A rare event occurred in Washington on Thursday, June 5: Congress approved a budget resolution during an election year, a feat not seen since 2000. This fact and a human needs-oriented approach to spending signal that Congress is addressing national priorities while attempting to more responsibly manage the country's finances. However, Congress's eliding of pay-as-you-go rules and unrealistic assumptions about war spending and Alternative Minimum Tax (AMT) relief have marred an otherwise responsible budget resolution. By a vote of 48-45 in the Senate and 214-210 in the House, Congress adopted the $3.03 trillion budget resolution conference report. The plan's $1.013 trillion in discretionary spending bests the president's request by some $21 billion, setting up a showdown on spending bills later in 2008.

The plan reflects priorities more consistent with the needs of Americans, particularly under increasingly difficult economic conditions. For example, the budget resolution acknowledges sharp price increases in recent months for everyday necessities such as food and home cooling that are stretching family budgets. To address these, the budget resolution adds funds for critical programs like Women, Infants and Children (WIC) and the Low Income Home Energy Assistance Program (LIHEAP), as well as the refundable Child Tax Credit and unemployment insurance. Equally important, the resolution staves off cuts proposed in the president's budget for housing, health care, nutrition, education, and employment that could further imperil living standards for millions of Americans.

Accepting that the Senate has little appetite for offsetting tax cuts, House conferees forged a compromise with their Senate counterparts that would omit filibuster-proof reconciliation instructions on implementing an AMT "patch" that would hold things even with today. The $70 billion AMT provision was the preeminent point of contention between the chambers, and the capitulation by House conferees enabled the resolution's passage in the Senate. It should be noted that while reconciliation instructions to enact a fully-offset AMT patch are not included in the budget resolution, Congress retains the option to provide revenue-neutral AMT legislation when it takes up the matter later in 2008. However, contrary to history and all indications for the future, the spending plan assumes all future AMT legislation will be revenue neutral.

Congress also unfortunately repeats the president's fantastical assumption that spending on the wars in Iraq and Afghanistan will cease after FY 2009, even though the most optimistic of anti-war advocates would not concede that this is a realistic forecast. Like the president, Congress has opted to reject a plausible war-spending scenario for the sake of claiming that budget surpluses will materialize in 2012 and 2013. This projection is very likely not to happen.

The budget resolution also allows for partial extension of the 2001 and 2003 tax cuts, including preserving the ten-percent tax bracket, maintaining the child tax credit, eliminating the "marriage penalty," and cutting the estate tax. The enactment of these tax cuts, however, depends on the materialization of those same unlikely projected budget surpluses in 2012 and 2013.

Congress's current approach to fiscal governance is encouraging compared to those of the recent past, because it emphasizes putting human needs before tax cuts for the wealthy. But the dubious assumptions on which it depends to arrive at budget surpluses indicates an unwillingness to confront the troubling realities of the longer-term fiscal outlook. Acknowledging that the nation's priorities and the revenue levels required to fund them are not in sync is the first step in enacting responsible budgets.