The deal reached at literally the final hour last Friday night between Congressional leaders and the White House is good news.
I’m relieved that a government shutdown was averted last week. It may be fashionable to make fun of Washington, DC and joke about whether anyone would really notice a difference if federal workers stayed home. But the ability to strike a compromise is important to demonstrate that our elected leaders are capable of governing despite immense policy and philosophical differences. The deal, which the Congress should finalize with votes today or tomorrow (when the latest continuing resolution, or CR, expires), also ensures that most government services will continue for the next few months, thus avoiding the potential of an unwelcome and unnecessary financial jolt that an extended shutdown could produce. Perhaps most important, the budget deal may form the basis for resolving the critical debate over extending the debt ceiling. Congress must act by mid-May to extend the ceiling or risk putting the U.S. economy and reputation at great risk. Investment advisors should be contacting their elected representatives now to help them understand that playing games with the debt ceiling would be ill-advised for investors, for the country, and for the world.
What does the new budget deal mean for the SEC? The bottom line is that the SEC did quite well. For 2011, the SEC received an increase of $74 million above its 2010 funding level. The $1.185 billion allocated to the Commission for 2011 is less than the $1.235 billion initially requested by the White House. But compared to other agencies that will experience substantial cuts, the SEC’s funding level is ample.
While this is relatively good news for the SEC, it’s no cause for popping the champagne corks. For one thing, the budget deal applies to federal fiscal year 2011. This means the funding only runs through the end of September – less than six months from now. Moreover, while the nominal increase is better than a dramatic reduction, it does not translate into enough funding that would enable the agency to make the investments that are most needed by the agency – hiring personnel and updating technology.