On April 10, President Obama released his proposed budget for the 2014 budget year. Unlike in the past, this year's budget came very late, after both the House and Senate had passed their respective budget plans. The president's plan is being billed by some as a compromise between the House and Senate.
Across-the-board federal spending cuts, called "sequestration," have begun. What can be done to undo this damaging budget policy? One of the primary barriers to fixing sequestration is that it is playing out much like the metaphor of a boiling frog. According to the metaphor, if a frog is placed in a pan of boiling water, it will quickly jump out. But if it is placed in a pan of water that is room temperature, and then only slowly heated to a boil, the frog will not notice the danger and will be slowly cooked to death.
As March 1 approaches, across-the-board federal spending cuts, called sequestration, appear almost certain to occur. Republicans and Democrats are not negotiating to resolve the looming crisis. Neither seems sufficiently motivated to compromise.
A new report from the Congressional Budget Office (CBO), released Feb. 5, reveals that the federal budget deficit is now on track to drop below $1 trillion for the first time in several years. It is expected to drop further for several more years without any additional efforts at deficit reduction. However, this drop has been bought at a significant cost, including substantially reduced economic growth and higher unemployment.
On Jan. 23, the House of Representatives sidestepped a battle over the debt ceiling and prepared itself instead for a coming fight over sequestration and a possible government shutdown. The No Budget, No Pay Act (H.R. 325), passed by the House, suspends the debt ceiling until May 18 and ties congressional pay to passage of budget resolutions in the House and Senate by April 15.
Resolution of last year's "fiscal cliff" fight was achieved in the first few hours of the new year with a tax package that made permanent 82 percent of the Bush-era’s tax cuts. This may have made a "grand bargain" on the deficit that balances tax and spending provisions much more difficult to achieve and heightened the likelihood of more spending cuts.