Will 'must pass' legislation pass?

Will 'must pass' legislation pass?
© Stefani Reynolds

Will Congress be able to pass its “must pass” legislation this year? Hearing this question is a bit of a shocker, but it is also a sobering reflection on just how far Washington has fallen these days. A range of policy issues, from higher education and highway funding to disasters and infrastructure, will compete for attention from Congress during the remainder of this year.

But at least two issues are fundamental to the United States economy. These are the annual funding bills and the debt limit, which are both way behind the curve. In decades past, the assignments for Congress were like that of a bright but procrastinating and lazy student. The assignments were overdue, but they would get done. These days, however, Congress and the president are so rebellious and conflicted that the American people have to wonder whether “must pass” legislation will pass at all.


Congress and the president cannot even agree on what to argue about with respect to annual government funding. The next fiscal year begins this October, and if Congress and the president cannot pass the key appropriations bills, the government will shut down. The shutdown last year substantially disrupted the economy by delaying government activities and debt payments and by spooking consumers and financial markets. The prospect of a shutdown is a high grade fever of uncertainty. When economic decision makers feel uncertainty, they freeze in place and postpone making important commitments, including investments and other big ticket items. It was no surprise that economic growth slowed at the end of last year, and the word “recession” proliferated in the news.

Substantial disagreements both within and between the political parties on appropriated spending are a significant barrier to a deal. Republicans generally favor lower spending, while Democrats generally want more spending. But it is also true that some Democrats and many Republicans, including the president, want big increases for defense. At the same time, Democrats along with some Republicans believe that the Pentagon is an inefficient money sink. Coming to agreement will therefore not be easy.

Another concern is that for more than a decade, whenever Congress was worried about the deficit, it imposed unrealistic limits on appropriations bills for future years. When the future years arrived, Congress reneged on those restraints. That pattern is still operative today, with unrealistically low numbers still on the books for next year. Congress and the president will begin negotiating from wishfully low legal caps, and will quickly need to give ground, making the projected budget deficits look even worse.

The funny thing is those deficits have been skyrocketing. Just more than two years ago, the Congressional Budget Office set off alarm bells with projections of $1 trillion deficits starting in 2023. However, no budget watcher today would be surprised if the deficit topped $1 trillion this year and beyond. With unrestrained spending and tax cuts causing lower than expected revenues, another disaster will be a storm surge of red ink.

Those rising deficits comes a faster than expected growth of debt. The Treasury secretary is now squeezed between the increasing debt and the statutory debt ceiling that Congress reinstated earlier this year. At the time that members of Congress wrote that law, they expected enough cash to carry the Treasury secretary into the next fiscal year. With the higher budget deficits, it is likely that the money will run out sooner.

The Treasury secretary has asked Congress to play nice and simply raise the debt ceiling to avoid the financial market panic that could occur if the United States should look to default. In days gone by, after a long evening of Kabuki, the deed would be done. But today, with many Republicans pledging never to increase the debt ceiling, and no Democrats disposed to help him out, the Treasury secretary is likely to stew in his own juice for a while. With the president boasting that he would pay off the entire debt in eight years, the chances of bipartisan cooperation are slim indeed.

What was once taken for granted is not certain anymore, as “must pass” legislation need not pass, at least not on time and not without high drama. But sadly, high drama in the economy is not good for the United States. We can only hope that high drama does not turn into horror this year.

Joseph J. Minarik (@JoeMinarik) is senior vice president at the Committee for Economic Development. He served as chief economist at the Office of Management and Budget under President Clinton and is the coauthor of “Sustaining Capitalism: Bipartisan Solutions to Restore Trust & Prosperity.”