StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between

Continuing Resolutions: Are We There Yet?

05 Mar 2011
Posted by Pete Davis

No! We're not there yet. We're not even sure where there is yet.  The NFL talks are going better.

So far, for the whopping price of $4.1 billion of easy pickings, $2.7 billion of Administration proposals that had no chance of enactment anyway plus $1.7 billion of earmarks, we funded two more weeks of FY11.  Wait a minute.  That's last year's budget.

Right.  We still don't have a budget for FY11, which we are more than five months into.  No budget resolution passed Congress last year, and no regular appropriations did either.  The only FY11 appropriations have been continuing resolutions and a supplemental.

So what about the FY12 budget?  President Obama presented his FY12 Budget a week late, partly because Jack Lew's confirmation as OMB Director was held hostage to speeding up Gulf drilling permits.  That pushed back CBO's Analysis of the Presidents Budget, until the end of March or early April.  That usually produces the baseline the Budget Committees use, but there's no way to produce a baseline anyway because no one can say what FY11 will be.  Therefore, the Budget Committees won't produce budget resolutions until mid-April at the earliest or May.  That won't matter too much because there's little chance the House and Senate could agree to a joint resolution.  If each house passes its own budget resolution that would be enough to launch the appropriations process.  If not, each house will probably pass a "deeming resolution" to set the overall level of discretionary spending for the appropriations process.  In the end, without a joint budget resolution, it will be very difficult to enact any appropriations, because each bill will look very different than the one that passed the other house, if any bills pass.

What to do?  Every government department and agency has developed very detailed plans for shutting down, although many face the impossible task cutting their budgets more than the law allows because it takes eight months to lay off a federal employee.  There aren't eight months left in FY11.  So, if the House passed H.R.1 became law, many administration officials would be forced to violate the Antideficiency Act, which says no money can be spent without an appropriation. That's OK, although minor violations occur all the time, no one has ever gone to jail yet for violating the Antideficiency Act. Besides, the Senate won't take up H.R.1, and President Obama would veto it anyway. That's OK because House Republican leaders say they won't force a government shutdown or allow default on the federal debt by failing to raise the debt limit, which will be reached in May. Here we have a game of chicken without any chicken.

So with no FY11 appropriations beyond midnight, March 18, no budget baseline, no prospect for a budget resolution until May, and the only way to avoid a government shutdown or default on our debt is to do something, what is that something? "Kick the can down the road" is one option.  Just pass another 2-week CR.  Start passing 2-week debt limit increases.  Ah, but that may not be good enough for most of the 87 Republican House freshmen.  They may balk at playing that game. They'll demand more spending cuts and budget process reforms and may a constitutional balanced budget amendment as their price for a long-term budget deal or debt limit increase.  Now we're talking about a game of chicken because Senate Democrats and President Obama will balk at spending cuts that large or budget process reforms that can't be enforced.

Senate Budget Chair Kent Conrad (D-ND) has called for a budget summit as in 1990 at Andrews Air Force Base.  Get all the principals in the room, including the President, and lock the door until they agree.  Republicans don't look back too fondly on the 1990 result, which included substantial tax increases that got President George H.W. Bush unelected in 1992.  The whole point of failing to resolve today's budget impasse is to avoid getting unelected.

What to do? The"Gang of Six" senators who served on the President's Fiscal Responsibility and Reform Commission continue to meet behind the scenes, hoping to come up with a bipartisan compromise.  The Commission's recommendations were forthright and full of politically dangerous ideas, like cutting Medicare, raising the Social Security retirement age and getting rid of tax expenditures, i.e. raising taxes.  By taking on entitlements and taxes, the largest sources of potential deficit reduction, they showed the way.  However, no one is following, at least so far.  Hopefully, the "Gang of Six" senators can reach agreement, but my sources aren't encouraging yet.  Even if they do agree, it's likely to be on broad principles, not on specifics that might kill reelection chances.

Are we there yet?  No!  When will we get there?  Not until we get some strong bipartisan political leadership that can get the public behind some very tough budgetary choices.  It took baby steps like we're seeing now in the mid-1980s to get to the tough choices that were made at the 1990 Budget Summit and again in 1993 before we reached balance in FY98, and it will probably take at least that long this time.  By the way, the deficits are a lot larger this time.  We won't get there without electing more new members of Congress from both parties with enough backbone to make the hard choices to secure a reasonable economic future for our kids.

So apparently Congress does

So apparently Congress does not need to pass a budget.

If they do not need to pass one this year, why would they be expected to pass one next year or any year thereafter?

A sorry state of affairs. . .

I don't entirely get this....

Agreed re electing DC representatives who actually LEAD (what a concept), and can communicate and compromise with representatives, including those in their party, as well as the other party, and can come to decisions fast (also apparently missing in DC currently). I got that part - but it sounds like the Federal Gov't has essentially shut down already, because it hasn't been funded for months, it's just gone on - surprise! like the emperor who has no clothes. OK, as a simple person, I can kind of get that part too. But what I think I'm hearing you say is the body has already been shot, it's dead, and for some reason it hasn't fallen yet. Did I miss something? Does something happen now, where there's either a federal government default [which from what you've said it sounds like has already occurred, they're just faking it], or Obama+Republicans wave some kind of magic wand? I know there's a debt ceiling that they can raise, but it sounds like the federal government has been operating for months without approved funds ???? I guess we can all be grateful (maybe) that there are problems in the rest of the world that are diverting people from the mess in the US.

How can you commend the

How can you commend the President's Fiscal Responsibility and Reform Commission's recommendations on Social Security. They proposed "means testing" but defined "means" as anyone receiving more than $1000 a month in Social Security benefits. How can you defend that? Right now the highest marginal taxes are paid by retirees who have retired at full age but must work part-time to supplement their income. As a part time self-employed retiree with a total income of $60,000 per year I pay a marginal federal income tax rate of 59%. If I were wealthy, that would not be tolerable; but inasmuch as I am a middle-class retiree, I am fair game.

How does the public support

How does the public support spending reduction? The public supports TAXING THE RICH. Yes – poll after poll show this. The public supports protecting the social safety net. The public supports funding our schools, protecting our environment, social security, medicare, consumer protection, regulating Wall St.The public wants JOBS. The notion that the public supports the Republican JOB-KILLING budget cuts is B.S.The public will be out in the street opposing the Republican assault on the Middle Class. From the Middle East to the MidWest – to all of Middle Class America – you will see opposition to the Richest of the Rich running roughshod over the rest of us.

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