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THIS WEEK THE HOUSE WILL CONSIDER A BUDGET EXTENSION BILL, H.R. 2608, to provide federal funding through November 18.  Even though Fiscal Year 2012 began just days ago, H.R. 2608 is already the second stop-gap funding bill for the new fiscal year.  Disagreement with the Senate over spending levels has delayed the annual appropriations process, but House and Senate leaders appear closer to finding consensus on additional budget cuts to proceed with a full Fiscal Year 2012 spending bill.

THE SUPERCOMMITTEE IS INCHING CLOSER TO ITS NOVEMBER 23 DEADLINE.  The Committee, tasked with recommending as much as $1.5 trillion in cost savings, is required to make its recommendations by November 23, otherwise $1.2 trillion in cuts equally divided between defense spending and non-defense spending will be triggered.  Social Security, Medicaid, civilian retirement and low income assistance are exempt, while Medicare cuts cannot exceed two percent.  The next deadline for the Supercommittee is October 14—which is the date that recommendations from House and Senate committees are due.  More details are available on the Supercommittee’s website.

BIPARTISAN OPPOSITION TO AUTOMATIC DEFENSE CUTS IS STRONG, due in large part to the fact that, only within the last year, the defense budget has been cut by almost $500 billion for the next decade.  The Secretary of Defense, Leon Panetta, and Secretary of State, Hillary Clinton, have publicly stated their concerns with the threat of an additional $600 billion in defense cuts and a new analysis by the House Armed Services Committee underscores the risk to military readiness and force structure from a hollowing of the defense budget. 

THE PROSPECT OF ANOTHER $600 BILLION IN SECURITY CUTS would put defense spending at its lowest point as a percentage of federal spending since before World War II.  Some projections: the Army and Marines would shrink by 150,000 troops beyond already planned deductions; the Navy’s fleet would drop to 238 ships from the current 285, including the loss of two aircraft carrier battle groups and; aging Air Force fighter inventory would drop from 1,990 to 1,512, and bombers from 135 to 101.

JOBS ARE ALSO AT STAKE.  The defense industrial base accounts for 2.9 million jobs nationwide.  San Diego is home to a high concentration of these jobs, many of which are skilled positions needed to design and manufacture high-tech systems.  The U.S. has been steadily losing capability in this area for decades and no longer a net exporter of military technology.  We can’t risk losing even more capability than we already have.

THE TAX CODE IS ALSO UNDER THE LENS OF THE SUPERCOMMITTEE.  Taxes have become a part of the conversation over deficit reduction and job creation.  I do support closing certain tax loopholes—including those pushing American jobs overseas—but, what’s really needed is fundamental tax reform.  A comprehensive change to the tax could increase economic productivity by as much as $5 trillion, according to one Harvard economist.  Even the President’s former chief economic advisor Larry Summers stated months ago that economic growth is the most effective way to improve the nation’s budget outlook.          

TAX REFORM vs. TAX INCREASES:  Raising revenue through tax reform and raising revenue through tax increases are two separate and distinct ideas.  Under the current tax code, taxes on higher income earners are taxes on those who create jobs and, more so during today’s downturn, taxing the capital that turns the economy is problematic.  Consider this: four years after the 2003 tax cuts were implemented, unemployment declined by a third, dropping to 4.2 percent from 6.2 percent.  During the same time, federal revenue increased by 44 percent.        

THE PROSPECT OF TAX INCREASES IS STIFLING EXPANSION AND JOB CREATION, according to the National Center for Policy Analysis.  Also, a recent survey of San Diego-based small business CEOs found that 40 percent cited economic uncertainty as the most significant business issue they face.     

CHARLES SCHWAB: EVERY JOB REQUIRES AN ENTREPRENEUR.  Writing in the Wall Street Journal, Charles Schwab, founder and chairman of the Charles Schwab Corporation, highlights his own experience starting a business—doing so with four employees and a personal loan on his home.  Investing requires confidence, according to Schwab, and today’s uncertainty stemming from "new regulations and legislation is a roadblock to investment.”

THE SUPREME COURT WILL LIKELY DECIDE THE CONSTITUTIONALITY OF PRESIDENT OBAMA’S HEALTH CARE LAW.  The Supreme Court meets to commence the start of the fall session this week and its agenda is expected to include a review of the President’s health care plan and the decision by the U.S. Court of Appeals for the 11^th Circuit that Congress exceeded its power in passing the law. 

EDUCATION REFORM IS MOVING AHEAD IN CONGRESS, with the House passing my charter school reform bill by a wide bipartisan majority.  In response to a recent editorial in the San Diego Union-Tribune on education reform, I submitted a letter to the editor that ran the next day, which you can read here.

EDUCATION AND JOBS ARE A LOT ALIKE.  Washington can’t single-handedly create good schools, just like it can’t single-handedly create jobs.  What Washington can do is create an environment that fosters job growth.  And the exact same goes for education.  Read more from Sunday's edition of the Washington Post.       

FEATURED COMMENTARY.  Read my latest op-ed, as seen in the Washington Times: Smart Move: Arms for Allies.