Happy Fiscal New Year?

Sep 28, 2012

UPDATE (10/1/2012):

Listen to Vice President of Research Susan Tanaka's interview with SiriusXM's "The Morning Briefing" on October 1st, 2012 (the beginning of Fiscal Year 2013):

October 1 marks the beginning of a new fiscal year for the U.S. Government, although there may not be much to celebrate. Here's where things stand:

  • Fiscal Year 2012 was full of bickering, gridlock, and precious little action on even the most immediate of fiscal concerns — let alone the long term.
  • The bipartisan congressional "supercommittee" announced on November 21, 2011 that it failed to formulate a plan for deficit reduction.
  • For the third year in a row, Congress did not adopt a budget resolution. In the 38 years since the budgeting process was overhauled, there have only been seven years that Congress failed to agree upon a budget resolution. While a new budget resolution is not required for Congress to appropriate money, it does establish an important blueprint to guide congressional action on fiscal matters.
  • Congress passed none of the appropriations bills for Fiscal Year 2013, which begins on Monday, and instead relied on an eleventh-hour continuing resolution to keep government services funded temporarily for the next six months.

Looking ahead, Fiscal Year 2013 presents substantial challenges that demand responsible behavior on the part of our leaders in Washington, D.C.

  • Unless our elected officials intervene, the country will arrive at the much-discussed "fiscal cliff" — an assortment of laws that expire or go into effect in January of 2013. The effect of these provisions would most likely be to push the economy back into recession. For more information on the fiscal cliff, please read our brief on the issue here.
  • In early 2013 we will once again approach the debt limit, potentially sparking more of the drama that surrounded this issue in 2011.
  • Baby Boomers will continue to retire in significant numbers, with the Social Security Administration estimating an additional 1.5 million Americans will join the program in the next calendar year.

Now would be a good time for Congress and the President to make a new year's resolution: to adopt a bipartisan, grand fiscal bargain which goes into effect once the economy is stronger and sets our fiscal policy on a sustainable course for years to come.

Keeping that resolution would be worth a toast!

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