Funding

The surprising thing is not that the federal government has shut down. It would have been surprising if it did not. Each side thinks it has the cards and that it has put the other in a bad position. The result is that the budget feud could last for months, ending with a temporary armistice that satisfies no one. There is little incentive for either side to shut down the shutdown. Washington Post columnist Paul Kane notes that most Senators have little reason to compromise: “very few senators feel the political pressure that usually comes with calamitous events like a federal agency shutdown. Most sit in safe seats, many with reelection campaigns a distant concern.

It’s almost spring, and you know what that means: buds popping on the trees, birds chirping as the days grow longer, and the president introducing a budget that will be quickly forgotten. And so it's happened. But there have been a few interesting twists that could make this budget season more interesting than most. President Biden wrote an op-ed for the Wednesday New York Times presenting his plan to “extend Medicare for another generation.” The piece was largely predictable: calls to raise taxes on the wealthy as a way “to increase the program’s solvency by twenty-five years.” While some fiscal conservatives welcomed the president’s willingness to raise the issue of Medicare solvency, his ideas are largely dead on arrival for Republicans.

The Biden administration’s latest $3.5 trillion spending proposal continues to attract attention. With a hodgepodge of Democratic priorities ranging from climate change to Medicare expansion, the bill is the more partisan companion of the administration’s $1 trillion infrastructure plan. Of course, another blockbuster story has been distracting attention from these packages — the difficult withdrawal from Afghanistan. Many in Congress continue to be critical of the administration’s handling of the pullout, and some are determined to use the crisis to their political advantage.

Covid has doomed the public finances — not just because the cost of mitigating it has been high in itself but because it has normalised high public spending. When you have just allocated £37 billion to Test and Trace and spend £54 billion on the furlough scheme, a £106 billion high-speed railway to Manchester and Leeds looks relatively good value — at least taxpayers will have something lasting for their money. And who would even notice if the budget for that railway quietly crept up by a further £1.7 billion? That is exactly what has happened today. The construction costs of the first phase of the railway, from London to Birmingham, have apparently been increased by social distancing.