Oh Captain! My Captain! Our fearful trip is done; Our ship has weather'd every rack, the prize we sought is won; The port is near, the bells I hear, the people all exulting!
Well...not quite. Although I'm sure our elected officials across the political spectrum would like to claim the glory and honor ringing through Walt Whitman's timeless prose. But unfortunately, the budget battles going on in Washington right now do not reflect a spirit of Carpe Diem. Instead of our representatives in Washington “Seizing the Day,” the Day has essentially Ceased. (Forgive us our puns, as we forgive those who pun against us.) For now, it seems that the Congressional appropriations process as we know it is stalled.
Roger M. from Brighton, MA wrote to me recently with a great deal of confusion over the debt ceiling and budget plans and how everything was fitting together in the grand machinery of our political system. The confusion is understandable, Roger. Normally, Congress would be diligently working on next year's budget right now. But this is not a normal year, so as you'll see, budget talks in Congress are not proceeding as normal.
The trouble all started back in February when the President released his budget proposal for Fiscal Year 2012 (FY2012 runs from Oct 1, 2011 to Sep 30, 2012). Now what usually happens is the President sends his budget proposal to Congress on the first Monday of every February. Congress, taking the President's proposal under advisement, passes its own Budget Resolution. A budget resolution is sort of a broad framework for deciding how money gets spent. Both the House and the Senate pass their own budget resolutions. A budget resolution essentially says “Okay, defense gets X dollars, Agriculture gets Y,” etc. Once a budget resolution is passed, the Appropriations Subcommittees in each chamber hash out the nitty-gritty details of what gets spent and where. For instance, the Defense Appropriations Subcommittee decides how to spend defense funding: so much for this type of jet, so much for that ship program, etc.
There's much more to it than that (check out our Federal Budget 101 tutorial), but I'm gonna stop here as courtesy to you because Congress hasn't even gotten this far yet. At least not the Senate. You see, the thing with budget resolutions is that they're voted upon by the House and Senate, and they provide a guiding framework for members of each Appropriations Committee to work off of. The House did actually pass a budget resolution based on Rep. Paul Ryan's plan (which, among other things, calls for a major overhaul of Medicare and making the Bush tax cuts permanent). In fact, the House Appropriations Committee is in full swing and has passed an agricultural bill and a financial services bill among others. Some of these bills have even been passed by the full House (of Representatives...not the 90s sitcom starring Dave Coulier and John Stamos).
Bravo, Lower Chamber, bravo. Even if you don't agree with the content of these bills, at least they've done something.
Unfortunately we can't say as much for our friends in the Upper Chamber. Not only has the Senate NOT passed a budget resolution, but its voted down every resolution that has been brought to the floor. Aside from the Ryan Plan, the Senate also voted down the President's Budget Proposal in a 0-97 vote — that's right, in the Democratically controlled Senate, the Democratic President's Budget didn't even get one vote. For a full run-down on this debacle, check out this great article by Sam here at NPP.
So what does this mean?
Well for one, without a budget resolution the Appropriations Committee gets to make all the budgetary decisions for the Senate. Not that there's anything particularly wrong about this, but concentrating power in the hands of a few (30 Senators) is antithetical to democracy and the founding principles of our country. And after all, what's greater than the power of the purse?
But perhaps more importantly, since the Senate is tying up the whole process, everything going on in the House is an academic exercise at this point. Both the House and the Senate have to draft and pass 12 appropriations bills. From there, the two Chambers of Congress have to reconcile the differences between their bills before they can be signed into law by the President. The House has passed several appropriations bills, the Senate has passed roughly zero.
So what's the hold up?
Enter the debt ceiling. A few months back, treasury Secretary Tim Geihtner warned that if Congress didn't raise debt ceiling (how much we're allowed to borrow) by August 2 then the U.S. would default on its debt obligations. Which would no doubt send crippling shock-waves through the global economy. However, since Congress is dominated by fiscal conservatives at the moment, the debt ceiling simply won't be raised without a commensurate deficit reduction plan. That's what the Biden Group and the Gang of Five have been trying to figure out: a long-term deficit reduction plan that will get Congress to agree to raise the debt ceiling.
So right now, everyone's waiting for that plan to emerge. Whatever plan does materialize will likely influence the budget for FY2012 (and the next nine years). So that's why the Senate isn't any rush to hammer out its appropriations bills as per usual: FY2012 will be determined by the debt ceiling deal.
The divide between the two parties in the debt ceiling debate is deeply ideological, and neither side seems willing to budge at the moment. Republicans want to see nothing but spending cuts (including security spending and programs like Medicare) in order to balance the budget. Democrats insist that raising revenue through taxes (or at least closing tax loopholes) has to be part of the solution. But as Sen. Bernie Sanders (I-VT) points out, both sides will need to compromise on spending cuts and taxes in order to reach an agreement. Maybe then we can declare:
The ship is anchor’d safe and sound, its voyage closed and done;
From fearful trip, the victor ship, comes in with object won.
TL;DR – The normal budget process has been derailed by the debt ceiling debate. The debt ceiling issue must be resolved before next year's budget can be decided. The eventual debt ceiling deal will determine spending priorities for the next year and decade.
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