Tuesday, December 20, 2011

What a funny way to run a country

J.T. Young has a great post about the absurd budgeting process that is what we have today in Washington. He refers to the "Budget Onion," meaning that there is so much beneath the surface compared to what we're seeing go forth in the capital. We have the basic appropriations process which is supposed to be finished by October 1. There are supposed to be 12 separate appropriations bills to fund the government or else it shuts down. So far they've passed only three and so we are being funded on continuing resolutions. They keep reenacting these and each time it comes down to some do-or-die moment giving politicians many opportunities to bloviate and demagogue. It goes on and on until we are ready to start positioning for the following year's budget.

Then there was the big supposed crisis over raising the debt ceiling. We resolved that with the Super Committee which was supposed to find cuts in the deficit over the next decade by November 23. They failed so there are now automatic cuts that will purportedly go into effect. Yeah, sure.
With the Super Committee having been unable to achieve any savings, we get the budget onion's third layer: mitigating the automatic cuts. Expect both parties to seek to undo those cuts threatening their policy priorities -- for Democrats, social spending, and for Republicans, defense spending.

Because those automatic cuts won't happen until 2013, that gives the parties roughly a year to fight over undoing specific ones. If it took Washington all summer to reach agreement to cut spending by $917 billion in general, imagine how bitter the battle will be over avoiding particular cuts?
Then next we'll be playing out fights over the budget during the presidential election. It will be time for everyone to be posturing and holding the budget hostage while they play for the cameras.
The budget -- and more precisely, the deficit -- is one of the race's most prominent issues.

No wonder. At its most basic, the budget is simply the government's priorities measured in money. Additionally, its deficit is historically high. The result is that the budget has become a political battlefield expressed in dollars. It is impossible to campaign without taking stances on it. Those positions limit what budget negotiators can pursue, if they want Congress to pass it and Obama to sign it. And they are likely to dictate at least the opening positions in subsequent negotiations even after the next election.
I'd add in this week's fight over extending the payroll tax holiday. Each side has their favored way of funding the tax holiday. The Republicans are looking for budget cuts while the Obama administration and Democrats want to raise taxes on the wealthy. Whichever proposals win out, those solutions will be off the table for other money savings that we want to pay for the increase in the debt ceiling or other spending proposals. And that isn't even touching our biggest fiscal hole - entitlement spending.

It's a mess and so much of what you hear them fighting about in today's crises don't even touch on the much scarier fiscal problems looming over our future.