While President Barack Obama and presumed Republican rival Mitt Romney run campaigns focused largely on the struggling economy, Congress is preparing for a new round of budget battles on debt reduction and tax cuts.
The U.S. Senate formally rejected President Obama’s $3.8 trillion budget request Wednesday (WashPost), along with a series of Republican alternatives including the Romney-backed spending plan authored by House Budget Chairman Paul Ryan (R-Wis.). On Sunday, Ryan sparred with Obama’s surrogates, White House chief economist Austan Goolsbee (Fox) and Sen. Dick Durban (D-Ill.) (MSNBC), on economic issues, including the ongoing budget fight. Goolsbee and Durbin both disputed the idea that the Ryan-Romney budget approach would lead to economic growth, while Ryan said his approach actually was designed to preempt the need for “Europe-like austerity.”
As budget options are being debated, one major issue that has arisen is the so-called taxmageddon, when the Bush-era tax cuts expire and the mandatory across-the-board cuts to federal spending resulting from last year’s deficit ceiling deal take effect — issues slated to come to a head at the end of the year.
House Speaker John Boehner (R-Ohio) insists work must begin on a larger budget agreement (ABC) that includes deficit reduction and tax reform now, rather than waiting until the lame duck session after the November election. “Why do we want to wait and rush this through at the end of the year, after the election?” Boehner asked Sunday (ABC). Boehner said earlier in the week he would draw “a line in the sand” (WSJ) requiring that any increase in the debt limit be offset by spending cuts.
But Obama administration officials and congressional Democrats have criticized Boehner’s approach, saying it signals the similar brinkmanship last summer’s debt limit fight. “Last year just the threat of not lifting the debt ceiling caused our credit rating to be lowered. This is not a responsible, mature, sensible place for us to go,” House Democratic Leader Nancy Pelosi said in response to Boehner’s remarks and challenging him to bring middle class tax cuts to the floor.
For more on the candidates’ stances, check out CFR’s Issue Tracker on The Candidates and the Economy.
Suggested Other Reading:
The “persistently weak economy” is the driving force behind every other issue voters are worried about, says Yuval Levin at The Weekly Standard, but neither candidate is really addressing addressing that problem. “The American economy still has great stores of strength, but it is not well prepared to make the most of those strengths or to address its deficiencies as a global competitor. This is not the fault of conservative plutocrats or of Barack Obama. It is not the fault of income inequality or of the Federal Reserve,” he says. “It is the fault of our country’s failure to adequately modernize its governing institutions and its economy—its public sector and its private sector.”
“Big issues are on the table as President Obama and Republican Mitt Romney begin the general election campaign: jobs and the economy, the future of health care, taxes, spending, the size and scope of government. What is missing is any serious discussion of the one question that overrides all others: Can Washington govern?” asks Dan Balz in the Washington Post. “The symbol of the breakdown is the ongoing stalemate over the economy and the country’s fiscal problems.”
Budgetary brinksmanship could be a win-win for the Republican Speaker of the House and for the GOP at the polls, says the Washington Post’s Dana Milbank. “If Boehner goes to the brink and secures new spending cuts, he wins,” Milbank says. “If he fails, and his brinkmanship sets off a crisis, he still wins, because the resulting drop in confidence will slow the economy and injure the incumbent president.”
–Contributing Editor Gayle S. Putrich and Senior Editor Toni Johnson