Real Clear Markets

The 2013 Budget: A Process Run Amok

At the announcement of the president’s budget, many budget observers are wondering if it matters much anymore. There was a time when presidents’ budget requests to Congress had some meaning, and were not just opening bids in a political auction where no sales are final.

In those days, Congress usually responded with a budget of its own, often quite similar. The real battles were later fought over appropriations. The budget/appropriations process has always been a confused, competitive exercise. That was before debt and deficits became overwhelming.

The competitive exercise has become a blood sport in which there are no winners. The president’s 2013 budget signifies an intention to keep fighting. It is almost $1 trillion in deficit. It is full of new and added “investments” many of which Congress will not enact. Most notably, it contains $1.5 trillion in new taxes, none of them favored by the House.

House Republicans perceive no softening in the president’s spending demands. It will pass its own budget which will not remotely resemble the president’s. As usual, the Senate is primed and ready to pass no budget at all. The budget process has become an election-year war dance whose result is endless warfare. The parties will blame each other while the deficits roll on.

In an election year, with no Congressional budget resolution and a presidential budget of dreams, the normal, stressful appropriations battles will be escalated to newer, grander heights. The same will be true for the winner-less debt ceiling war. Spending decisions may go over into a lame duck session where solutions are no easier. Where olive branches are needed, the combatants in the Executive and Legislative branches are throwing down gauntlets, instead.

Forgotten in this disorderly process is the fact that the Budget Act was passed in the hope that it would add discipline and stability to the fiscal processes. The president was supposed to lead, and the Congress, if not inclined to follow, was supposed to show some leadership of its own. Occasionally, both have done so.

Also lost in the political struggles of divided government is the concept that our fiscal house is in abysmal disorder, and that we desperately need to stabilize our debt and reduce our deficits. The president’s budget and the Congressional reaction serve notice that policy makers may enjoy divided government more than they favor fiscal sobriety.

Bowles-Simpson, and other budget authorities, have convincingly made the debt stabilization point, ad nausam. The president and Congress have gone to the mat again and again, making only a small dent in the problem. The president’s budget and the Congressional reaction indicate that 2012 will be another year of inaction.

The president’s 2013 budget is not the first shot in the war, but it presages another year of slow-to-none progress on the fiscal problem. It is not too late yet. There is some hope. But it will take a combination of leadership and courage not always demonstrated at either end of Pennsylvania Avenue.