The Public Policy

Washington’s Budget Onion

Peel away its layers -- and be prepared to cry a river.

By 12.19.11

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Unraveling Washington's budget drama is a lot like peeling an onion. That's because Washington keeps adding layers to it. It's not about what's happening next, it's about everything happening at once and seemingly, continuously. If you thought budget politics confusing and confounding before, look at where things stand after the Super Committee's failure and the belated passage of the annual funding bills.

The first layer of the budget onion is the just-completed annual appropriations process. These programs are funded only for a year at a time. Washington's fiscal year begins on October 1, and without legislation for new funding, the government shuts down. Washington is supposed to enact on time twelve separate bills to fund the government. Of course, it rarely does -- only three had been enacted before last Friday -- so Washington frequently sidesteps that deadline with its old standby the "continuing resolution."

Commonly known as a "CR," this is stopgap funding allowing negotiators to buy time to reach agreement on full year funding.  Washington has enacted several this year alone -- each time reaching the last minute of the last one before taking the next step of enacting the next one.

Of course, the fight just over quickly will resume again next year.

If all this deadline-defying sounds familiar, it should. It's the same fight that began the year. From there, it spilled into the summer's debt limit increase debate -- which then spilled into more CRs.

And all this stays resolved for barely the blink of an eye The President's next budget will come out early in 2012 and an agreement on annual spending will again have to be reached by October 1 -- less than 10 months away.

There are now two important differences with past history however. First, as with any fight -- including fiscal ones -- the longer they go, the more acrimonious they get. So, expect the rematches to get progressively tougher.

Second, the stakes are decidedly lower than with the debt limit. An impasse on the debt limit threatened government default this summer. Impasse on the annual spending legislation merely threatens government shutdown.

While government shutdowns make great media theater, they don't threaten the government's debt or the world's economy. The upshot is: If the parties would go to the precipice of default, how much more likely would they be to go over the lower cliff of shutdown in an election year?

The budget onion's second layer results from this summer's debt limit deal. That deal lowered annual spending totals by $917 billion over the next ten years -- the same annual spending over which Washington now is grappling for just a single year.

It also created a special Congressional committee -- dubbed the "Super Committee" -- comprised of 12 members from both bodies and parties to come up with at least another $1.2 trillion in deficit reduction over the next decade. The Super Committee was supposed to reach agreement by November 23, and Congress pass it by December 23, or face automatic spending cuts to a host of programs in order to make up any shortfall.

With the Super Committee having been unable to achieve any savings, we get the budget onion's third layer: mitigating the automatic cuts. Expect both parties to seek to undo those cuts threatening their policy priorities -- for Democrats, social spending, and for Republicans, defense spending.

Because those automatic cuts won't happen until 2013, that gives the parties roughly a year to fight over undoing specific ones. If it took Washington all summer to reach agreement to cut spending by $917 billion in general, imagine how bitter the battle will be over avoiding particular cuts?  

The budget onion's fourth layer is the presidential election. Well less than a year away, the race is already a full sprint. The election is more than just a distraction. The budget -- and more precisely, the deficit -- is one of the race's most prominent issues.

No wonder. At its most basic, the budget is simply the government's priorities measured in money. Additionally, its deficit is historically high. The result is that the budget has become a political battlefield expressed in dollars. It is impossible to campaign without taking stances on it. Those positions limit what budget negotiators can pursue, if they want Congress to pass it and Obama to sign it. And they are likely to dictate at least the opening positions in subsequent negotiations even after the next election. 

These are the four layers of the budget onion… so far. Already there's talk of more, specifically: efforts to pursue broad reforms to entitlements or taxes.

Washington's budget process is overlaid with policy, process, and political peril. Its overlapping layers further complicate and extend an already difficult job -- to the extent it has become almost impossible and unending.

Washington is enmeshed in the budget for the foreseeable future. The more it seeks solutions, the more it has to peel away… yet the more it winds up layering on. And like peeling an onion, the further you go, the more it makes you want to cry.

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About the Author

J.T. Young served in the Department of Treasury and the Office of Management and Budget from 2001 to 2004 and as a Congressional staff member from 1987 to 2000.