Director’s Desk

Kenneth Gold | January 9, 2015

A major decision point facing the 114th Congress will be how to deal with federal spending beyond the end of the current fiscal year.  The December 2013 Ryan-Murray agreement raised baseline discretionary spending by about $9 billion per year for FY14 and 15, but expires at the end of the year.  Unless Congress and the President agree on a new spending plan, discretionary spending will revert to the tighter caps set by the 2011 Budget Control Act through FY21.

Annual deficits have been cut dramatically since the record $1.4 trillion deficit in FY09, to only $486 billion. But even with the strict BCA caps in place, deficits are expected to start increasing again after next year, and are projected to add an additional $7 trillion to the current $18 trillion debt by 2024, more than doubling the percentage of the federal budget that goes to paying interest on the debt.

Although much of the near term debate in the 114th Congress will be over how to reconcile differing priorities in discretionary spending, any long-term debt solution will need to address mandatory spending, especially Social Security and Medicare, as well as the revenue side of the equation.  One ray of hope suggests that the 114th Congress, with Republicans firmly in charge of Congress, and a Democrat in the White House, may be better positioned to make the difficult choices that need to be made to solve the long term fiscal crisis (see Josh’s article in this newsletter).

We’ll be looking closely at the budget and other issues critical to the federal departments and agencies in our upcoming New Congress class on Capitol Hill.  I hope to see many of you there.

Ken Gold is director of the Government Affairs Institute

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