POLICIES FOR THE NEXT ADMINISTRATION. PART 8: FEDERAL BUDGET
This is the eighth in a series on the major policy ideas — from Left and Right — that should guide the next presidential administration’s agenda. (For the opposing view, see James C. Capretta, “Fiscal Policy After the Election.“)
Hillary Clinton’s agenda of investing in people and infrastructure is an important step to righting America’s economic ship. And, to her credit, her agenda is generally offset by proposals to close tax loopholes and tax hikes on higher income individuals. But it is very unlikely that Congress will sign on to over a trillion in new spending to be paid for solely with new taxes and a small increase in the deficit, even if Democrats somehow regain control not only of the Senate, but also the House. That’s why, if elected, Mrs. Clinton will need to embrace the moment and work to enact a comprehensive deficit reduction package (including tax and entitlement reform) that will create the “fiscal space” for her investment agenda.
Fortunately, once this election is over, the fiscal policy debate is likely to reignite and get a lot hotter, creating a window for a big budget deal that could also serve as a vehicle for her policy agenda. The continuing resolution keeping the federal government open will expire in early December, likely to be followed by another short-term extension to get the government through the Inauguration. In February, the new president will submit the administration’s annual budget for 2018. Then comes March and the expiration date for the debt-ceiling deal cut in 2015. Finally, come October 1 2017, sequestration will rear its ugly head again when the two-year budget cap increase runs out.
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