The Federal Budget and Deficit Will Soon Return to the Headlines

The Federal Budget and Deficit Will Soon Return to the Headlines

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The federal budget all but disappeared in early February, just after President Obama sent his plan for fiscal 2011 to Capitol Hill.  In the more than six weeks since that budget was released, we’ve barely heard a word about what the administration proposed.

Part of the reason the budget has disappeared as an issue is that the White House wanted it that way.  The days when submission of the budget was a big positive event for an administration, providing at least a temporary boost in the president’s popularity, ended years ago, when large deficits became the norm.  By submitting a budget, which can’t be avoided because it’s required by law, the president ends up owning the deficit and having to take responsibility for the spending and revenue changes he proposes to reduce it. 

The obvious response is to quickly make the budget as much of a nonissue as possible.  That’s what we saw during the George W. Bush administration and it’s the game plan the Obama White House has followed this year.

A second reason the budget has largely disappeared from view so far this year is that health care and financial reform have pushed it not just off the front page, but out of the news entirely.  Combine this with fewer column inches and minutes devoted to hard news these days and fewer reporters working at most news organizations, and it becomes obvious that it isn’t just severely constrained congressional resources that are forcing some issues — like the budget — to take a back seat.

In fact, with the exception of reconciliation, the element of the congressional budget process that prevents some legislation from being filibustered in the Senate, it’s hard to think of any budget-related story that has been much in the news recently.  And the reporting on reconciliation was related to health care rather than economic policy.

The third piece of the disappearing act has been that the Democratic leadership needed to slow down this year’s federal budget process to improve chances that health care reform could be enacted.  The reconciliation instructions included in last year’s congressional budget resolution, which now appear critical to passage of a health care bill, can't be used if a new budget resolution conference report is adopted first.  In addition, the House and Senate Budget Committees almost certainly will want to include in the fiscal 2011 budget resolutions they draft this year the lower deficits the Congressional Budget Office projects if current health care bills are enacted.  That, too, requires health care reform to be signed into law first. 

As a result, for strategic reasons, dealing with the budget had to be delayed until health care legislation either was enacted or killed.

All this is about to change.  Not only is the health care debate coming to some resolution, but with that out of the way Congress will have to start focusing on its plans for the rest of this year.  The budget, or more precisely the fiscal 2011 congressional budget resolution, is a large part of that equation.

The first decision will be whether to attempt to adopt a budget resolution at all.  Although there has been a renewed commitment to complying with the Congressional Budget Act since Democrats regained the majority in 2006, and Congress has adopted a budget resolution each of the past three years, there are some doubts about its willingness and ability to get it done in 2010. There’s no penalty for not doing it and a budget technically isn’t required for the government to keep operating.  Even though it is the correct fiscal policy in the current economic environment, the political price of seeming to go on record in favor of very high deficits in a tough election year has many representatives and senators thinking that it’s not worth the effort.

There also appears to be a growing realization among Democrats that, because of the roadblocks Republicans are expected to use with a standalone tax cut bill, the planned extension of most of the tax cuts enacted during the Bush administration beyond their current Dec. 31 expiration will require reconciliation.  Because reconciliation can only occur pursuant to instructions included in a budget resolution, that could mean a budget resolution cannot be avoided.

And that means that the budget and the deficit have to become big issues for the rest of this year.