Congress Said to Delay Automatic Budget Cuts Until March - BloombergRepublican and Democratic congressional leaders are weighing whether to delay automatic federal spending cuts until March 2013, according to a House aide and industry officials who were briefed on the discussions...
Leaders in both chambers are discussing whether to propose a catch-all bill that would delay the automatic cuts, fund the government through March or later and temporarily extend the George W. Bush-era tax cuts and other tax laws, said the House aide and industry officials, who asked to speak on condition of anonymity.
When confronted with the possibility of having to make some tough choices, the bipartisan consensus to avoid fiscal discipline appears to be holding fast. Despite political rhetoric articulating a powerful commitment to fiscal restraint, it appears that yet again such rhetoric rings hollow. Washington still lacks the appetite for fiscal discipline and that lack of appetite is one of the few areas in which there is strong bipartisan agreement. Perennial campaign pledges to reduce the nation's budget deficits remain little more than rhetorical flourishes.
If Congress were to postpone the spending reductions/tax changes temporarily until the economy grew stronger, but put a credible plan for medium-term (5-10 year) fiscal consolidation on the table, that would be one thing. I believe that approach would probably be reasonably prudent at this time. However, no such plan is likely to be offered, much less adopted. A credible fiscal consolidation plan would include discretionary spending reductions, mandatory spending reforms (possibly starting with a macroeconomically painless increase in the Social Security eligibility age), and tax policy changes.