Lately, Americans have been distracted by the ferocious debate in Congress centered on funding the federal government through the remainder of the 2011 fiscal year (ending on Oct. 1), as well as reducing the deficit. Earlier this month, the parties finally came to an agreement on a package to fund the government for the next six months. This agreement was immediately followed by two proposals addressing how to rein in the ballooning deficit. The House Budget Committee, led by Representative Paul Ryan (R-Wis.), released its “Path to Prosperity” plan that would cut $6.2 trillion in spending from the president’s 2012 budget over the next 10 years. President Obama announced his own deficit reduction plan that promises $4 trillion in cuts over the next 12 years. Then came the alarming decision from Standard & Poor’s, to downgrade its outlook on U.S. Treasuries from “stable” to “negative.” This decision was based on the agency’s perception that deep political divisions in Congress would keep both parties from agreeing to a deficit reduction plan by the 2012 elections.

In the near future, Congress must also decide on two big issues that had been sidelined: a vote on whether to raise the federal debt ceiling, set to hit its limit by May 16 and a debate and vote on the 2012 federal budget. As Congress grapples with these major decisions, how can we best help our clients weather the budget storm?

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