The Year in Fiscal Policy...So Far

After the elections in November 2006, with a new majority and low public confidence in Congress following multiple lobbying and ethics scandals, members vowed to restore integrity and responsibility to the legislative process, particularly in fiscal policy. Congress pledged it would prioritize funding for domestic needs and abide by pay-as-you-go rules for new mandatory spending and taxes. It would shed light on the earmarking process and spend more time minding the people's business in Washington. In short, the new Congress said it would clean up Washington and rebuild public confidence in government. Now that Congress is in its annual August recess, we have occasion to compare what Congress promised with what it's delivered since January. Fiscal Responsibility
    Steps Forward: Re-enactment of strong PAYGO rules; adherence to the rules thus far. Steps Back: None yet, but still difficult fiscal issues to resolve. What's Next: Passage of SCHIP re-authorization and AMT might test dedication to PAYGO.
Over the course of the Bush administration, the U.S. national debt has ballooned from $5.95 trillion to almost $9 trillion. A combination of huge new tax cuts, increases in military spending and enactment of expansions of entitlement programs — all passed without regard for how to pay for the increases — has caused one of the largest fiscal deteriorations in the country's history. Against this backdrop, the new majority in the 110th Congress promised to bring fiscal responsibility back to Washington and has taken an important step toward doing so by enacting strong pay-as-you-go (PAYGO) rules. The House adopted the proven budget control rules immediately in January as part of its new rules package, and the Senate followed suit in May with the passage of the FY 2008 budget resolution containing PAYGO rules. Thus far, Congress has adhered to PAYGO rules in the SCHIP re-authorization bill and other mandatory spending bills, as well as on the tax side. But the big hurdles are yet to come with reform of the Alternative Minimum Tax and other difficult fiscal policy issues (i.e., how to handle the president's first-term tax cuts) left unresolved. Moving forward, it will be essential for Congress to pass deficit-neutral legislation in these areas as well to keep the promise of fiscal responsibility alive. Congress Addressing Federal Priorities, But Conflicts with the White House Remain
    Steps Forward: Congress takes first step toward restoring adequate funding for national priorities. Steps Back: None yet, but antagonism between Congress and the president threatens timely implementation; Senate running out of time to enact appropriations. What's Next: The Senate has to pass eleven of twelve spending bills; Congress will wrestle with the president over slim differences.
Twenty-one billion and two percent. Those are the numbers over which Congress and the president are going to the mat. The president's $933 billion discretionary budget request represents about a seven percent increase over 2007 levels, while Congress's $954 billion spending plan would boost discretionary spending by nine percent. The president's stubborn objections over the $21 billion difference is absolutely vexing when compared to the $3 trillion increase in the national debt that the president has overseen during his tenure. Adjusting for inflation, the president's budget would be a 2.2 percent cut in non-defense, discretionary spending, compared to the 3.1 percent increase under the congressional plan. When population growth and inflation are factored in, the FY 2008 budget passed by Congress represents spending below 2002 levels. That the president would call this budget "irresponsible and excessive" is a stark reminder of how much his priorities are skewed. When Congress returns in September, the Senate will have nineteen legislative days until the end of the fiscal year to pass eleven of the twelve spending bills and then conference all twelve bills with the House. While it is possible the Senate will pass the bills before the current spending regime expires on Sept. 30, veto threats issued against nine of the bills put timely presidential approval in jeopardy. Congress and the president have held steadfastly to their positions, but both appear willing to discuss differences. If a compromise can be achieved in the coming weeks, a budget standoff may be avoided, but a continuing resolution is almost assured. Earmarks: Groundbreaking Reforms Enacted
    Steps Forward: Enactment of legislative earmark disclosure rules for the first time. Steps Back: Rules could have been slightly stronger to improve access; ignored executive branch earmarks. What's Next: Reforms awaiting president's signature.
A popular revulsion at various congressional excesses and scandals in 2006, headlined by the Jack Abramoff investigation, provided Congress with a strong mandate to address the "culture of corruption" in Washington. In response, Congress overwhelmingly passed the Honest Leadership and Open Government Act of 2007, which prescribed disclosure requirements for legislative earmarks for the first time ever. The Act — which awaits the president's signature — requires that earmarks in bills, resolutions and conference reports be identified and posted on the Internet at least 48 hours before a vote on the underlying legislation, and that sponsors certify they and their immediate families will not financially benefit from the earmark. Earmarks that suddenly appear in a conference report (i.e., not approved by either chamber) are now subject to a 60-vote point of order in the Senate that will not jeopardize the entire conference report. In a related development, plaudits also go to the voluntary publication by the Office of Management and Budget of a database of FY 2005 and FY 2008-to-date earmarks. Congress ultimately stepped back from adding an earmark reform to the act that the Senate had adopted earlier this year that would have required earmark information be published in a searchable format — a reform urged by Sen. Jim DeMint (R-SC). Congress also seemed to create a partial loophole by allowing earmarks to be voted on without public disclosure in certain instances if such disclosure is not "technologically feasible." In all likelihood, Congress will not return to earmark reform this year. The next major step forward in earmarks disclosure should be an examination of executive branch earmarks — a form of spending wholly neglected in this year's reform process, but which involves at least as much bottom-line and self-interested spending as its legislative twin. It's also likely continued progress will be made by OMB as it fills in its database of FY 2008 earmark and adds functionality to the website. Working Harder: Congress Resolves to Spend More Time Legislating
    Steps Forward: The House and Senate have been in session more this year than last. Steps Back: Little work done on Mondays still leaves four-day work weeks. What's Next: As adjournment approaches, Congress is likely to keep up the pace.
The new majority was elected on promises to put Congress to work. The 109th Congress had neared historic lows of actual days spent in session and number of votes on legislation. This combined with its few legislative accomplishments earned it the "do-nothing" label that President Harry Truman originally gave in 1948 to a similarly inactive Congress. So far, both the House and Senate have put in longer weeks and more days than Congress did in 2006 (See current and past legislative calendars). The Senate has logged 121 legislative days, compared to the 107 days put in by the last Congress at this stage last year. Meanwhile, the House has spent 40 percent more time working, racking up 111 legislative days in outpacing the paltry 79 days put in last year. Leaders also promised to try to reinstitute a five-day work week while in session. The House has so far had mixed success. A little more than 40 percent of the weeks spent in session were five-day weeks. This is still better than last session, when only 20 percent were full weeks. The Senate has had more success, with 60 percent of their weeks coming in at five days — about the same proportion as last session. However, most Mondays are still "in session-days" in name only, since voting typically begins at 6:30 p.m. and few votes are held. Therefore, the number of "full" weeks is misleading, as they are usually only four days long. The House has scheduled 34 more voting days left for the rest of the session and has a target adjournment date of Oct. 26. The Senate has tentatively scheduled its adjournment for Nov. 16, but with significantly more work left to complete, that could easily slip into December. Reauthorizations: Expanding Investments While Adhering to PAYGO
    Steps Forward: Both houses have made good progress on reauthorizations and are expanding crucial investments. Steps Back: None yet, as no expiration dates have been missed. What's Next: Intense negotiations will be required to resolve significant differences between the House, Senate and the White House.
Recent Congresses have had difficulty doing the required work of renewing program authorizations before they expire — most notably in the case of the Temporary Assistance to Needy Families program, which Congress took four years to reauthorize after it came up for reauthorization in 2002. A host of important programs — including student loan programs, the State Children's Health Insurance Program (SCHIP), and a variety of farm and nutrition programs — are testing Congress's ability to get routine work done. So far, no deadlines for reauthorization have been missed, but a few are looming on the horizon, most notably the SCHIP, which expires at the end of September. SCHIP reauthorization bills that would significantly expand coverage have been passed by the Senate and the House. The House has passed a version of the farm bill that includes a $4 billion increase for the Food Stamp Program. And both the House and Senate have passed versions of the student loan program reauthorization, both of which increase federal student financial aid packages. None of these reauthorizations have been completed yet, and Congress has much work ahead of it. Significant differences remain between the House and Senate in these reauthorizations. Further, the Bush administration has said it would veto both the Senate and House versions of the SCHIP reauthorization, and it opposes the current versions of the Higher Education Access Act and the farm bill reauthorization.
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