The Disappointing Continuing Resolution

The House of Representatives is set to vote on a continuing resolution (CR) tomorrow to fund the federal government until December 11, 2014. A CR is stop-gap measure often used when the parties and chambers cannot agree on a full-year budget.

The CR package, as presented in draft form, is disappointing. It fails to institute much-needed fiscal reforms.

  • Spending Levels: The CR keeps the level of discretionary spending constant at $1.012 trillion. Not growing the size of government is a positive step for Congress, but there are plenty of ways to cut and reform spending. As I noted recently, the sooner Congress reforms spending the better.
  • Export-Import Bank: The CR extends the Export-Import Bank’s charter until June 30, 2015. Ex-Im subsidizes exports for American companies, but at a large cost to other American firms.
  • Internet Tax Moratorium: In 1998, Congress passed a law making it illegal for federal, state, or local governments to impose taxes on internet access, such as bandwidth or email taxes. This moratorium expires on November 1, 2014. The CR extends the moratorium until December 11, 2014, but it does not permanently extend it as  previously-passed House legislation would have. This sets up an important tax fight after the congressional elections.
  • Overseas Contingency Operations: The supplemental war budget, known as the Overseas Contingency Operations (OCO) budget, provides funding for military activities in Iraq and Afghanistan. OCO funding is supposed to decrease as those activities wind-down. But this CR increases OCO above planned levels. It includes $26 billion, at an annual rate, more than the Obama Administration’s request earlier in the year. One problem with OCO funding is that it is not subject to the same federal budgetary rules and disciplines as other types of spending, which allows Congress to treat it like a slush fund.

In sum, this CR allows members to again punt on any sort of meaningful entitlement reforms or spending cuts to reduce our half trillion dollar deficit.