Why the budget outlook is even worse than you think

budget illustration

The largest and most intractable item on the congressional agenda this fall is federal spending and the related issue of raising the debt ceiling. Budget dysfunction will again become the mantra on Capitol Hill. And this cycle might be worse than ever, as mind-bending as that possibility seems.

Almost everyone knows that little progress has been made on fiscal 2014 appropriations. Heading into September, the House had passed just four of the customary 12 spending measures, and the Senate had passed none. It's unlikely that any will be completed before the Oct. 1 start of the new fiscal year, which means that some form of a governmentwide continuing resolution will be required to avoid a shutdown. But it's actually even worse than it appears.

Here are eight reasons why congressional Democrats and Republicans can barely agree that it's Tuesday, much less strike a deal on broad budget principles or (heaven forbid) deliver on their obligation to pass spending bills. This year's more-intense exercise promises to be like drunken cyclists pedaling along a high wire with no net below them.

Buckle up! And count on a long, bumpy road to December — or even beyond.

1. Talking different languages

Last spring, the House passed a fiscal 2014 budget resolution with a $967 billion spending cap — the level that Republicans cite as required by the Budget Control Act of 2011. The Democratic-controlled Senate approved $1.058 trillion, which unilaterally assumes elimination of that law's requirement of a spending sequester.

The two chambers have made little effort to reconcile the differences, which they ultimately must settle to keep government doors open. Even within the House, many GOP lawmakers who voted for their budget have been unwilling to approve the requisite Tea Party-level cuts in discretionary spending.

"Some House Republicans don't yet feel the pain" of the cuts they have mandated, said Stan Collender, a longtime budget expert.

2. Searching for passage

Even with their separate budget levels, both chambers have been unable to rally the votes necessary to approve routine appropriations. Evidence of this legislative never-never land came in July when each chamber failed to pass its committee-approved funding bill for the departments of Transportation and Housing and Urban Development. Because of the Senate's filibuster rule, Democrats needed at least six Republican votes.

"The far right appears to continue to have firm control over the Republican Party's negotiating posture in both houses," wrote Scott Lilly, a senior fellow at Democratic think tank the Center for American Progress and a former senior House Democratic Appropriations Committee aide, in an article on the center's website.

House "prospects for passing this bill in September are bleak at best," House Appropriations Committee Chairman Hal Rogers (R-Ky.) conceded.

3. Avoiding the real money

The fiscal debate on Capitol Hill continues to focus on so-called discretionary spending for domestic and national security programs. Lawmakers mostly ignore the far larger sums of money that are spent on the huge entitlement programs — chiefly Social Security, Medicare and Medicaid. Even the House-passed budget dealt cautiously with those programs, partly from fear of offending the core voting bloc of senior citizens.

Likewise, following enactment in January of tax hikes on the wealthy, neither party has proposed specific new taxes that could ease spending logjams. And Democratic insistence that tax reform must generate additional revenues appears to have scuttled support for that objective, which could boost the economy.

"It's hard to see how that gets past [Senate Majority Leader] Harry Reid," said Dan Holler, spokesman for the conservative Heritage Action for America.

4. Engaging in sideshows

The only apparent discussions to build consensus on the budget have been halting negotiations between a group of Senate Republicans and White House Chief of Staff Denis McDonough. But like an earlier effort by the Senate's bipartisan Gang of Six, those talks — which were spurred by dinners with President Barack Obama — have been longer on rhetoric than on budget reality.

More to the point, Collender said, "the White House's problem is with House Republicans" more than the Senate.

"There's a big gap to bridge," acknowledged Will Allison, spokesman for House Budget Committee Chairman Paul Ryan (R-Wis.). "Most of us have a realistic view that Democrats and Republicans are not likely to take more than small steps."

5. Abandoning leadership

Congressional leaders in both parties have mostly kept their heads down in dealing with one another and with their troops. House Speaker John Boehner (R-Ohio) has become more cautious after repeated showdowns with the Tea Party faction. Some Democrats lament that he has become irrelevant, though others voice hope that he will ultimately agree to take the heat on a budget deal.

GOP leaders have splashed cold water on hard-liners' call to use the budget talks to defund Obamacare. Ryan said that because the program is mostly entitlement spending, "there are more effective ways of achieving that goal."

But conservative groups, which insist they don't want a government shutdown, continue to press their health care initiative. "House Republicans will realize that this is where their constituents are," Holler said.

6. Punting the decisions

As both parties circle each other in the latest budget debate, they have postponed coming to terms with finding the substance — or process — for agreement between the House and Senate and with Obama. Like students or journalists who put off the inevitable day of reckoning, lawmakers hope that their deadline will somehow ease or disappear.

Others hope that the endgame will encourage both sides to put their cards on the table. "We do want to go to [House/Senate] conference, but we want to go when we have a good chance of actually getting something done," Ryan told reporters.

Both sides' procrastination seems likely to complicate the task. Deadline pressures can limit meaningful discussion, as was evident during the 2012 New Year's Eve deal-making.

7. Whistling past the graveyard

Always eager to defer painful choices, lawmakers can now cite a continuing reduction in the federal deficit, which is projected to dip to about $500 billion in 2018. But they are less eager to point out that the upcoming surge in baby boomer retirements, among other factors, will move those numbers higher again. Oddly perhaps, the amount of the budget sequester is not pegged to changing deficits.

The rolling deficits have fueled cynicism about annual budget debates. Veteran Washington players point out that budget dysfunction has been constant since the Congressional Budget Act was enacted in 1974.

"The budget is a problem," Lilly said. "But that process is not what drives the problem of spending."

8. Failing to manage

Ultimately, the current budget mess points out the growing oversight failures and lack of direction by both Congress and the White House in dealing with federal agencies. In the era of 24-hour news and social media, leading figures in both parties see more benefits in partisan gamesmanship than in the often tedious details of government management. Lobbyists and the news media, of course, often encourage conflicts.

Budget observers concede that the breakdown of discipline has become a bipartisan problem. Decision-makers "can't find out what agencies are doing," Lilly said. "There is no accountability in the budget process."


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