Fiscal 2010 Budget Fight Will Make All Others Look Easy

Posted April 14, 2008 at 3:33pm

As a devoted budget person, I’m hoping the House and Senate will agree in the coming weeks on a fiscal 2009 budget resolution. The statutory deadline is today, and adopting the budget resolution within a month of that date would approximately equal what the chambers did last year. Compared to the too many years in the very recent past when Congress was unable or unwilling to adopt a budget resolution, we should all consider having one in place two years in a row a signature achievement worthy of note.

[IMGCAP(1)]But regardless of whether the resolution is adopted, this year’s budget debate essentially is already over. The economic downturn has eliminated almost all of the interest in the deficit and federal debt, and the spending and taxing decisions ahead mostly will be done outside the budget process with little regard for what a budget resolution says and does. That’s what happens when emergency appropriations are used to fund ongoing military activities, and when stimulus packages that weren’t forecast or assumed are considered necessary.

The process will also be over because few of the 2009 appropriations are expected to be enacted by the start of the fiscal year. As they typically do, the Appropriations committees will try to get as many done as possible. But the strong likelihood of a veto of everything but the Defense, Homeland Security, and military construction and Veterans Affairs bills combined with the virtual certainty that the votes won’t exist to override those vetoes will take away much of the impetus to do anything other than a continuing resolution.

Therefore, even though it’s only the middle of April, the election is about seven months away, and the next president and Congress won’t begin work for nine months or so, it’s time to start thinking about next year’s budget debate, especially because it’s going to be among the toughest in history.

The debate will start with Congress and the president dealing with the unfinished business from this year. As was the case in 2007, the continuing resolution that will likely keep the government funded through the election and into next year will probably expire in January or February. So the remaining fiscal 2009 appropriations or another CR will have to be considered.

The start of the fiscal 2010 budget debate will be delayed because, as has become standard procedure, the incoming president probably won’t have her or his budget ready by the statutory deadline of the first Monday in February. Congress could begin its deliberations without the president’s budget, but it seldom does. Even in 1995, when the newly elected House Republican majority was calling Bill Clinton’s budget “irrelevant,” Congress still waited for the White House’s plan before moving forward.

If the past is any indication, the president’s fiscal 2010 budget will be sent to Congress around March 1. Excluding the days Congress will be in recess, that will mean all of the spending and taxing decisions for the coming year will need to be made in about five months.

Until the mid-1970s, when the Congressional Budget Act changed the start of the federal fiscal year from July 1 to October 1, this is the same amount of time that was repeatedly insufficient for Congress and the president to get all of the work done on the budget. But the act also imposed new procedural requirements — like budget resolutions — that didn’t exist before. As a result, Congress will have to do more in five months next year than it had to do before, and the time will seem to be even shorter.

In other words, 17 months before it begins, it’s not hard to predict that a CR will be needed at the start of fiscal 2010.

Five months will also seem short because of the substantive budget issues Congress and the president will have to deal with next year. The alternative minimum tax, the expiration of the 2001 and 2003 tax changes, and continued Iraq and Afghanistan funding — any one of which could scuttle the budget debate — will all be a big part of what has to be discussed next year.

And they may not even be the most controversial discussions. Medicare solvency, something that’s been put on hold or completely avoided the past eight years, is also likely to be part of next year’s debate. The recent Social Security and Medicare trustees report projecting big problems for the program in 2019 has made it more likely that health care reform will have to be considered sooner rather than later.

There will also be some very contentious discussions about other spending. The resource problems that became obvious last week at the Federal Aviation Administration are just the latest in a steady stream of reports from public safety agencies about budget issues. This includes the Food and Drug Administration admitting it doesn’t have the resources it needs to adequately review both food and drugs, and the Centers for Disease Control and Prevention letting it be known that it didn’t have what it needs to deal with an outbreak of a highly contagious form of tuberculosis. The problems caused by the limited resources provided to military hospitals like Walter Reed and the increasing concern about the ability of veterans’ hospitals to provide adequate care to a growing population will also be on the budget agenda.

And if the economy is recovering, reducing the deficit, which could easily reach the politically sensitive benchmark of $500 billion in 2009, almost certainly will be considered.

That’s why it’s generous to refer to next year’s budget debate as “difficult.” A more accurate description would be “downright ugly.”

Stan Collender is managing director at Qorvis Communications and author of “The Guide to the Federal Budget.” His blog is Capital Gains and Games.