When Congress addressed most of the tax issues involved in the “fiscal cliff” debates of late 2012 with the enactment of the American Taxpayer Relief Act (ATRA) in January 2013, it left many important budget issues unresolved – and more cliffhanger budget battles to come. Most of these issues remain unresolved today, and now the deadlines are looming.
On October 1, 2013, the new federal fiscal year begins – but Congress has not yet agreed on any appropriations bills to fund the federal government. Another round of budget cuts from sequestration begins in fiscal year (FY) 2014, even deeper than the painful cuts in FY 2013. And in mid-October, unless the debt ceiling is raised, the nation will default on paying its bills.
As of early September 2013, negotiations are stalemated. Democratic congressional leaders and the Obama Administration have called for replacing sequestration with a mix of revenues and other spending cuts; Republican congressional leaders refuse to consider new revenues. The House and Senate budgets call for very different spending levels for FY 2014, and some Republicans insist that they will reject any bill to keep the government from shutting down unless it defunds the Affordable Care Act (“Obamacare”). House Speaker John Boehner (R-OH) insists that any increase in the debt limit must be accompanied by larger spending cuts, while President Obama refuses to negotiate over raising the debt limit, saying Congress must pay the bills it has incurred.
The stakes are high: a government shutdown if Congress cannot pass an FY 2014 spending bill, an economically catastrophic default by the United States if the debt ceiling is not raised, and deeper and more widespread pain if sequestration is not ended. Short-term actions to get through the next few weeks are possible – postponing deadlines and extending a politically created, unnecessary fiscal crisis. Predicting how and when Congress might address these issues is difficult, and adding the debate over Syria to the congressional agenda has further complicated the picture.
