Fiscal Deadlines Fade for Months as Congress Shifts Focus

As Congress returns this week to confront immediate budget issues that have consumed the debate in Washington, lawmakers are preparing to pivot to topics such as immigration, gun control and energy policy.

A barrage of fiscal challenges, including a March 27 deadline for extending funding for the federal government, will yield to matters that could prove just as fractious.

This week, in the final days before a two-week recess, legislators are expected to extend federal spending through Sept. 30 to avoid a government shutdown. The House and Senate anticipate adopting separate, partisan budget plans for the next fiscal year that they won’t attempt to quickly reconcile.

By legislating to the least-common denominator, Congress over the past three months will have avoided an across-the-board income tax increase, prevented a default on the nation’s debt and sidestepped a shutdown. While automatic spending cuts will remain in place and government worker furloughs will start, Congress won’t be up against a fiscal deadline until a debt ceiling increase is needed in August.

“We have two or three issues that are substantive issues - - immigration, guns as examples -- that are moving forward, and I hope that we bring them to the floor,” Senator Richard Durbin of Illinois, the chamber’s second-ranking Democrat, said in an interview last week. “Fiscal problems are big problems, but there are other challenges in America.”

Pipeline Bill

In the House, Republicans announced plans to pass a bill by the end of May approving the Keystone XL oil pipeline from Canada that would run through part of the U.S. Representative Fred Upton, chairman of the House Energy and Commerce Committee, said he wants to advance that and other measures before Congress takes up 2014 spending bills in June.

“It’s the time that we do our work,” said Upton, a Michigan Republican.

The Republican-controlled House has passed a bill to extend government funding through Sept. 30. The Senate is considering its version this week and is expected to send it back to the House well before the March 27 deadline.

When they finish work this week, lawmakers will return to their districts for a recess during the Passover and Easter holidays.

After that, no major fiscal deadline will approach for several months. Technically, the U.S. will hit the federal debt ceiling in mid-May, under a law passed earlier this year to delay default.

Extraordinary Measures

The Treasury Department can use so-called extraordinary measures to extend that date so an increase won’t be needed until August, said Steve Bell, senior director of the economic policy project at the Bipartisan Policy Center in Washington.

The gap until the next potential fiscal showdown buys time for lawmakers working on tax policy to focus on a possible rewrite of the U.S. tax code instead of wrangling with more immediate issues. The House Ways and Means Committee has set up 11 bipartisan working groups to grapple with revising the code, and they are scheduled to report to the full panel by April 15.

“It’s an important time for us to be pushing the ball down the field,” said Representative Pat Tiberi, an Ohio Republican and Ways and Means member.

House Speaker John Boehner, an Ohio Republican, said that “talk about raising revenue is over,” on ABC’s “This Week” program yesterday. “It’s time to deal with the spending problem.”

Finance Committee

Similarly, the Senate Finance Committee is starting a series of bipartisan meetings on a tax overhaul.

Meanwhile, the automatic cuts that started March 1 will remain in place. The reductions total $85 billion this year and $1.2 trillion over nine years. Because government agencies must give employees a 30-day notice of furloughs, some effects of sequestration will start being felt.

Federal Aviation Administration workers, including air- traffic controllers, have been told that furloughs will begin April 21. Private firms that operate airport towers are awaiting the FAA’s decision on how many will be shut starting April 7.

Supreme Court justices Anthony Kennedy and Stephen Breyer told lawmakers last week that cuts affecting the federal judiciary would undermine its work if left in place for more than a few months. The reductions amount to about 5 percent of the court’s budget, or $3.7 million, for the rest of the fiscal year, which would be absorbed temporarily through furloughs and shorter work days for some employees.

‘Simply Unsustainable’

Over the longer term, Kennedy said in testimony before a House appropriations subcommittee March 14, “it is simply unsustainable.”

During the deadline lull, talk about a potential “grand bargain” on the budget won’t vanish.

President Barack Obama met with Republicans and Democrats in the House and Senate last week, reiterating his pitch for a plan that would pair cuts in future spending for entitlement programs such as Medicare with additional tax revenue.

While those conversations occur, the extra breathing room could benefit consideration of a five-year reauthorization of U.S. agriculture policy that would replace direct payments to farmers with a more insurance-based safety net, said Representative Frank Lucas of Oklahoma, chairman of the House Agriculture Committee.

“I believe the oxygen level will be higher, and you need that kind of environment to be able to get into the really detailed policy issues,” he said. “And the farm bill is detailed, intense, policy-focused material.”

Taxes, Immigration

Representative James Lankford, a member of the House Republican leadership, cited a tax overhaul and immigration as issues expected to get attention in coming months.

At the same time, he said, lawmakers are aware that the next debt-ceiling standoff is only months away, with no clarity on how it will be resolved.

“I wish it did leave more room for the things that we need to do,” said the Oklahoman. “We are kind of like a family that fights about money all the time. Once you get into debt everything is about money, and that’s where we are now.”

To contact the reporter on this story: Richard Rubin in Washington at rrubin12@bloomberg.net

To contact the editor responsible for this story: Jodi Schneider at jschneider50@bloomberg.net

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