The 118th Congress is proving to be the epitome of a do-nothing Congress. That is not necessarily a complaint given the tremendous amount of change they have made to tax and retirement laws over the last few years. The IRS likely needs a breather to catch up on writing all of those regulations.
One item that Congress cannot ignore is the federal budget. Every year on October 1 the federal government starts a new fiscal year. Some programs like Social Security, Medicare, and Medicaid are considered “mandatory” expenses and do not require annual reauthorization.
However, most government departments and agencies are considered “discretionary” expenses whose budgets must be authorized every fiscal year. If funding is not approved, these agencies cannot spend money and are, therefore, must shut down except for essential employees.
Thus far Congress has made only minimal progress in developing a budget to start October 1. Given the divided Congress, it is highly likely that this year Congress will wait until the last minute, cram everything into one giant 2,000+ page “omnibus” bill written by Congressional leaders instead of the appropriate committees.
These omnibus bills tend to attract additional non-budgetary provisions that could impact your financial plan. We will continue to monitor this closely.
Look for Congress to use several “continuing resolutions” to keep the government operating until it can find the wherewithal to do its job.
As of this writing, our federal debt totals $32,759,307,280,146.99. Ten years ago on this day it was $16,738,450,395,371.13, so it has almost doubled in the last decade. Based on current law, the Congressional Budget Office estimates that the federal debt will grow by $20,000,000,000,000 over the next 10 years to reach $52,000,000,000,000 in 2033. Assuming a 3% interest rate (probably low), the annual interest on that debt will cost us $1,560,000,000,000 every single year.
