As the FY 2009 appropriations process grinds to a halt, a new OMB Watch analysis of the past nine fiscal years reveals that the nation's priorities are better served when Congress and the president work together to complete the annual appropriations process. Congress's abandonment of the FY 2009 appropriations process increases the risk that the resources critical to vital government supports will be further constrained as both sides of the aisle simply refuse to work toward agreement on FY 2009 appropriations legislation. The analysis looked at a sample of health, education, and labor programs and found that those programs received funding increases when individual appropriations bills are passed by Congress and signed by the president. However, these same programs are cut when Congress and the president rely on consolidated appropriations ("omnibus" bills) because they cannot enact specific appropriations bills.

In the nine fiscal years — FY 2000 through FY 2009 — consolidated appropriations were used in six to fund the operations of most non-defense governmental programs and operations. Looking at a random selection of 12 labor, health, and education programs for those years shows that they were cut, on average, by 0.5 percent (see table below). When adjusting for inflation, those programs were cut by 3.5 percent. However, in the three fiscal years in which all of the appropriations bills were signed into law, those programs saw their funding increased by 17.8 percent, or 14.9 percent after adjusting for inflation.

The Department of Defense was the only federal agency to see its funding approved as a stand-alone bill in all nine years. From FY 2000 to FY 2008, the Pentagon saw its funding increase from $287.2 billion to $600.9 billion. After adjusting for inflation, the Defense Department averaged annual increases of 7.5 percent.

It is how programs are funded (consolidated appropriations or regular appropriations bills), not which party controls government, that impacts whether funding for the programs above is increased or cut. Every year in which an omnibus spending bill was passed to fund the government for the entire year (FYs 2000, 2003-2005, 2007, and 2008), the programs saw a reduction in funding. Of the three years that were not financed through an omnibus measure (FYs 2001, 2002, and 2006), only two saw an appropriations process that boosted funding for the programs.

In all of the years, party control of the White House and Congress varied. Republicans controlled the House in FYs 2001, 2002, and 2006. (In calendar years 2000, 2001, and 2005, they determined FYs 2001, 2002, and 2006 spending levels.) But Republicans shared control of the Senate with Democrats when funding bills for FY 2002 were signed into law. In 2007, Democrats controlled both houses of Congress, but they passed a consolidated appropriations bill that reduced the programs' funding by 8.3 percent.

It is the president who seems to wield considerable power over the appropriations process. Without the two-thirds majority necessary to override a presidential veto, Congress risks playing a game of fiscal chicken with the president. In 1995, a Republican Congress and a Democratic president could not agree on appropriate funding levels, and without the necessary spending bills signed into law, the government ceased most day-to-day operations for several weeks. The public overwhelmingly sided with Democratic President Bill Clinton over GOP Senate Majority Leader Bob Dole (R-KS) and House Speaker Newt Gingrich (R-GA). Both Democrats and Republicans apparently learned the same lesson from that episode: better to submit to the president's demands than risk a similar political train wreck. This political calculus can explain why, in 2007, Democratic leadership in the House and Senate approved a continuing resolution (CR) for FY 2008 that called for an appropriations "top-line" funding level identical to the President Bush's budget request — only $22 billion below that of the congressional budget resolution.

There are additional disadvantages when the normal appropriations process breaks down. If Congress and the president cannot agree on spending levels before the end of the fiscal year (Sept. 30), Congress must pass a CR to fund government operations until spending bills for the remainder of the year can be enacted. Because continuing resolutions typically either "flat fund" (i.e., keep a program's funding for the new year at the same level as the current year) or reduce spending on existing programs, new programs may end up not being funded at all. Consolidated spending bills, on the other hand, can increase funding for specific programs by adjusting spending levels for inflation and population growth. The result of employing CRs is that for part of the fiscal year — or in the case of FY 2007, an entire fiscal year — programs are deprived of a certain amount of funding that Congress intended for them to spend. On July 9, the Senate Appropriations Committee added a provision to the Transportation-HUD FY 2009 appropriations bill that would transfer $8 billion from the General Fund to the Highway Trust Fund to ensure adequate funding for the nation's transportation's needs. This funding shift may not be continued in an anticipated FY 2009 CR, because the provision simply did not exist in FY 2008 and therefore cannot be continued.

Another disadvantage is that non-spending policy provisions included in individual funding bills may not be included in a CR. For example, both the House and Senate Appropriations Committees have both approved language that would effectively end the IRS's wasteful private debt collection program by zero-funding it. However, because controversial policy changes are unlikely to be tucked inside must-pass spending legislation like a CR or consolidated appropriations bill, the problematic program will likely continue to operate for at least another year.

At this point, most in Washington have acquiesced to the idea that appropriations bills will not be completed before the start of the new fiscal year on Oct. 1. Like any other year where a CR will be used, the breakdown in the current appropriations process will create difficulties at federal agencies in planning staffing levels, managing program resources, and continuing to implement federal programs. The White House recently admitted as much in their pleas for Congress to enact a Department of Defense spending bill before they recess for the year.

This political breakdown also comes at a difficult time for the nation's economic condition. As the country's housing values have plummeted and state tax revenues have shrunk, important infrastructure and human needs investments have been pared back at the state level. Most states have a constitutional requirement to pass a balanced budget each year, and they cannot run deficits to continue important investments during difficult economic times. As the Center on Budget and Policy Priorities has documented since the beginning of the year, struggling state budgets exacerbate economic hardship, usually at exactly the point when help is needed most.

Although the president has yet to officially threaten a veto, his adamant insistence in 2007 that Congress hew to his budget's top-line figure seems to indicate that he will take a similar stance this year. Yet because President Bush will leave office in January 2009, Congress will have a new partner with whom to bargain for their preferred spending levels — a negotiation their actions show they would prefer. While a partial CR may be all but inevitable, federal programs face a more favorable budgeting environment should the next president be willing work with Congress and sign into law the 12 appropriations bills as prescribed by regular budget process. The ensuing uncertainty, however, will continue to limit the resources federal employees will have to implement federal priorities.