Debate Begins on Obama Budget

Congressional Budget Committees will begin “marking up” President Obama’s budget proposal tomorrow, readying it for consideration by both houses of Congress next week.  The budget is so big — $3.66 trillion dollars — and contains so much substantive legislation on Obama’s “cap and trade” global warming tax, healthcare expansion and education that even some Democrats are bridling at it.

President Obama’s first choice as his Secretary of Commerce, Sen. Judd Gregg (R-N.H.), issued a warning at a press conference yesterday that if America continues on the financial course of out-of-control spending set by the Obama administration, we will end up with a “banana republic-type of fiscal system.” (Gregg withdrew his nomination over differences with Obama on economic policy.)  

Gregg, who is also the ranking Republican member on the Senate Committee on the Budget, and Senate Republican leader Mitch McConnell (R-Ky) held a press conference Monday to discuss the proposal.  

“It doubles the national debt in five years, and it triples in ten years,” Gregg said.  “What does that mean, these sorts of numbers? $17 trillion worth of debt in 10 years, $11 trillion at the end of five years?  This translates into a debt to GDP ratio which we have not seen in this country since the end of World War II when trying to pay off the war debt. Basically you take national debt up to about 80% of Gross National Product, that’s the public debt.  Historically it’s been about 40%.  

"When you get up to an 80% ratio where your public debt is 80% of your Gross National Product, and you maintain that ratio in the years to come, you’re basically running your country into the ground.  You’re turning over to the status of a banana republic-type fiscal system.  If you try to put it into a different context, if you take all of the presidents from George Washington through George Bush, and add up all of the debt they put on the books for the American people, President Obama’s proposal equals and actually exceeds that amount of debt in his first term.  Staggering numbers.”

McConnell very pointedly discussed the level of discomfort Democrats in Congress have over the president’s budget.  “My impression is that the administration is getting quite nervous about having adequate Democratic support to pass this budget,” McConnell told reporters.  “The best evidence of that is that the president and the vice president are coming up here this week, the vice president I believe tomorrow [Tuesday] and the president, I think, Wednesday, to talk to Democrats and usually when that occurs — there have been reports of defections.

“You all have been carrying the various comments of Democratic senators expressing concern with the size of the budget, about the potential for some kind of reconciliation vehicle being a part of it and by putting them in the position of owning the whole product at the end without any sort of bi-partisan buy-in.  I don’t think I’ve witnessed this level of unease about a budget certainly in the time that I’ve been here — I may have heard about budgets that may have had this kind of queasiness attached to it — so clearly they’ve got a tough sell to make to get their centrist Democrats to buy in to a product which Senator Gregg has pointed out repeatedly will double the national debt in five years and triple it in ten years.”

The House Budget Committee begins the markup of its budget resolution on Wednesday and the Senate Budget Committee begins on Thursday. Congress is not bound by the president’s budget proposal but usually considers it an outline of the administration’s policy and funding priorities.  Congress can use this as a starting point for budgetary considerations for the fiscal year, and the markups allow for amendments and changes to the starting text offered by the chairmen of both committees. Under the Budget Act, the Senate is required to submit its budget resolution by April 1st.  The House is not bound by this constraint.  

When the budget committees approve and pass their own versions of the budget, these resolutions will move to the House and Senate floor for passage next week. When Congress returns from its early April spring recess two weeks later, the two chambers will craft a compromise that will again have to pass a floor vote in both chambers.  The president’s signature is not required.

There are concerns from both sides of the aisle that the far-left Democrat leadership in the House and Senate will include a budget reconciliation maneuver into the process.  Budget reconciliation was created as a means to reduce deficit spending utilizing issues directives placed in the budget resolutions that legislate policy changes in mandatory spending or revenue programs to reign in the deficit, which is the purpose of the budget reconciliation process.  If budget reconciliation maneuvers are used, the Senate is stripped of its filibuster option, meaning a simple majority would pass the budget resolution through the Senate rather than the 60-vote threshold to reach cloture ending debate before a vote.

The Democrats are considering using this budget reconciliation process to move the cap and trade carbon tax and universal health care elements of the budget through the House and Senate as a mechanism to strip the Senate of a means to filibuster these controversial programs.  If the Democrat leaders decide to use the reconciliation process, “reconciliation directive” language must be included in the budget resolutions in committee.

“If they want to steamroll the minority, obviously some kind of reconciliation vehicle would be the way to do that, but there are some limitations on that,” McConnell said.  “There is, we all know, the Byrd rule… that would make it challenging.”

According to the Center on Budget and Policy website, “While reconciliation enables Congress to bundle together several different provisions affecting a broad range of programs, it faces one major constraint: the ‘Byrd rule,’ named after Senator Byrd of West Virginia. This Senate rule makes any provision of (or amendment to) the reconciliation bill that is deemed ‘extraneous’ to the purpose of amending entitlement or tax law vulnerable to a point of order. If a point of order is raised under the Byrd rule, the offending provision is automatically stripped from the bill unless at least 60 senators vote to waive the rule. This makes it difficult, for example, to include any policy changes in the reconciliation bill unless they have direct fiscal implications. Under this rule, authorizations of discretionary appropriations are not allowed, nor are changes to civil rights or employment law, for example. Changes to Social Security also are not permitted under the Byrd rule.

“In addition, the Byrd rule bars any entitlement increases or tax cuts that cost money beyond the five (or more) years covered by the reconciliation directive, unless these ‘out-year’ costs are fully offset by other provisions in the bill.”

McConnell continued, “You’ve got a whole lot of liberals in Congress who’ve been ranking members for a long time, a lot of pent up desire to Europeanize the country… The whole far left agenda which has been bottle-necked in one way or another for 15-18 years is now coming back and it wouldn’t surprise me… if they tried to use any device they could to advance their agenda.  

“If I were in their shoes, however, it’s a big gamble, because if you do it with no bi-partisan buy-in at all, you own the whole thing politically.  They all well remember what happened in 1994 when there was a big blowback for an excessively partisan first two years of the Clinton administration.  It’s a calculated risk on their part.  I don’t know what they’re planning to do, but we’ll find out in the coming weeks.”