Budget Battles Begin, Obama to Fire the First Shot
Policy + Politics

Budget Battles Begin, Obama to Fire the First Shot

Alex Rader/The Fiscal Times

A year ago, President Barack Obama unveiled his new fiscal 2011 budget  – one that imposed a three-year freeze on domestic spending and a raft of spending cuts. The idea of an across-the-board freeze on all nondefense discretionary spending didn’t sit well with members of the House and Senate Appropriations Committees, which have a big say in how federal funds are spent. And three of Obama’s specific cuts – for development of the second engine for the Joint Strike Fighter aircraft, the NASA “return to the moon” program, and housing subsidies for the elderly – brought howls from lawmakers.

None of Obama’s $20 billion in cuts were implemented. As the saying goes, the president proposes but the Congress disposes — and the content of the massive budget books that the administration sends up to Capitol Hill typically emerge from the annual budget and appropriations process looking quite different.

“That is a natural, inevitable congressional reaction,” said Brookings Institution defense budget expert Michael O’Hanlon. “And it’s not even wrong,” he added, noting that members of Congress are sent there to protect jobs in their districts, and each budget line item means jobs somewhere. Particularly in a recession, members of Congress are reluctant to see jobs vanish, even in the name of deficit reduction.

Once the president unveils his new budget, usually on the heels of the State of the Union speech, the elaborate budget process begins. The House and Senate budget committees hold extensive hearings, involving testimony by the White House budget director and key cabinet members, before attempting to draft budgets of their own, which may or may not follow some of the president’s recommendations. In some years, the House and Senate may agree on a spending blueprint, as was the case last year.

Then the committees swing into action, with the goal of drafting a dozen separate major government spending bills. If the two parties are divided and can’t agree, they pass continuing resolutions to keep the government operating. Congress adjourned last month after failing to agree on a comprehensive spending plan for the current fiscal year, which began last Oct. 1. A continuing resolution  allowing the government to operate at last year’s spending levels is due to expire March 4. Congress must also act to raise the national debt ceiling later this spring or face possible default on government borrowing.

With the deficit-minded Republican Party now in charge of the House, Obama is planning to send up a budget for fiscal 2012 in mid-February that includes a five-year freeze on nondefense discretionary spending and $78 billion in defense savings. But there is no assurance either of these plans will fly.

House Speaker John Boehner, R-Ohio, Senate Republican Leader Mitch McConnell, R-Ky. and others say a freeze at the highest spending levels in history is not enough, and that they want to roll back spending to 2008 levels — before the Bush and Obama administrations spent massive sums on economic stimulus and bailout programs. And late last week, House Armed Services Committee Chairman Howard P. “Buck” McKeon, R-Calif., vowed to block proposed cuts in the Pentagon budget, even as freshmen committee members backed by the Tea Party argued that defense should be cut along with other programs for the sake of reducing a deficit now projected at $1.5 trillion this year.

“I cannot say it strongly enough: I will not support any measures that stress our forces and jeopardize the lives of our men and women in uniform,” McKeon said.

This year the war over the budget may be fought on different fronts. For one thing, Republicans are divided against themselves. Some conservatives want deep cuts — $100 billion worth of domestic cuts. Others, including House Budget Committee Chairman Paul Ryan, R-Wis., are more moderate, even with burgeoning deficits.

Meanwhile, the Democratic Party in the House emerged from last November’s election with a much diminished and more liberal-leaning caucus than before. And with former House Speaker Nancy Pelosi, D-Calif., still leading the party, House Democrats are not inclined to support any budget saving measures that reduce benefits to middle-class or poorer Americans.

The fight over the budget will touch on familiar themes: how deeply to cut basic government programs and services, whether or not to freeze civil servants’ salaries, what to do about the runaway costs of politically sensitive entitlement programs, and how to get a handle on defense spending – one of the largest chunks of federal spending.

Cutting military spending by $78 billion over five years was first proposed by Defense Secretary Robert Gates early this month —  the first proposed reduction since the Sept. 11, 2001 attacks. But even with the cuts, the Pentagon’s operating budget for 2012 is expected to increase by $4 billion to about $553 billion, more than double the 2001 allocation. The growth would slow over the next several years and then stop by the 2015 fiscal year.

In an interview with The Fiscal Times, Brookings’ O’Hanlon said that, in general, proposals to reduce defense spending and other national security projects should be linked to an overall deficit reduction strategy. That means considering defense cuts along with tax policy changes and reductions in Medicare, Medicaid and other entitlement programs – not just scrapping specific Pentagon projects.

Sen. Jeff Sessions, R-Ala., the highest ranking Republican on the Senate Budget Committee and generally a defense hawk, signaled recently that he would not necessarily oppose reductions in Pentagon spending, particularly those proposed by Gates. Those include scrapping a $15 billion Marine Corps program to build a new amphibious landing craft, delaying the F-35 Joint Strike Fighter, and shrinking the size of the Army and Marine Corps. “Nothing is immune. Defense will take some reductions,” Sessions recently told Politico.

But in a conversation with The Fiscal Times, Sessions, whose state of Alabama is home to a significant NASA space facility, suggested that cutting NASA’s Constellation program, the manned moon missions which NASA is already thinking about retooling, is a nonstarter. “The Constellation program … was affirmed by NASA as the right way forward for solar system exploration … An official at NASA told me the effect of that is to say that the Chinese will go to the moon and return with the American flag, having planted theirs.”

Sessions said he’s not opposed to the Republican proposals for a 5 percent across-the-board cut in domestic spending, and that NASA might have to take such a cut, but not by scrapping the Constellation project entirely. And Sen. Richard Shelby, R-Ala., this month inserted a provision in an authorizing bill “forbidding” NASA from canceling the Constellation’s jobs.

Congress failed to pass a budget or any appropriations bills last year and instead is operating under the “continuing resolution” that expires in March. Assuming Congress does not pass another budget by then, another CR would carry the government through Sept. 30, the end of the current fiscal year. That would give Congress and the president more time to work out a new budget for fiscal 2012 and appropriations to fund it.

Appropriations committees are going to have a huge task this year, as they attempt to cut spending. Deficit reduction now seems especially urgent after the Congressional Budget Office projected last week that the budget deficit will reach a record $1.5 trillion this year and will continue to spiral upward unless tax and spending policies are changed.

Donald Marron of the Tax Policy Center said that the “newly elected folks in the House would like to accomplish the goal of getting a budget [passed]. Everyone laments the fact that they didn’t get one last time. There’s going to be a debate on the CR as March approaches, a debate on the debt limit in May.

“I assume the House will pass a budget, but the Senate may or may not, and then there’s the debate on how you bring that together.”

Related Links:
Obama to Send Congress Multitrillion-Dollar Budget Likely to Show Cutbacks (Bloomberg) 
Time to Reform the Budget Process (The Fiscal Times) 
Obama, GOP, Frame Debate for 2012 (The Washington Post)