The President’s Budget: Now What?

“The President proposes and the Congress disposes” has been a truism for more than 200 years.

Nothing is likely to happen this year to disprove that aphorism.

President Obama has submitted his budget for Fiscal Year 2014. The House and Senate have passed their versions of FY14 budgets. Behind all the assumptions, explanations, and differing baselines stands the stark fact that all three of these budget proposals seem to exist in parallel universes, destined to never intersect.

The next step under regular legislative order would be for House and Senate leaders to appoint conferees to engage in a conference to iron out differences between the two bodies’ budgets and produce a conference agreement that the House and Senate would then pass. One assumes, since both the House and Senate have reconciliation instructions to committees in order to cut future deficits, that an agreement on the size and timing of reconciliation would be part of the final conference agreement.

But that assumption rests on two actions yet to occur.

First, the House and Senate may not appoint conferees. That seems unlikely, since Senate Majority Leader Harry Reid can appoint conferees without debate and is quite likely to do so. It seems likely that House Speaker John Boehner, faced with a call from Democrats to at least sit down in a conference and negotiate, would then appoint House conferees.

Second, the conferees may not agree on a compromise budget. This is the conventional wisdom in town. The conferees hold to their themes (tax increases versus no new taxes, cut entitlement spending versus no such cuts) and then prepare for the 2014 election cycle.

But reality isn’t that simple.

Statement by the Bipartisan Policy Center’s Steve Bell on President Obama’s Budget

Congress must confront fiscal questions when the FY13 appropriations bills expire September 30 of this year. The current level of spending is higher than the caps set for FY14 by the Budget Control Act. Will the House and Senate compromise between those cap levels and the FY13 current services level, or will we face another melodrama over “closing down the government”?

A second bite at the fiscal apple comes when the debt ceiling is breached (May 28) and the Treasury uses “extraordinary measures” in order to pay the nation’s bills. We anticipate that extraordinary measures will get Treasury to late August or September. At that point, Congress will have to once again decide how to handle fiscal gridlock.

(Yes, you have seen this movie before. It’s called “Groundhog Day.”)

Somewhere in all this fun and games, the President’s budget becomes relevant again. Although the odds are against it, it could happen that Congress will truly embrace legislative regular order: appoint conferees to a budget resolution conference, reach a conference agreement including reconciliation instructions, and then await the actual changes in legislative language from the relevant committees. This could lead to a real Reconciliation Bill, real tax and entitlement changes that could incorporate many of the President’s suggestions in those areas, and at least a temporary truce in the fiscal wars.

History teaches that optimism is the prelude to disappointment. However, it may be that Congress is getting as tired of this chaos as the public is. And, the growing impact of the sequester may rise to a painful enough level that Congress finds it in its own self interest to make a deal.