Hopes for a budget deal are waning given that the Senate is not in session this week and both chambers are intent on adjourning for the year on Dec. 13 — the same date on which the budget conference committee is tasked with striking a deal to keep the government running beyond the expiration of the current Continuing Resolution on Jan. 15.
As Joe Lieber of Washington Analysis wrote in his Washington This Week commentary, released Monday, given the constrained Dec. 13 timeline, “we doubt the ongoing budget negotiations will be able to reach a consensus.”
What’s more likely, Lieber says, is that another CR at FY13 levels ($988 billion), with sequestration reducing that figure to $967 billion, is the end result sometime in early January.
“House Republicans remain concerned that the absence of a deal prior to the winter recess will stoke both fears and, more importantly, blame, regarding another government shutdown,” Lieber said. “As such, the lower chamber may seek to pass its own CR prior to adjourning, leaving the Senate to either accept it or resume discussions” when lawmakers return on Jan. 7.
But the odds of a government shutdown are “very small,” Lieber says. “In fact, we continue to see a very benign macro ‘fiscal’ policy outlook for the markets, with little chance of another government shutdown between now and mid-December of 2014, and an even smaller probability of breaching the debt limit as the mid-March deadline approaches.”
Even if Washington Analysis’ prediction is incorrect, Lieber says, “and the government does shut down again, there would likely be an even a smaller market reaction than what occurred in October, which was itself minimal.”
The remainder of this year’s legislative session will be consumed by “more macro-level budget and policy priorities,” Lieber opines, “in addition to ongoing noise about the Affordable Care Act.”
Rep. Dave Camp, R-Mich., chairman of the House Ways and Means Committee, will also miss his self-imposed deadline of moving a tax reform bill through his committee this year, according to Wes Sheumaker on a recent blog posting on the law firm Sutherland Asbill & Brennan’s TaxReformLaw.com.
Sheumaker says that some Republicans have gone so far as to question whether a tax reform bill is even possible in 2014, “given the budget and debt ceiling fights that are expected in the coming months and the fundamental differences between the Republicans and Democrats over possible tax increases.”
Says Sheumaker: “While Rep. Camp has refused to make any prediction on timing,” he has said that he “would continue to move ahead on the bill and continue to refine it.”
Indeed, Camp expressed approval of Senate Finance Committee Chairman Max Baucus’ recently released tax reform discussion drafts, and praised Baucus for “his continued commitment to advancing tax reform forward.” Baucus’ proposal on international tax reform sets up a discussion of “how to design the equivalent of a leash to rein in the abuse of the U.S. tax system by multinational corporations,” wrote Christopher Bergin, president and publisher of Tax Analysts, in a recent blog posting. “It’s a great understatement to say that what Baucus is doing is not what the multinationals had in mind.”
Says Bergin: “When tax reform does come, and whatever it means when it gets here, U.S. multinationals will pay a price.”
It’s unclear how much Baucus, D-Mont., will impact tax reform’s progress, as he announced that he would not seek re-election in 2014. The more pressing question in Bergin’s mind is: Who will replace Baucus?
Check out Senate Finance’s Baucus Floats International Business Tax Reform Plan on ThinkAdvisor.