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No Reason to Get Snarky About Delayed Mid-Session Review

The fury expressed by some over the White House’s decision to delay the release of the mid-session budget review until August was (and I’m being extremely kind) amusing.

[IMGCAP(1)]The agita the decision supposedly caused is very hard to believe given that the mid-session review has hardly ever been of much interest to anyone but the most extreme budget wonks. In most years the report has seldom merited more than a quick mention. The idea that this year’s mid-session review suddenly is of monumental importance is laughable; the implication that the announced delay is a national scandal is preposterous.

The numbers in the mid-session budget review and the president’s budget often are not that different because they’re released relatively close to each other and little happens in between. The time between the release of the budget and the mid-session review is only five to six months, and during that time two Congressional recesses usually occur. This is also the period when the legislative process typically is just getting under way and almost no legislation is adopted in final form that changes the budget outlook.

This is especially the case in a transition year like this one when the president’s budget typically is sent to Congress after the statutory deadline. This year the final details of the budget weren’t known until almost May and that made it even less likely the mid-session review would produce numbers that were that different.

In addition, House and Senate committees begin work late in the years after an election because their members often are not selected until the end of January or early February. This means the results of the coming year’s appropriations fights are not yet final and likely won’t affect the mid-session’s estimates. Most major policy changes — like health care reform — take far more than six months to enact, so changes from what the president proposed also are not always included in the mid-session report. Finally, many of the most costly natural disasters (hurricanes, for example) often occur after the mid-session review has been released so the tax cuts and spending increases enacted to deal with them aren’t yet known.

Finally, presidents don’t always make big changes in the mid-session review even when they should. In the face of very clear signals and even outright decisions from Congress that one or more proposals included in the president’s budget won’t be considered, will be revised substantially, or will be rejected outright, administrations sometimes decide to stick to their guns in the mid-session report and refuse to admit they won’t get what they requested.

This type of budget behavior is not just typical of presidential administrations. In the early 1970s when it was required to adopt two budget resolutions each year, Congress typically didn’t change the deficit outlook from the first to the second even when it was clear that what originally had been assumed was no longer correct.

Like everything else in Washington, political considerations are always part of the reason anything is done even (or perhaps especially) in a numbers-oriented world like the budget. For example, a decision by an administration to assume in the mid-session that a major policy proposal will be enacted in the face of clear evidence to the contrary could be an attempt by a White House not to admit failure or look ineffective. Similarly, a decision to delay the mid-session review, which has happened many times in the past decade alone, could be an effort to wait until Congress and much of the media that covers budget issues are away on vacation so the release generates less of a response. A decision to delay the release could also be a plan to wait until the House and Senate have acted on something so that the administration’s assumptions seem more reasonable.

The Obama administration’s decision to delay the release of this year’s mid-session review was already public when the White House made it official a week or so ago. (Office of Management and Budget Director Peter Orszag actually let it be known back in June.) But because of all of the Sturm und Drang surrounding the official notification, I thought it might be useful to provide a quick mid-session budget review of my own to tide over all those who expressed such ridiculous indignation.

The 2009 deficit is going to be slightly higher, slightly lower or just about the same as the one the Obama administration projected in the initial budget it sent to Congress in February and the detailed budget it sent in May. There are two reasons. First, most of the legislation that has been enacted so far has been similar to what the White House wanted. Second, other than the projected level of unemployment for this year and next, which is certain to be revised upward, the relatively optimistic original Obama economic forecast seems less of a reach now than it was when it was first released. In fact, several recent analyses by prominent economists have said in the past few weeks that it may be right on target.

In addition, all those who think the projected deficit is going to jump substantially from the original estimates may be disappointed because the administration included the cost of a substantial additional financial bailout package in its budget that it may now decide isn’t needed for economic reasons or isn’t possible for political reasons. The 2009 and 2010 savings from dropping that plan could overwhelm the additional costs of the higher-than-projected unemployment.

All of this points to a mid-session review that will be far less of an event than many over the past week or so have said it would be.

Stan Collender is a partner at Qorvis Communications and author of “The Guide to the Federal Budget.— His blog is Capital Gains and Games.