Government's open (but don't dare celebrate)

Warning: Killjoy alert!

As you all know (because you’re probably reading this from your office instead of your home), Congress last week struck a deal to keep government operating for another two weeks. So here we are today, the first Monday into the new CR, and federal agencies are operating, citizens are getting their government services,  and feds are getting paid. What’s not to love about that?

According to today’s excellent-but-depressing blog post by former Capitol Hill staffer and Wall Street consultant Peter Davis, plenty. Davis dissects the predicament we find ourselves in and concludes that the big-picture budget outlook is bleak and reflects a complete dysfunction at the policy level…

Continuing resolutions: Are we there yet?

No! We’re not there yet. We’re not even sure where there is yet.  The NFL talks are going better.

So far, for the whopping price of $4.1 billion of easy pickings, $2.7 billion of Administration proposals that had no chance of enactment anyway plus $1.7 billion of earmarks, we funded two more weeks of FY11.  Wait a minute.  That’s last year’s budget.

Right.  We still don’t have a budget for FY11, which we are more than five months into.  No budget resolution passed Congress last year, and no regular appropriations did either.  The only FY11 appropriations have been continuing resolutions and a supplemental.

So what about the FY12 budget?  President Obama presented his FY12 Budget a week late, partly because Jack Lew’s confirmation as OMB Director was held hostage to speeding up Gulf drilling permits.  That pushed back CBO’s Analysis of the Presidents Budget, until the end of March or early April.  That usually produces the baseline the Budget Committees use, but there’s no way to produce a baseline anyway because no one can say what FY11 will be.  Therefore, the Budget Committees won’t produce budget resolutions until mid-April at the earliest or May.  That won’t matter too much because there’s little chance the House and Senate could agree to a joint resolution.  If each house passes its own budget resolution that would be enough to launch the appropriations process.  If not, each house will probably pass a “deeming resolution” to set the overall level of discretionary spending for the appropriations process.  In the end, without a joint budget resolution, it will be very difficult to enact any appropriations, because each bill will look very different than the one that passed the other house, if any bills pass.

Worse still, the options for getting out of this mess offer little cause for hope, as Davis sees it:

So with no FY11 appropriations beyond midnight, March 18, no budget baseline, no prospect for a budget resolution until May, and the only way to avoid a government shutdown or default on our debt is to do something, what is that something? “Kick the can down the road” is one option.  Just pass another 2-week CR.  Start passing 2-week debt limit increases.  Ah, but that may not be good enough for most of the 87 Republican House freshmen.  They may balk at playing that game. They’ll demand more spending cuts and budget process reforms and may a constitutional balanced budget amendment as their price for a long-term budget deal or debt limit increase.  Now we’re talking about a game of chicken because Senate Democrats and President Obama will balk at spending cuts that large or budget process reforms that can’t be enforced.

Senate Budget Chair Kent Conrad (D-ND) has called for a budget summit as in 1990 at Andrews Air Force Base.  Get all the principals in the room, including the President, and lock the door until they agree.  Republicans don’t look back too fondly on the 1990 result, which included substantial tax increases that got President George H.W. Bush unelected in 1992.  The whole point of failing to resolve today’s budget impasse is to avoid getting unelected.

What to do? The”Gang of Six” senators who served on the President’s Fiscal Responsibility and Reform Commission continue to meet behind the scenes, hoping to come up with a bipartisan compromise.  The Commission’s recommendations were forthright and full of politically dangerous ideas, like cutting Medicare, raising the Social Security retirement age and getting rid of tax expenditures, i.e. raising taxes.  By taking on entitlements and taxes, the largest sources of potential deficit reduction, they showed the way.  However, no one is following, at least so far.  Hopefully, the “Gang of Six” senators can reach agreement, but my sources aren’t encouraging yet.  Even if they do agree, it’s likely to be on broad principles, not on specifics that might kill reelection chances.

Davis concludes the way out is for leaders of both political stripes to — get this — show some leadership and take on the real problems underlying the deficit that no one wants to talk about. Unfortunately, that may take a while.

Hopefully, it won’t take longer than 11 days, 12 hours and 5 minutes from now (when the current continuing resolution expires) . . . .

By the way, my personal favorite option to all this is the Kent Conrad “budget summit” solution: lock up the president and congressional leaders in a room until they strike a deal. But what venue would offer the best hope of a quick solution?