On May 17, Congress achieved a basic benchmark of responsible fiscal governance — passing a final budget resolution. While this accomplishment has become somewhat of a rare event in Washington (spending in three of the past five fiscal years has not been guided by a budget resolution), and the votes were close (Senate 52-40, House 214-209), Democrats were able to reach final compromises on a few contentious issues. The budget resolution is a blueprint for government spending for the upcoming fiscal year and the four subsequent years. The final FY 2008 resolution establishes a $954 billion discretionary cap for the twelve federal spending bills that will be passed later in 2007, which is $21 billion higher than the president's request. The House and Senate appropriations committees can now officially begin their work for FY 2008. The fiscal 2008 budget also returns strong "pay-as-you-go" (PAYGO) rules to the Senate. With slight differences in the time frames to which the rules apply, the Senate's version mirrors the PAYGO rules adopted by the House earlier this year as part of the Democratic leadership's new rules package. In addition to Senate PAYGO rules, the budget:

• Significantly increases funding for children's health care, education, and veterans health care
• Calls for a one-year "patch" for the AMT
• Increases the national debt limit to $9.8 trillion, an increase of $800 billion
• Fully funds the president's request for war spending through Fiscal Year 2009

Before the House and Senate agreed to the spending blueprint, conferees had to iron out a few key differences between each chamber's initial budgets. Discretionary spending caps: The Senate's version called for $948.8 billion in discretionary spending. However, the final total, $954 billion, is much closer to the House's initial request of $955 billion. This discretionary spending cap is $21 billion higher than the president's $933 billion suggestion. OMB Director Rob Portman issued a pre-emptive veto threat on May 11 in a letter to House Budget Committee Chairman John Spratt (D-SC). In the letter, Portman said he would recommend the president veto "any appropriations bill that exceeds [the president's] request." Portman was referring to spending bills that are developed later in the year that derive from the limits set by the budget resolution. Baucus Amendment: The Senate's budget contained a provision, known as the Baucus Amendment (named for the sponsor, Sen. Max Baucus (D-MT)), that would claim the projected $132 billion surplus in fiscal 2012 for additional tax cuts aimed at the middle class and a further roll-back of the estate tax for the wealthy. The amendment, which reduces the projected surplus to $41 billion, was approved by conferees in the final version, but the future tax cuts will still face PAYGO rules and a so-called "trigger" in the House. The House trigger mandates that future tax cuts not exceed the lesser of either $179.8 billion or 80 percent of the 2012 surplus and requires that the surpluses currently projected for 2012 actually materialize. Spratt describes the budget as "not the perfect solution, but it is a long step in the right direction." The fiscal 2008 budget signals a commitment to fiscal responsibility while increasing funding for national priorities. But perhaps more importantly, by establishing a spending framework and implementing PAYGO rules, the budget serves as a guide by which these goals can be met.