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Thursday September 18, 2014

Washington News

Washington Hotline

Reasonable Compromise or Grand Bargain?

Leaders of the House and Senate continue to focus on the government shutdown. Both the House and the Senate have passed their versions of bills that would reopen the government. However, the House bill includes provisions on the Affordable Care Act that are not acceptable to the Senate.

The House and Senate bills do agree on the proposed level of discretionary spending. The 2014 fiscal year discretionary spending budget follows the sequestration limit of $986 billion.

Majority Leader Harry Reid (D-NV) sent a letter to Speaker John Boehner (R-OH) with an offer that he called a "sensible, reasonable compromise." He proposed that Boehner "allow this joint resolution to pass, reopening the government. And I commit to name conferees to a budget conference as soon as the government reopens."

House Ways and Means Chair Dave Camp (R-MI) discussed the situation with reporters on October 3. He suggested that both the government shutdown and the forthcoming debt limit negotiations could now be joined together. He hopes that a fiscal agreement could include both a budget for this year and an increase in the debt limit.

Treasury Secretary Jacob Lew continues to report that the internal borrowing process of the government will run out of funds by October 17. This deadline is now rapidly approaching and several members of Congress join Chairman Camp in the hope that both issues can be resolved at one time.

Ways and Means Member Charles Boustany, Jr. (R-LA) suggests that the two issues should be resolved together. He stated, "This fight has been brewing for three years. It's time to have it and let's see if we can get to a deal where we actually put us back on a path towards fiscal sanity and we get real tax reform out of it."

Boustany was expressing the hope that there would be a combination of a budget agreement, an increase in the debt limit and a "fast track" process for tax reform. This combination agreement has been called the "grand bargain" and would resolve many of the fiscal and tax issues facing the nation.

Editor's Note: In 2011 and at the end of 2012, previous action on the debt ceiling and the fiscal cliff occurred at the last minute. It now is quite possible that the agreement on both the budget and the debt ceiling will be very close to the October 17 deadline set by Treasury Secretary Lew. The Founding Fathers purposefully created a system to encourage the House, Senate and White House to create compromise solutions. While budget and taxes are likely to be part of this compromise, it will be difficult to complete the full "grand bargain" on this time schedule. However, there may be several steps forward toward that agreement by the middle of October.

Published October 4, 2013

Previous Articles

House and Senate Strive to Avoid Shutdown

Baucus Chooses Tax Reform, Not Extenders

Simpler Taxes in Memphis

Affordable Care Act (ACA) Premium Tax Credits

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