While Congress recently avoided a government shutdown by allowing the federal government to keep borrowing until March 15, 2015, five looming fundamental fiscal issues still remain unresolved, says Andy Friedman of The Washington Update.
In his Tuesday commentary, Friedman says that while Congress hastily passed legislation before leaving for the Presidents Day holiday allowing the government to borrow funds through March 15, 2015, coupled with the agreement reached last December to fund the government through Sept. 30, 2015, these actions failed to address other fiscal areas of concern.
“Some believe that the Republican agreement to extend the borrowing authority without a corresponding concession from the Democrats marks the end of the budget battles going forward,” Friedman said. “That is not my view, however.”
Although the fiscal battles “will be quiescent this year, by the time next year that the debt ceiling has to be raised and the government funded again, a new class of House Republicans – likely fortified by new Tea Party members – presumably will want to take up the cudgel again to fight for fiscal restraint.”
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Friedman says the first unresolved fiscal issue is bringing in additional tax revenue or closing tax loopholes through comprehensive tax reform.
But Friedman doesn’t see tax reform moving ahead this year. “Tax reform remains on the [congressional] agenda, but there has been no groundswell in Congress or encouragement from the administration to move forward in a serious way.”
While the Senate seems to agree with this notion, the House is reluctant to acknowledge the lack of momentum surrounding tax reform, Friedman says. Once the House embraces the idea of no comprehensive tax reform, Congress is likely to move a tax extenders bill later this year, he adds.
Indeed, the new chairman of the Senate Finance Committee, Sen. Ron Wyden, D-Ore., told Bloomberg that his priority as chairman was to get tax credits and deductions extended, as he believes there is little chance of broad tax reform in the near future.