are not met. Meanwhile, some argued that a study from the Joint Committee on Taxation (JCT) showed that tax reform along the lines of what was accomplished in 1986 with broadening the base would not work this time around. However, a CRFB analysis made the case that the JCT study proved no such thing and that broadening the base and simplifying the tax code along the lines proposed by the Simpson-Bowles and Domenici-Rivlin commissions could indeed reduce tax rates while also lowering the deficit.

Americans Open Up Their Pocketbooks – While lawmakers refuse to give in on a debt deal, Americans are personally giving to reduce the debt. Americans chipped in $7.7 million in FY 2012 to the U.S. Bureau of Public Debt. The giving shows that Americans are concerned about the debt, but charity alone won’t solve the problem. The deficit in FY 2012 alone was just over $1 trillion.

Key Upcoming Dates (all times are ET)

October 22

  • Third and final Presidential Debate at 9 pm in Boca Raton, Florida

October 23-24

  • Federal Open Market Committee Meeting in Washington, DC

October 26

  • Third Quarter GDP figures released

November 2

  • Unemployment statistics for the month of October released

November 6

  • Election Day

November 13

  • House and Senate due to convene for lame duck session

November 15

  • Consumer Price Index for October released

November 29

  • Second estimate of Third Quarter GDP figures released

December 7

  • Unemployment statistics for the month of November released

December 14

  • Consumer Price Index for November released

December 20

  • Third estimate of Third Quarter GDP figures released

January 1, 2013

  • The “fiscal cliff” occurs, including the expiration of the 2001/2003/2010 tax cuts and across the board spending cuts the following day