Audio Transcript

From Bankrate.com, This is Your Money This Week.
We connect the dots between what’s happening in the world and your wallet.
I’m Mark Hamrick reporting from Washington.

Deja vu all over again in Washington.
A looming series of budget deadlines is fast approaching.
Didn’t we just go through this? We’ll we did, but as you remember, all that the Congress and president were able to muster was to hit the snooze button on the budget and debt ceiling deadlines. We’ll talk with one of the top experts on how your dollars are spent by Uncle Sam and whether there’s any reason for a better breakthrough as the next deadlines loom. And we’ll hear how one deadline may not be quite as pressing as we’ve been led to believe.

Bankrate’s Doug Whiteman tells us why insurers are concerned about the quality of the roof on your house.

All of that and more coming up on Your Money, This Week.

Maybe all you need to know about how well Stan Collender is regarded on federal budget issues is to look at his Twitter handle, which is @TheBudgetGuy.

He’s also the national director of financial communications for Qorvis in Washington, D.C.

It’s a great time to chat with Stan because we now have less than a month before the next deadline involving the federal budget. That’s when a bipartisan group of lawmakers comprising the budget conference committee is asked to come up with an agreement on a long-term budget. That deadline is Dec. 13.
After that, the government is funded only through Jan. 15, and a debt ceiling was lifted only through Feb. 7.

I asked Stan first whether he was optimistic the budget conferees will have anything to show for their efforts.

Stan Collender: Actually, I am extremely pessimistic about the possibility the conferees are going to come up with anything, for a variety of reasons. Number one, there is no sword of Damocles hanging over their head. That is, if they don’t come up with an agreement by December 13th nothing happens. The government doesn’t shut down the next day. The sequesters don’t occur. We don’t have a debt ceiling problem. They just sail. In that respect, I expect them to follow on the heels of the super committee and fail just as miserably. But even the process is likely not to do well simply because you have 29 members of Congress sitting in a room trying to decide something. Twenty-nine members of Congress sitting in a room couldn’t decide what to order for lunch.

Interviewer: Right. That is kind of where we are with Congress these days. It is particularly sad, in a way, isn’t it? This is really what they are supposed to be doing all along is coming up with a budget that actually is a spending blueprint for an entire year.

Stan Collender: Yes. That is what they are supposed to be doing. Washington changed a lot since I first came here 35, 40 years ago. Back then you came to Washington to compromise. To come up with a consensus. To agree on something. Now, agreeing is not necessarily what you come to Washington to do. You come to Washington to get re-elected. For many people that means not agreeing on anything. Because compromise is considered collaborating with the enemy.

Interviewer: Yes. And obviously, as you indicate there, whether the system has changed or the people have changed or some combination thereof it seems very hard to get actual success in the Congress these days. Do you have any feeling about why it is so hard or why those changes you just described have taken place?

Stan Collender: It is a variety. It is no one thing. It has to do with the redistricting that took place in 2012 that created all these heavily partisan one-party districts. About 90 percent of all  congressional districts essentially are one-party and that means instead of trying to compromise to appeal to a broader group of people you are basically trying to appeal to a very narrow folks who vote in primaries. Then you got the rise of independent candidates. I don’t mean independent political parties. It used to be 30, 40 years ago that members of Congress were heavily dependent on the Democratic or Republican Party for fundraising. Now the Democratic/Republican parties are heavily dependent on individual members. And that gives them the real power. They don’t have to compromise with anybody because there is no threat they won’t get the funds they need. They are doing it all on their own. You put all that together with an increasingly hyper partisanship group of voters and you get a situation that is tailor-made for no compromising. Absolutely no compromising at all.

Interviewer: The individual has become essentially more capable than the larger bodies themselves — particularly, as it relates to fundraising as you describe it.

Stan Collender: The best way to think about this is instead of having two political parties in the House you have 435. That is each member of Congress is his or her own political party and they are running their own campaign, funding their own campaign, and the Democratic party, the Republican party is beholden to this group of 435 rather than the other way around.

Interviewer: Stan, the other thing we are looking at coming up is a budget deadline around the 15th of January. That is the deadline that has to do with how long the government is funded. The following one is the debt ceiling through the 7th of February. Let’s talk about the funding issue. Of course, at the beginning of October we had a partial government shutdown because lawmakers on, dare we say, both sides were not able to come to an agreement. Do you think that they will avoid a problem like this next time around?

Stan Collender: The common wisdom is that the political baggage, the political fallout was so bad for this last shutdown that everybody, in this case mostly Republicans, will do anything possible to avoid it. That is probably right, but it is not guaranteed. In fact, just the opposite. When you think about what the shutdown was about — it was about making Obamacare the issue — there were a lot of folks who wanted to make it an issue the first time who were going to say, you know what — we are goingwhen  to go after Obamacare in January when it may not still be fixed or the residual bad feelings will be the highest. Rather than waiting until June, July or August to go after it again when a lot of the problems will be fixed and a lot of the issue will have died down. I don’t think there is more than a 33 percent chance we will get a shutdown again.  But it is not inconceivable that it will happen again in January or will be threatened at least.

Interviewer: As we know from the last couple of times that we have had this become an issue the debt ceiling – raising the debt ceiling – has been something that has been done time and time again for decades now under both Democratic and Republican presidents. Obviously, we dodged that bullet, if not calamity, this last time around. Do you think the Republicans still feel that is something they need to use as a threat?

Stan Collender: I think for a lot of them, particularly the tea party folks, it is something that they will always use as a threat because they are never going to vote for it anyway. It doesn’t make any difference what they attach to it or don’t attach to it. Voting to increase the debt ceiling is something that is anathema to tea party supporters and they are not going to vote for it.

Here’s the big thing this time though: February 7th is not really the drop-dead date for the debt ceiling. That is the date technically by which it should be raised. But if not the Treasury will start using its cash management techniques, what we call extraordinary measures. And it will have probably four to six weeks at that point before the debt ceiling absolutely has to be raised. And this is important — if the government’s cash flow improves – that is if the spending slows down a little bit in February and March and revenues come in a little bit faster than anticipated and the Treasury can use its cash management techniques all the way through the beginning of April it may not really have to raise the debt ceiling until late May or early June simply because individual tax payments are due in April and the government’s cash coffers go up quite substantially. There is a chance the debt ceiling might not be much of a weapon all the way through the beginning of the summer.

Interviewer: Of course, last time around we had some guidance from the secretary of the Treasury who essentially said what the deadline was. I suppose as we get closer to early February he may have more to say about that, right?

Stan Collender: Right. But what he was basically saying, this is Jack Lew the Treasury Secretary, was saying is that we would default the next day. That was December 13 or 17th – I mean October. But the ability to use cash management techniques would end on that particular day and they have to operate strictly out of cash flow which he said would be perilously low at that point. We do have to wait for some pronouncement from the Treasury. As I said, I think they will be able to get through at least the beginning or middle of March, perhaps beyond. In which case maybe not until June will be the real deadline.

Interviewer: Thanks, Stan. Thanks for shedding so much excellent light on these complicated subjects. It is always great to catch up with you.

Stan Collender: Thanks. Take care.

Stan Collender, National Director of Financial Communications for Qorvis in Washington.
And he Tweets under @thebudgetguy.

Next up, Bankrate’s Doug Whiteman, our expert on all things insurance.
He’s taken a look at your roof and wonders aloud, how well you are really covered.

You could say your roof is a top concern for your home insurance company.

The roof is your home’s first line of defense against wind, hail, wildfires and other hazard, and once it’s breached it can be a gateway to much greater damage. Insurers will price your homeowners policy based on the soundness of your roof and what it would cost to replace it. The roofing materials you choose can impact your premium. For example, clay tile is expensive and may result in a higher rate. Slate can add to your coverage costs, too, because it can be pricey, and insurers will want to see that your roof can support the extra weight of slate. Asphalt shingles are a more economical option, and their relatively light weight is preferable in earthquake zones. In areas where fires are common, insurers may not even give you a policy if your roof is made of wood shakes, which are chunky shingles.

For more on roof types and their home insurance impacts, visit Bankrate.com. I’m Doug Whiteman.

Finally, our look at this week in business history …

We go back to a moment in the evolution of technology.
It was November 18, 1963 — 50 years ago — that the first electronic push-button phone system touch-tone dialing, similar to what we use today, was rolled out by by Bell Telephone customers in Pennsylvania.

Some of us can remember when one could only dial the telephone before push buttons and then virtual buttons became part of today’s smartphones.

You’ve been listening to Your Money, This Week.
Our thanks to this week’s guest, Stan Collender.

If you enjoyed the podcast please check us out on iTunes and rate and subscribe to the program.

We’re hoping you can help us get the word out. Also check out our other podcast, Special Report, with breaking news and special features.

For more on this and other personal finance issues, visit Bankrate.com. And you can follow us on Twitter @bankrate, and I’m at @hamrickisms.

Thanks to Producer Lucas Wysocki, for his terrific work in the studio.
I’m Mark Hamrick. From all of us here at Bankrate, here’s hoping you have a great week.