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Budget and Appropriations

Legislative Issue Update - January 2008

Budget [updated January 2008]:

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 passed all of the appropriations bills by October 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.

In January 2007, the new Democrat Congressional majority promised to move the budget and appropriations process more efficiently than had their Republican predecessors, and at least in terms of the budget they succeeded, enacting a final Budget Resolution in May, 2007. While the process was commendable, the content was less so.

The final FY 2008 Budget called for a 9% increase in discretionary Federal spending -- $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 was more than $200 billion. These proposed increases set the stage for a long and contentious spending battle throughout 2007.

Appropriations and Earmarks [updated January 2008]

While the Budget Resolution sets the stage for the spending war each year, the actual battles are carried out over the individual appropriations bills which determine not how much money will be spent, but how it will be spent. These bills not only fund the departments and agencies of the Federal government, they also fund the individual spending requests, or “earmarks,” of Members of Congress. The allocation of money to fund these earmarks gives the Appropriations Committee Chairmen so much power in Congress that they are referred to – not with affection – as the “Cardinals.” But the power of the Cardinals was challenged last year.

The number and scope of Congressional earmarks grew so dramatically over the last decade that an angry voting public tossed from power in 2006 the Republican majority which had controlled Congress while the use of earmarks exploded. In 2007, Senate and House Republicans, stung by their defeat at the polls in 2006 and aware that spending and earmark excesses were in part responsible, fought for serious earmark reform in the 110th Congress.

Wrap-up of Fiscal 2008 Actions [added January 2008]

The battle lines drawn in early 2007 set the stage for a year-long debate over spending and earmarks. Throughout the Session, the President insisted that Congress spend only the amount of money that the Administration had called for and threatened to veto spending bills that exceeded his spending requests. Most Republicans in Congress supported the President and promised to uphold his vetoes. Republican reformers in Congress often created legislative “gridlock” in their effort to expose and eliminate earmarks in the appropriations bills.

Despite their promise to handle the spending issues more efficiently than had the Republicans over the previous decade, the Democrat majority ended the First Session of the 110th Congress in virtually the same place. They were able to send to the President for his signature only one of the 12 individual appropriations bills, and had to pass a series of “continuing resolutions” to keep the government funded long past the end of the fiscal year.

Finally, as Christmas approached, the Democratic Majority gave up trying to pass the individual appropriations bills and agreed to a single “omnibus appropriations” bill with a spending level acceptable to the President and the Republican Congressional minority. Worse still for the Democrats, they were forced to agree to the President’s request for new funding for the troops in Iraq without the restrictions or withdrawal time-table demanded by their vocal anti-war constituents. The House finally passed the legislation on December 19th, almost three months into the new Federal fiscal year.

Although Republicans achieved victory on the battle over spending levels, the fight for earmark reform was not as successful. The reform advocates succeeded in removing a number of high-profile and controversial earmarks, but the final omnibus bill still contained more than 9,000 such designations. Reformers fought with their own GOP leadership over the issue, threatened to try to defeat the final bill, and urged the President to veto it. While criticizing the earmarks, President Bush signed the final bill on December 26th.

A Look Ahead to Fiscal Year 2009 [added January 2008]

The President’s signature on the FY 2008 Omnibus Appropriations bill both closed the book on last year and set the stage for the Fiscal Year 2009 debate. Critical of the earmarks in the final bill, the President instructed his Director of the Office of Management and Budget to determine if there are actions the Administration can take to deal with them. Conservatives in Congress have urged the President to instruct his Cabinet members to ignore the earmarks – to refuse to spend the money as directed by Congress. Should the Administration take that action, it would prompt a show-down with Congress over Legislative versus Executive authority. Should he decide not to attempt to reverse the earmarks by Executive action, the President could send to the Congress a list of spending items that he opposes and ask Congress to rescind or repeal that funding, but Congress would not have to act on that request, and would almost certainly not do so.

The debate over earmarks and wasteful spending will continue in “Groundhog Day” fashion as – 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 passed the 12 separate appropriations bills by the end of the fiscal year on September 30th.