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NAW News

Budget & Appropriations

Legislative Issue Update - October 2007

Updated June 2007

Much of the time in each Congress is taken up with the budget and appropriations process. In theory and in statute, the President submits his budget to Congress in February, both Houses of Congress pass a Budget Resolution conference report by April 15th and Congress passes the 12 separate appropriations bills by the end of the fiscal year on September 30th.

In reality, Congress has not passed all of the appropriations bills by October since 1994, and has done so only three times since 1948. And in 2002, 2004 and 2006 the Congress failed to adopt a Budget Resolution altogether, thus allowing the appropriations bills to be considered without the fiscal discipline that a Budget Resolution is intended to provide.

The new Democrat Congressional majority promised to move the budget and appropriations process more efficiently than their predecessors, and at least in terms of the budget, they have succeeded. The Senate passed its FY 2008 Budget Resolution on March 23rd, and the House approved its version on March 29th.

While the process is commendable, the content is less so. Both the House and the Senate versions of the budget increased discretionary spending above the level requested in the President’s budget request; both rejected the President’s recommended cuts in domestic programs; both increased levels of so-called “mandatory” spending, or entitlements. Given the similarity of the provisions in the budgets passed by each House, reconciling the differences and between them became a readily achievable goal, and a final Conference Report was agreed to on May 17th.

The final 2008 Budget calls for discretionary Federal spending next year of $954 billion – a 9% increase and $23 billion over the amount requested by the President. For the 5 years covered by the Budget, the increase in discretionary spending above the President’s request climbs to $205 billion. And although Medicare and Social Security are headed toward fiscal crisis, this Budget not only does not propose any savings in these “mandatory” spending accounts, it increases Medicare spending by $24 billion, or 6.6%.

While the new Majority in Congress gets credit for having completed the Budget process, they fell far short of achieving a viable consensus on budget and spending priorities for the coming year. Every Republican Congressman, 13 Democratic Congressmen, all but 2 Republican Senators, and the President, all opposed it. As did NAW.

The President does not sign so cannot veto the Congressional Budget, but his signature is required on the individual spending bills, and his veto is expected on several of them. Both the White House and Congress are anticipating a contentious battle when Congress sends the spending bills to the White House later this year.

And an even bigger battle looms on the tax side of the ledger: the Budget calls for massive tax increases, although Congressional leaders claim that it does not. Details on the tax implications of the Budget Resolution are in the separate Tax Staff Report.

Appropriations and Earmarks - Added June 2007

Each fiscal year, as part of the statutory Budget process, Congress is supposed to enact 12 separate appropriations bills to fund the departments and agencies of the Federal government. The Congressional Committees with jurisdiction over these spending bills are understandably powerful; so much so that the Appropriations Committee Chairmen are referred to – usually not with affection – as the Cardinals. The power of these chairmen is derived from their ability to determine how much of the taxpayers’ money will be sent to the various states and/or used to fund the individual spending requests, or earmarks, of their colleagues. But the power of the Cardinals is being challenged.

Like the Budget Resolution itself, the separate spending bills today are rarely enacted, forcing Congress to resort to “omnibus appropriations” bills, rolling several spending bills into a single huge measure; or “continuing resolutions” that maintain spending at the previous year’s level without a separate bill.

More important, the number and scope of Congressional earmarks grew so dramatically over the last decade that the taxpayers took notice, and umbrage, tossing out of power last November the Republican majority that controlled Congress while the use of earmarks exploded.

It is too early yet to tell if the new Majority will be successful in passing the individual appropriations bills by the statutory deadline of September 30th. As of this writing none have been passed by the Senate and fewer than half have been passed by the House. Congressional action on the bills will not complete the process this year, however. The President has already threatened to veto three of the House-passed bills, demanded changes in another, and let Congressional leaders know that he will veto any bill they send him which exceeds his budget spending cap. House Republicans have garnered 147 signatures – more than the one-third of the House necessary – on a letter to the President promising to uphold his vetoes. The spending battle lines are clearly drawn.

The handling of earmarks is even more dramatic. The House Republicans, stung by their defeat at the polls last year and aware that their spending and earmark excesses were in part responsible, promised to insist on implementation of the earmark reform they had enacted last September in an effort to retain their Majority. The new Democratic Majority, highly critical of Republican earmarks in the past, attempted to circumvent those reforms.

Specifically, the new House rules required that the Chairman of the Appropriations Committee, Dave Obey (D-MN), and his staff review earmarks to weed out those that were inappropriate, and that the authors of earmark requests be publicly identified. Chairman Obey, claiming that there were far too many earmarks requests for him to review in a timely manner, announced that he would not publicize the list of earmarks in appropriations bills while the bills were being considered by the House and could therefore be amended. Instead, he would publicize the earmark requests AFTER the bills had passed the House, thereby removing any opportunity to review the earmarks and offer amendments to remove them.

The Republican minority cried foul and used House rules to tie the floor up in procedural knots, preventing passage of any of the appropriations bills until earmark reforms were reinstated. The Democrat leadership capitulated, eventually agreeing to earmark reforms even tougher than those that Congress adopted last fall.

Both Congress and the White House have made it clear that they want to get the spending bills completed and avoid the government shutdown that would result if they do not succeed. How they accomplish that goal remains to be seen.