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How realistic is Congress’ budget?

Kai Ryssdal May 16, 2007

How realistic is Congress’ budget?

Kai Ryssdal May 16, 2007

KAI RYSSDAL: The actual dollar amount’s $2.9 trillion, give or take a couple of million. An 11 percent boost for the Pentagon next year. About 5 percent on average for some of the other cabinet agencies. Congressional Democrats are also promising a budget surplus by 2012.

We’ve called Maya McGuineas at the Center for a Responsible Federal Budget to help explain the details. Maya, where do the Democrats figure they’re going to get all that money?

MAYA MCGUINEAS: On the revenue side, sort of the biggest issue is that they’re also going to attempt to extend some of the tax cuts. And the plan there is that they’re going to extend the so-called middle-class tax cuts — those for people with children, a child credit; people who are married; and the lowest tax bracket, that’s been brought down to 10 percent. And the real question is how they’re going to be able to offset those costs. It’s going to be quite costly to make those tax cuts permanent.

RYSSDAL: Right, and what they’re talking about is something called pay as you go. It’s been a big thing for them since the election. How’s it gonna work?

MCGUINEAS: Pay as you go has really been the main point of fiscal discipline the Democrats have rallied around. And what pay as you go means is that anytime you cut taxes or you raise spending on certain programs — and those are entitlement programs, things like Social Security and Medicare and Veterans’ health care programs . . . But any increases in those areas of spending have to be offset so they won’t increase the deficit. That means that any tax cut has to be offset either by other tax increases or spending reductions. So, the point that pay-go brings us to is, it doesn’t fix our deficit mess, but it means that you’re not allowed to make it worse.

RYSSDAL: Let me get you to the big line item that’s only partially there in this budget. There’s no money for Iraq and Afghanistan after 2009.

MCGUINEAS: Right. The argument the people have put forth for not putting this in the budget is, “Well, we don’t know how much it’s going to cost so we’re not going to estimate it’s anything.” But, of course, if there’s one amount that we know it’s not going to be, it’s zero. And the purpose of a budget is to kind of put your best estimates out there about what something will cost. And I think there’s a real risk by leaving something so obvious and costly such as Iraq outside of the budget is that the budget starts to lose its meaning. So what we’ve been doing so far is passing these emergency supplementals. Congress is working on one right now to fund the operations in Afghanistan and Iraq. And it’ll be a lot better if we could start bringing those into the budget so that the budget would actually be a snapshot of what we think realistically things will look like.

RYSSDAL: Political reality obliges me to ask this next question. The president has said he’s going to veto any budget that comes in higher than what he requested. And this budget does that. Where do we go from here, now?

MCGUINEAS: Right now, attention is going to shift from the overall budget — which is what they are working on right now and will pass this week — into the individual appropriations bills. And those are going to be coming out of the appropriations committees. They’re going to be going to the president’s desk. And in all likelihood, he will go ahead and veto bills that he thinks spend too much money. And I think this is going to set Congress up for a very contentious showdown between the White House and Congress for the rest of the budget season.

RYSSDAL: Correct me if I’m wrong, but the 2007 budget was never finished and that was with Republicans in charge of Congress and the White House as well.

MCGUINEAS: Most people in the country would probably never have noticed we didn’t have a budget this year. But what it reflects is that it’s very difficult to pass these budgets. It was important, from a political perspective, that the Democrats pass this budget as they took over control in the House and the Senate. And they were able to do that. It is going to be important, again, that they get their appropriations bills passed. And in all likelihood we will probably start the new fiscal year without all those appropriations bills passed and in place. Which means we’ll have to turn to some kind of more general funding revenues to keep the government going.

RYSSDAL: For the second year in a row.

MCGUINEAS: For the second year in a row and we have done it actually a number of times in past years. In the big picture, the budget process is actually breaking down. We have a whole set of rules and guidelines and timetables for how the budget is supposed to be passed. And we are, with frightening regularities, starting to miss all of those. That may be a sign that it’s time for new rules.

RYSSDAL: Maya McGuineas works for an organization called the Committee for a Responsible Federal Budget. It’s part of the New America Foundation. Maya, thanks a lot.

MCGUINEAS: Thank you so much.

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