Monday, August 1, 2011

Budget Control Act 2011: A quick read (part 1)

Here's some points that come immediately to mind on reading the text of the compromise bill that's being pushed to end the debt ceiling fiasco (for which I seriously hope there is a price to be paid for everyone in Congress who decided that political points were important enough to hold a gun to the economy over):

    SEQUESTRATION: This appears to be a cut-and-paste from an existing law.
  • (3) MILITARY PERSONNEL: I'f I'm reading this right, the idea is that, should the president use existing authority to exceed set spending levels to pay military personnel, there's an automatic debit against all other segments of government. An interesting idea. In practice, I'm not sure how it will work.
  • Then there's a lot of implementation detail including who reports the numbers to whom.
  • (A) EMERGENCY APPROPRIATIONS; OVERSEAS CONTINGENCY OPERATIONS / GLOBAL WAR ON TERRORISM: This section seems to exempt budgetary items that Congress and the President agree on labeling as being for military contingencies and the "War on Terror". Which, in practice, probably means the military budget is off the table. That probably renders much of this legislation fairly toothless for anything but reducing entitlements.
  • CONTINUING DISABILITY REVIEWS AND REDETERMINATIONS: It looks as if this section sets hard-caps on how much Social Security expenditures can grow by, effectively applying a tourniquet to the failure of the Social Security Trust Fund (funny story, that trust fund was already spent by forcing it to buy U.S. Bonds, so had we refused to raise the debt ceiling, and had to choose whose bonds to pay off... Social Security would have been one of the parties hoping they wouldn't get defaulted on). The hard-caps on Social Security growth are 623 million in FY 2012, 751 million in 2013, 924 million in 2014, 1.1 trillion in 2015, 1.2 trillion in 2016, 1.3 trillion in 2017, and 1.3 trillion ongoing each year through 2021. There's a similarly large amount that's specified as a cap on fraud and abuse control expenditures.
  • (D) DISASTER FUNDING - This section sets some guidelines on what disaster relief is, how to measure what a reasonable amount of money to spend on it is, and exempts that amount from automatic adjustments.
  • This bill says that it replaces and repeals "Section 275 of the Balanced Budget and Emergency Deficit Control Act of 1985"
  • Also that, "Sections 252(d)(1), 254(c), 254(f)(3), and 254(i) of the Balanced Budget and Emergency Deficit Control Act of 1985 shall not apply to the Congressional Budget Office." That might be a formality of replacing that law, but more reading would be necessary to determine that.
  • (d) EMERGENCIES IN THE HOUSE OF REPRESENTATIVES: Interestingly, this section locks in a definition of expenditure increases which includes revenue reduction (e.g. tax cuts). This is a good thing, as it's impossible to control costs without including a measure of what the available funds are and how they are constrained at the same time.
  • (e) ENFORCEMENT OF DISCRETIONARY SPENDING CAPS: This section basically says, "you have to comply with these rules, or your bill can't even be debated."
  • SEC. 106. SENATE BUDGET ENFORCEMENT: If I'm reading this right, the Senate Committee on the Budget needs to submit a balanced budget. So, perhaps (and I'm not 100% on this), the preceding sections deal with the laws that set out exceptional conditions under which the budget can be modified, and this section sets out the requirement that you have to start balanced?
  • TITLE II—VOTE ON THE BALANCED BUDGET AMENDMENT: This section just says that there needs to be a vote in the November-December timeframe on a balanced budget amendment. The only thing that scares the daylights out of me, here, is that the "join resolution" is essentially rammed through as a matter of procedure. What does this mean? It means that no matter what the House and Senate pass titled, "Joint resolution proposing balanced budget amendment to the Constitution of the United States," a joint resolution has to be formed. In theory this is a normal part of lawmaking where the House and Senate versions are merged, but this section strips out some of the controls over how broad and sweeping that reconciliation can be, and how much control anyone has over what goes into that "compromise." In theory, nothing new can get tucked into it, but in reality, there's no real controls here, and we're talking about our Constitution! The states still need to ratify whatever mess comes out of Congress, but there's no chance to edit the Amendment after this stage.

OK, that's it for now. I'll try to digest the rest late tonight or tomorrow.

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