After the debt limit bill passed, the House of Representatives began its August recess. "The next votes in the House are scheduled for 6:30 p.m. on Wednesday, September 7," the Majority Leader's office alerted members on Monday. Left unmentioned: the House and Senate are still mired in a long fight over FAA funding -- one that has resulted in a partial shutdown of the agency. Before leaving town House Republicans passed a take-it or leave-it, one-month extension of FAA funding that cuts funds rural airports, including some in the states of key Democratic senators.
The message to the Senate was clear. Pass our plan, or 4,000 FAA employees, and tens of thousands of contractors won't have work this August. So far Democrats have refused, and there's some chance that both the House and Senate will reconvene to settle the issue more equitably. But considering the Democrats' record this past year, Republicans have little incentive to give in.
When Congress returns from recess, it will have just three weeks to pass new appropriations legislation by the end of September when federal funding expires. Despite a statutory cut to, and cap on, discretionary spending, the debt limit deal didn't lay out what government programs to fund, and by how much. The House has already passed some austere appropriations bills, which won't fly in the Senate, so we're in for a repeat of the Spring appropriations fight that nearly resulted in a government shutdown. Democrats will want to spend up to the level of the new spending cap, Republicans will demand a lower total. Democrats will want to allocate those funds to the programs they favor, Republicans will want to allocate those funds to different programs. And Republicans will insist as they did last time on passing controversial policy riders -- things like defunding NPR, and planned parenthood, and environmental protection programs and so forth. All of these fights will play out under the threat of a government shutdown, except this time, lawmakers will have less time on their hands.
While that battle's being fought, a new deficit Super Committee will be hashing out tax and entitlement reform legislation. Its six Democrats and six Republicans will be charged with reducing deficits by $1.2 trillion over 10 years, at a minimum. But if they can't agree on where to find the savings -- if Republicans dig in and refuse to consider higher tax revenue, and Democrats refuse to consider entitlement cuts unless Republicans give on entitlements -- then a penalty kicks in. Specifically, if by Christmas, Congress hasn't passed the Committee's plan, it will trigger $1.2 trillion in spending cuts: $500 billion from defense and security programs, the rest from domestic spending, much of which will come from a two percent haircut for all Medicare providers. That's policy neither Democrats nor Republicans really support, so there will be a strong incentive for the committee to come to a deal. The question is, who'll blink first? If the tax, spending, and debt limit fights are any indication, there's your answer.
If they pull the trigger on those cuts, there's a wrinkle: they won't take effect until January 1, 2013 -- the same day the Bush tax cuts are set to expire. That would set up yet another time bomb situation, with the parties blaming each other for the inability to defuse it. "Democrats will leave the country defenseless unless we let them raise your taxes." "Republicans would rather protect rich interest groups than protect our troops." And so on.
If that committee doesn't produce higher revenues for the Treasury, President Obama has vowed to veto any tax legislation that doesn't allow the Bush tax cuts for high-income earners to expire. And that means yet another hostage crisis on the Hill. If Republicans call Obama's bluff, refuse to expire the top-bracket cuts, and thus pass legislation that Obama vetoes, or don't pass any legislation whatsoever, all of the Bush tax cuts will expire, including on middle-income workers, still struggling in a tough economy.
If that happens, it'll delay our next collision with the debt limit. If it doesn't, then we'll be back in the throes of another debt limit fight early in 2013...well, that is, if Obama wins re-election.