Perceptions of Ben Bernanke
Problems with the Market for Health Insurance

Budget Reconciliation Stalls...

Stan Collender, who knows the federal budget process, writes about "reconciliation":

BUDGET BATTLES: A Dead Horse? Tuesday, Nov. 15, 2005: Anyone who has followed the 2006 federal budget debate since it began in January has known that reconciliation was always going to be difficult to enact this year. Even after the political strength President Bush proclaimed after his reelection last November, it was clear that the spending and tax changes likely to be considered would present very difficult budget challenges for the White House and congressional leadership alike. So when the House and Senate reconciliation efforts both stalled on the same day last week, the only thing surprising or shocking about the surprise-bordering-on-shock that was apparent around Washington was that anyone was caught off-guard.

The House leadership stopped the spending cut reconciliation bill debate because it didn’t have enough votes; the Senate Finance Committee decided it did not have enough support to report out its reconciliation tax cut plan. Both things happened within hours of each other. Yet both were extremely predictable. In many cases, they had actually been predicted. Given everything that has happened since the first doubts were cast on reconciliation as the budget debate began, the fact that it has run into problems is anything but surprising.

For example:

The debate in the full House and the Senate’s Finance Committee were scheduled to take place less than two days after the 2005 election, which was widely regarded as a disaster for the White House and the strongest indication yet of the decreasing support for Bush and his policies.

Second, since January, there has been a steady and significant drop in the president’s and Republican leadership’s job approval ratings. That means the political capital the White House thought it had to spend on the budget debate either was far less than it expected or was already gone by the time reconciliation was considered. It also means that the leadership was less able to demand and receive the political obeisance it had always previously received on budget matters.

Third, reconciliation and reconciliation-related votes have already had to be postponed several times this year. Immediately after Hurricane Katrina, congressional leaders decided to delay the debate because they feared the spending cuts would not be approved. They also didn’t want to consider the reconciliation tax changes many said would primarily benefit higher-income families and individuals when lower-income people were seen to be the ones hurt by the storm.

Fourth, House leaders also postponed, apparently indefinitely, a vote to amend the budget resolution adopted earlier in the year so that additional spending cuts -- especially appropriations -- would be required. This was in spite of the fact that the proposed amended budget resolution was announced by the leadership with great fanfare and was said to demonstrate its continued commitment to reduced federal spending. That amended budget resolution was also a sop to Republican fiscal conservatives in the House whose influence was seen to be on the rise. That presumed increase in power was shown to be fleeting in the extreme when the leadership prevented the vote because of a lack of support.

Fifth, the people who in previous years have been so instrumental in enforcing White House and congressional leadership policies and decisions have all become less powerful since the Bush budget was sent to Capital Hill and Congress approved the fiscal 2006 budget resolution. The ethics issues facing Senate Majority Leader Bill Frist, R-Tenn.; the legal problems facing House Majority Leader Tom DeLay, R-Texas; White House Deputy Chief of Staff Karl Rove’s continuing concerns involving the CIA leak case; and the recent questions raised about Vice President Dick Cheney mean that all the enforcers are less able to impose discipline than at any time in the Bush presidency.

Finally, all of these factors enabled Republican moderates to do something on the budget they haven’t done for some time -- stand up to the leadership and the White House. In theory, they have always had this power given the relatively small Republican majorities in both houses. But they have been unwilling to use it for fear of White House or leadership retribution. That fear is now greatly diminished.

The Republican moderates have also not acted because of a concern about being said to be out-of-step with the rest of their own party and the country. That label is now far less likely to stick, given the polls showing that most Americans think the country is going in the wrong direction on the economy and other key issues.

The leadership may be able to work out these problems... the Senate Finance Committee might have managed a deal.... The House leadership is also widely expected to come up with a substantive or procedural deal that will allow the reconciliation spending cut bill to be approved as well.

None of this will diminish the very strong likelihood that the budget world in Washington has shifted significantly away from the White House and congressional Republican leadership over the past few months. That will make a compromise between the House and Senate on what’s left of the budget reconciliation process even more difficult than it was already likely to be. Therefore, it may very well be that the deals worked out in the next few days don’t actually help get reconciliation enacted this year.

Comments