Budget Update: The Fiscal Year Begins With Plenty Left to Accomplish

The new fiscal year began on Oct. 1, without a single appropriations bill completed. Instead, operations are being funded by a continuing resolution (CR) that sets discretionary funding at current levels and is in place through November 16. The measure also temporarily extended some programs that were set to expire at fiscal year-end including the State Children's Health Insurance Program (SCHIP), food stamps, and the Federal Aviation Administration.

Congress also increased the debt limit by $850 billion. The increase should have been used as an opportunity for Congress and the President to begin addressing the country's long-term fiscal problems. The Committee for a Responsible Federal Budget expressed deep disappointment that both parties continue to go along with the charade of expressing dismay over the debt limit increases while supporting the policies that make the increases necessary.

Meanwhile, a "Veto Showdown" is looming. The White House has promised to veto most of the 12 appropriations bills needed to finance government operations because they would, in total, spend $23 billion more than the President's proposed $933 billion on discretionary spending. President Bush has already vetoed a bill to increase spending on SCHIP, and will likely carry out at least some of his veto threats. The real question, then, is how the President and Congress will resolve their differences after the vetoes. This is likely to turn into a heated political battle, where we fear everyone will come out looking bad. While $23 billion is a significant amount of money, and the Committee for a Responsible Federal Budget applauds attempts to hold down spending, the veto threats come off as politically-driven given that the President did not veto any appropriations bills sent to him when his party controlled Congress. While we welcome the effort to control spending, we fear that this adversarial strategy will further fray relationships on Capitol Hill and will leave Members of both parties more at odds with each other and less able to concentrate on collaborating to make larger structural budget reforms.