Reports Add to Budget Debate

The top priority for Congress when it returns in September is to finish work on the fiscal year 2008 (FY08) appropriations bills. When the August recess began, Congress had not fully completed any of the twelve spending bills, although the House made significantly more progress than the Senate. Congress’s job will not be easy, considering the time constraint of the September 30th deadline, coupled with veto threats from the White House. In an attempt to preempt the battle over the veto, law makers are spending the recess in negotiations on spending levels as well as stumping for support against the Presidential vetoes.

Earlier this month, the House Budget Committee released The President’s 2008 Appropriation Veto Threats: What’s at Stake? A State-by-State Analysis. The committee claims that if the President’s vetoes are upheld, it could mean funding for 9,200 fewer classroom teachers. The committee also claims that the President’s proposed budget levels also reduce per-child funding to schools for special education by an average of $125 per child and keep 19,900 children from participating in Head Start as compared to the House-passed appropriations bills. The committee provides data for what it believes the President’s proposed spending levels would mean for various programs. The table below shows how many teachers will not be funded if the House-passed numbers are cut back to the president’s proposed levels for Title I spending.

Adding fodder to the budget debate, on Thursday, the Congressional Budget Office (CBO) released updated numbers for fiscal year 2007 (FY07) spending. The budget deficit for FY07 is expected to be $158 billion, which is $19 billion less than what CBO projected in March, $47 billion less than the administration’s estimate and $90 billion less than the fiscal year 2006 deficit. By 2012, CBO projects, the government will be running a $62 billion surplus, growing to $109 billion by 2017. Both sides of the spending debate are using these numbers to cement their own points. Republicans see the data as vindication of their tax policies, but also warn that the positive future is endangered by the ever-expanding entitlement programs. To stay on the path to a surplus, Republicans are calling for a pull back on spending, as well as extension of the 2001 and 2003 tax cuts.
Inversely, Democrats see the numbers as both a warning and a reminder that the government was operating under a surplus before President Bush took office. The CBO estimate, of course, relies on many variable assumptions, including that Congress will do nothing to increase or decrease spending or revenue from present levels, which assumes that current tax cuts will expire at the end of 2010. Unlike the Republicans, Democratic leaders are focusing on the revenue aspect of the equation, as opposed to the spending. While the alternative minimum tax and future spending on the wars in Iraq and Afghanistan will also impact the budget numbers, the immediate concern for both parties is spending levels for FY08. As previously reported, Congress still has a few options if it is unable to gather enough votes to override a Presidential veto, but is operating under a very tight schedule, and there are still many uncertainties for when and how the final spending levels will make it through Congress and the President.
Resources:
Budget Chairman John Spratt (D-SC) , “The President’s 2008 Appropriation Veto Threats: What’s at Stake? A State-by-State Analysis,” House Budget Committee, August 3, 2007.
http://budget.house.gov/analyses/0802state_report%20(2).pdf
Richard Rubin, “CBO Projects Lower Fiscal 2007 Deficit,” CQ Today, August 23, 2007.
Author: SAS