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August 02
Congress Set to Adjourn with Major Fiscal Matters Unresolved

With Congress set to adjourn for its annual August recess, major work on budget and appropriations matters remains undone. The end of the current federal fiscal year on September 30 will leave legislators with roughly three weeks, post-recess, to agree on FY2014 appropriations levels. Such an agreement seems unlikely at the current juncture given the fact that House and Senate appropriators continue to operate under overall FY2014 spending levels that are roughly $91 billion apart, with the House at $967 billion and the Senate at $1.058 trillion. Further complicating matters is the Treasury Department’s statement that Congress will need to raise the debt ceiling “sometime after Labor Day” to avoid sending the U.S. into default on its obligations.

Despite this prevailing sense of uncertainty regarding appropriations and budgetary matters, some key players made efforts before leaving for recess to work towards an elusive “Grand Bargain” that would bring down annual deficits while stabilizing the national debt to GDP ratio at a sustainable level. President Obama travelled to Capitol Hill on July 31 to meet with Congressional Democrats behind closed doors, and other top White House officials, including Chief of Staff Denis McDonough, reportedly held meetings with various Republican Senators.

On July 30, the President delivered a speech in Chattanooga, TN, which outlined his latest “Grand Bargain” offer. It includes reducing some corporate taxes paired with increased investments in infrastructure and raises to the minimum wage. The proposals were widely panned by Congressional Republicans. While the President’s specific ideas do not appear to have gained traction on the Hill, they may suggest the components that any “Grand Bargain” would need to incorporate: tax reform, entitlement reform and some reordering of discretionary spending priorities – both domestic and defense – if not an outright repeal of sequestration.

These components of a “Grand Bargain” constitute a “triple threat” for counties: tax reform puts tax exemptions for municipal bonds and state and local taxes at risk; entitlement reform puts Medicaid at risk and reordering discretionary spending priorities puts county programs at risk. NACo has led efforts to emphasize the important interests of counties in appropriations and budget discussions and will continue to monitor such developments.

Contact: Paul Beddoe 202.942.4234


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