10 reasons why the next budget debate will be a doozy
Maybe it should be a trillion reasons. But budget guru Stan Collender paints a picture of the future:
But regardless of who is to blame for the deficit, there’s no doubt that it’s Obama’s responsibility to deal with it. That leads to the most important result of the mid-session reviews: it’s now far more likely that the fiscal 2011 budget debate, which will start next year when the president submits his budget to Congress in late January or early February, will be among the most difficult, vicious, and painful of any that has taken place in the past 30 years.
1. It will be an election year
2. Partisanship in Washington is much stronger now than it was during any of the previously budget figthts. This includes the Gramm-Rudman-Hollings debate in 1985 and the Clinton-Gingrich debate in the mid-1990s that resulted in government shutdowns.
3. The deficit is much larger now both nominally and as a percentage of GDP than it has been since World War II.
4. The national debt is much larger now than it was when GRH was debated and Clinton and Gingrich sparred. The much greater interest being paid on the national debt will put far more pressure on all other spending in the budget and tax increases.
5. More than 50 Blue Dog Democrats will push the White House to deal with the deficit.
6. The deficit will be a big issue for the first-term Democrats who were elected from what had been Republican districts. They will be facing what could be the toughest reelection battles of their careers and will need to show their constituents that, because of them and their party, some progress has been made on the deficit.
7. The bond market will push for deficit reductions.
8. Foreign creditors, especially the Chinese, will push for deficit reductions.
9. Some on Wall Street and elsewhere will express extreme concern about inflation and interest rates stopping the recovery in its tracks unless deficit reductions are put in place.
10. Obama, who promised deficit reductions once the economy started to recover, will be hard-pressed not to live up to that promise. He will be pressured to do so by the Blue Dogs, many of which supported the White House this year because they were told that the deficit would become a front burner.