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Budget Season Overview

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It's "Budget Season" once again in Washington, and since it's going to be a particularly contentious and complex one this year, it's worth taking a moment at the beginning to provide an overview of the entire process which is about to play out over the next two or three months. There are, at this point, three main budget battles to be fought. One of these isn't strictly a budget battle, but will likely devolve into one, hence its inclusion in the list. Two of these have hard and fast calendar deadlines. All three of them are going to be major political battles, and it's unclear what the outcome of any of them is going to be at this point.

Let's look at these three items, in the order they're going to be fought on Capitol Hill, and then we'll take a look at some of the political constraints on each side of this fight.

 

The 2011 continuing resolution

Congressional Democrats did not successfully pass a budget for the current federal fiscal year (which started at the beginning of October). This puts the federal government in a sort of limbo, with no real budget in place. Since October, Congress has passed legislation known as "continuing resolutions," where they resolve to continue spending money at some agreed-upon level (usually last year's budget, or last year's budget plus inflation, or some such easy-to-calculate figures).

The current continuing resolution ends on the fourth of March. That doesn't leave a whole lot of time, it should be noted. Congress will need to pass another continuing resolution to kick the can down the road, so federal checks don't start bouncing the first week of March. Whether they manage to pass a "C.R." for the rest of the year, or whether they just pass a very short-term one (and then later revisit this battle), this is the unfinished business from the last Congress (more on this in a bit).

Because of the looming deadline, this is going to be the first budget battle fought. This is the budget fight where Republicans are attempting to cut spending by $100 billion (at least, according to their "math"), I should add.

 

Raising the debt ceiling

This is not, strictly speaking, a budget issue. It is related to the budget, but only tangentially. Imagine it this way: all deficit spending is added to the United States' credit card. Not only have we been charging money each year on this credit card, but it also includes all the past years as well. The money we charge each year is the annual "deficit," whereas the total amount charged is the "national debt."

But we're about to hit our credit card's borrowing limit. This periodically happens, and is usually not that big a deal in Washington. Neither party is enthusiastic about raising the debt ceiling, but it happens when it has to happen. Congress, rather than calling up their Visa or MasterCard company and asking for a credit increase, simply passes a bill stating the federal government is allowed to borrow more money. Usually in the dead of night, late on a Friday before a holiday weekend, in the hopes that nobody will notice.

We're fast approaching hitting our limit, and will likely do so in the next few months. But this time, rather than a standalone bill which does nothing more than lift the debt ceiling, Republicans are going to try getting a pound of flesh in the bargain by tinkering with the budget in some unspecified way. In plain language, they're going to re-fight the battle they just fought (to gain back anything they had to compromise upon in the continuing resolution).

 

The 2012 budget blueprint

This is the biggest battle immediately in front of Congress. But, due to the fact that it has no deadline attached to it (as the other two do), it will likely be the third of these three fights to occur. While the C.R. will deal with the current fiscal year, and the debt ceiling will deal with our ability to borrow, the budget "blueprint" will instead be looking toward the future -- next year's budget.

Unlike the C.R., this battle will have a lot more leeway for Congress to work its will. Since it will deal with money that won't be paid out until the coming October, it won't have the "on the fly" nature of the C.R. The stock political line (from both parties) is going to be: "Everything's on the table," as usual.

The document released today by the White House ("the president's budget") is the opening salvo in this battle, as it deals with the 2012 budget.

Confusing the matter slightly is the fact that Congress really has to pass the budget twice each year. The initial budget is called a "blueprint" and lays out the broad outlines of spending. Later in the year, the money is actually appropriated and detailed in a series of about a dozen budget bills (roughly one for each department or area of spending the federal government does). But these battles are pretty far in the future, and likely won't even begin until summertime, at the earliest (at least, if recent history is any guide), so they'll likely be separate from the budgeting frenzy that is about to grip Washington in earnest.

 

That is somewhat oversimplified, but at least breaks down the upcoming political process into its three component parts, for easy reference. Now, I'm not going to get into examining President Obama's budget (or the Republican plans) in detail here, as we'll have plenty of time for that in the weeks to come. But I do want to point out a few basic political realities surrounding the debate, as background to the specifics about to be fleshed out by both parties.

The first of these realities is the painful fact that the entire continuing resolution debate didn't need to happen -- and is only happening because of the political cowardice of the congressional Democrats (in the Senate, in particular). The Democrats were in control of Congress right up until the end of last year. At any point during this time, they could have passed the 2011 budget -- and they did not. They failed to do so because they were scared that it wouldn't play well at the ballot box. They also failed to do so after this consideration was moot, during the lame duck session. In a word, the Democrats punted. And now they are paying for this punt, the way any football team pays for a punt -- the other team now has the ball.

Democrats abdicated on one of their basic congressional responsibilities -- there is no easy way to sugar-coat this reality. Which leaves the door open for Republicans to do what they will with this year's budget -- when, if Democrats had indeed passed their bills on time, the Republicans simply would not have the opportunity to do so. And the only reason Democrats didn't pass a budget on time was they were terrified of what the voters would do. That -- again, not to mince words -- is nothing less than political cowardice. Democrats could have taken the offensive at the end of last summer, saying: "You want to cut the budget? Fine, we're going to have a debate about the budget, and you can tell the voters exactly what you'd cut. And we'll use this against you on the campaign trail." They did not do so. And, now, they are paying the price.

Republicans, though, are in somewhat of a bind, even though most of them haven't realized it yet. Because most of them seem to be falling into the serious error of "believing their own P.R." -- which can roughly be measured by how many times any given Republican uses the phrase "the American people" in an interview, these days. Republicans are convinced -- absolutely certain -- that their recent election victory means that "the American people" have bought into every single part of the Republican Party (and Tea Party) platform. Some of them are about to get a rather rude awakening, as they realize that most voters are for "cutting spending" in the abstract, but can get decidedly angry about "cutting spending" which benefits them personally.

The Republicans have backed themselves into somewhat of a corner on this. They steadfastly refused, during the campaign (and since), to identify exactly what was going to get cut. Politically, this was probably a smart move, but now it is time to pay this particular piper. Democrats, for once, don't seem shy about criticizing Republican budget cuts, so if they do even a marginal job of getting their message out, the media is going to be informing American voters over the coming weeks of exactly what the Republicans are lopping out of the federal budget. It's worth remembering that almost every federal dollar has a constituent somewhere who relies on this money -- and they're going to be awfully vocal about Republican plans to cut them off.

The second pitfall Republicans are about to face is the prospect of refusing to pass bills before the deadlines arrive. Or, in media-speak, "shutting down the government." The two deadlines looming are the C.R. deadline for the current budget year, and raising the debt ceiling before we actually hit it. The first is the same as the Newt Gingrich/Bill Clinton "government shutdown," and would be an interesting game of "chicken" between the Tea Party Republicans (whose motto seems to be: "No compromise -- on anything, at any time!") and the White House. But the second one -- refusing to lift the debt ceiling -- is more akin to a "federal government default" on our debt, and could have worldwide consequences more shattering than any mere "government shutdown" ever could. The Republican leaders seem to acknowledge this, but the Tea Party Republicans are a definite wild card, and most of them would just love to tilt at this particular windmill, no matter how catastrophic the results. Most experts believe that these "shutdowns" will be avoided somehow, and that the C.R. and the debt ceiling hike are going to become nothing but precursors to the real budget battle -- over the 2012 blueprint. Of course, these experts could be wrong, because predicting what the Tea Party Republicans are going to do is truly anybody's guess at this point.

Throughout all three budget battles, the focus is going to be on fights waged over fairly minor areas of the budget -- in much the same way the political fight over "earmarks" has raged for the past two years (earmarks, in terms of the entire budget, are little more than a rounding error). This is due to the fact that both parties would rather wage budgetary warfare on terrain of their choosing. And neither one of them wants to tackle the bigger problems in the budget at all (or in only minor ways, at best).

The new phrase in Washington, when speaking of budget matters, is: "non-security discretionary spending." Allow me to translate this into English: "the one-eighth of the budget which doesn't affect seniors or the military-industrial complex." What the big fights of the next two months are going to center on is about 12-16 percent of the federal budget (estimates differ, depending on how you define the nebulous term "non-security discretionary spending"). To put it bluntly, you zero out every single federal dollar in this category, and the budget would still be in deficit.

The lion's share of the federal budget is comprised of four things: the Pentagon, interest on our national debt, Social Security, and "entitlements" (mostly Medicare and Medicaid). One of these cannot be cut at all, because cutting interest on the debt is pretty much the same as defaulting on our obligations. The Pentagon can see the writing on the wall, and has proposed its own ideas for cutting its budget, but they are rather limited, so far (listen closely when you hear these numbers, because they are usually "over ten years" -- divide by ten to see a rough estimate of how much they're really willing to cut each year). Republicans, so far, have shown no stomach for cutting any of the Pentagon's budget, although they may have to in the 2012 budget, especially if they slash a lot of discretionary spending in the C.R. -- leaving less to cut next year.

But the other two elephants in the room are the big ones -- Social Security and entitlements. And neither party wants to go first with proposals for how to cut them. There is a very simple reason for this: seniors vote. This is going to be a game of "You first" ... "After you" ... "No, no, I insist, you may go first..." and the likely upshot is that neither party is going to risk a huge overhaul of either Social Security or entitlements any time soon.

President Obama's budget, which was released today, certainly doesn't tackle them. I'd be very surprised if the Republicans tackle the problems in the next six months, either. Obama's budget, in reality, is nothing more than a political document, because presidential budgets are never passed intact by Congress. Ever. So while plenty of people will be picking it apart in the next few days, decrying this or that proposal, keep this in mind -- there is absolutely no chance that Obama's budget proposal is going to even remotely resemble what gets passed by Congress. It's not a totally worthless document, because it is meant to lay a marker on the table for what the president is willing to deal on and what he will fight for -- but it is nothing more than political posturing put into words, and shouldn't be seen as anything more at this point.

So, that's where we find ourselves, on the opening day of Budget Season. We've got three big fights ahead, two of which will happen within weeks and one of which may be more drawn out. The political posturing has begun, and will rise in a frenzy to deafening levels in the coming weeks. The Tea Party Republican tail seems to already be wagging the Republican Party dog, and this situation is going to become very intense as we reach the point where (in a normal year in Washington) some sort of deal is cut between the parties. The fault lines are obvious, and more varied than in recent years: Tea Party Republicans v. establishment Republicans (especially John Boehner); a Republican House v. Harry Reid; a Republican House v. President Obama; and Blue Dog Democrats v. the Democratic Party in the Senate. There are likely to be many games of "chicken" (or "who blinks first," if you prefer) in the next few months. How it all plays out is going to set the domestic political stage for the 2012 election season (which has, among Republicans at least, already begun).

 

Chris Weigant blogs at:
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